Lexicon Pharmaceuticals, Inc. (LXRX) Q2 2026 Earnings Report, Transcript and Summary

Welcome to the Lexicon Pharmaceuticals Second Quarter 2026 Financial Results Conference Call. [Operator Instructions] As a reminder, this call is being recorded today, August 6, 2026. I will now turn the call over to Lisa DeFrancesco, SVP, Investor Relations and Corporate Communications for Lexicon. Please go ahead, Lisa.

Thank you, Therese. Good morning, and welcome to our Second Quarter 2026 Earnings Call. Joining me today are Dr. Mike Exton, Lexicon's Chief Executive Officer and Director; Dr. Craig Granowitz, Senior Vice President and Chief Medical Officer; and Scott Coiante, Senior Vice President and Chief Financial Officer. This morning, Lexicon issued a press release announcing our financial results for the second quarter of 2026, which is available on our website at www.lexpharma.com and through our SEC filings. A webcast of this call, along with the slide presentation is also available on our website. During this call, we will review the information provided in our release, provide a corporate update and then use the remainder of our time to answer your questions. Before we begin, let me remind you that we will be making forward-looking statements, including statements relating to the safety, efficacy, clinical development, regulatory status and therapeutic and commercial potential of sotagliflozin, pilavapadin, LX9851 and our other drug programs as well as our business generally. This call may also contain forward-looking statements relating to our growth and future operating results, discovery and development of our drug candidates, strategic alliances and intellectual property as well as other matters that are not historical facts or information. Various risks may cause our actual results to differ materially from those expressed or implied in such forward-looking statements, and we refer you to the most recent annual report on Form 10-K and other SEC filings for detailed information describing such risks. I would now like to turn the call over to Mike Exton. Mike?

Yes. Thank you, Lisa, and good day, everyone. Thanks for joining us. Look, I want to begin by focusing on our most recent and major accomplishment, the completion of enrollment in SONATA-HCM, our Phase III study of sotagliflozin in hypertrophic cardiomyopathy or HCM. This study is the largest Phase III study to date in both obstructive and nonobstructive HCM. This marks an important milestone for patients living with the symptoms of HCM as SOTA would be a completely novel and complementary treatment for their disease as compared to all approved treatments currently available and other agents in development. We're thrilled with the outcome of our enrollment efforts, which resulted in the study being significantly over-enrolled. I couldn't be more pleased with the accomplishment of this critical milestone, and we eagerly await the top line data, which we expect to announce in Q1 of next year. In addition to the completion of enrollment in SONATA, we've also made other important progress across our portfolio. I'll start by providing an update on Zynquista, where we are at an important and exciting moment for the program. If you recall, the FDA asked for 3 things to support a resubmission of our new drug application: a prospective study, adequate patient exposure and DKA rates below those observed in our previous clinical trials. I'll ask Craig to take over here.

The FDA has previously confirmed that STENO1, an open-label investigator-initiated study of sotagliflozin being conducted by the STENO Diabetes Center in Denmark may serve as that prospective study. STENO1 is on the verge of achieving the exposure levels previously identified by FDA as necessary to support a resubmission and the DKA rates observed to date in the study in patients treated with SOTA are similar to patients on the standard of care in the trial and below those observed in our earlier trials. As a result, we believe that each of the FDA's criteria for resubmission of the NDA will soon be satisfied. We expect that STENO1 will achieve adequate exposure levels by the end of August and following, we will quickly move to finalize the administrative aspects of patient level data collection and transfer from Denmark. We currently anticipate that we will complete a resubmission of our NDA during the fourth quarter of this year. While this is a slight delay from our previous time line, we cannot be more pleased with the data we've received to date. This is a huge step forward for Zynquista, for Lexicon and for patients with type 1 diabetes who for many years have pleaded for another option besides insulin to manage their blood sugar. Furthermore, in heart failure, our licensee Viatris has also continued to submit regulatory applications for sotagliflozin across an increasing number of markets outside the U.S. and Europe. To date, Viatris has obtained regulatory approval in the United Arab Emirates and in Bahrain and has submitted applications for regulatory approval in more than a dozen other countries, including Saudi Arabia, Canada and Australia. Viatris anticipates regulatory decisions in Australia and Canada and additional regulatory submissions in other markets this year. Turning to 9851, a first-in-class ACSL5 inhibitor for obesity, a Phase I study is underway and being conducted by our licensee, Novo Nordisk. We have previously received 2 $10 million milestone payments under our license agreement with Novo and have the potential to receive a third $10 million milestone payment later this year. We are excited to see the continued progress on this promising compound. Finally, turning to pilavapadin. Our belief in the potential of this agent and its novel AAK1 inhibition mechanism of action only continues to grow. We have exciting work underway exploring its utility in other potentially high-value indications, and we look forward to sharing data from these preclinical studies as early as later this year.

Yes. Sorry about that, everyone. Thanks, Craig, for taking that on. But really, I couldn't be more pleased with where we're at, both for HCM and importantly, for Zynquista. This is a really important milestone for us in this program. As many of you know, we've been working with the FDA very constructively and are now on the precipice of having all the requirements needed to move forward with the NDA. So with that, I'll ask Craig to continue and give you the pipeline update.

Thank you, Mike, and good morning, everyone. I'll start with sotagliflozin, our novel oral SGLT1 and SGLT2 inhibitor, which is in late-stage development in both HCM and type 1 diabetes. I'd like to begin by discussing the underlying pathology of HCM and why we at Lexicon believe that sotagliflozin is uniquely positioned to address the tremendous unmet need in this space. Hypertrophic cardiomyopathy, or HCM, is a genetic disease characterized by adverse cardiac remodeling associated with myocardial hypertrophy, diastolic dysfunction and fibrosis. This fundamental biology is present across both non-obstructive and obstructive HCM, which I'll refer to as nHCM and oHCM independent of underlying anatomy. It is important to note that even in oHCM, symptoms and progression are not explained by left ventricular outflow tract obstruction alone. It is noteworthy that in oHCM, patients in which the outflow tract obstruction has been eliminated through surgery or other means, patients may still remain symptomatic due to the underlying disease process. Diastolic dysfunction is the underlying disease process observed in both nHCM and oHCM. This dysfunction is characterized by an abnormally thick and stiff left ventricle and impaired diastolic relaxation. These metabolic and anatomical changes negatively impact cardiac function. Both types of HCM are characterized by a thick and left ventricle associated with fibrosis, which results in a less pliable and improperly functioning left ventricle. These changes in cardiac structure and function result in the physical manifestations of shortness of breath and exercise intolerance that often impact patient quality of life. SOTA's unique dual SGLT1 and SGLT2 inhibition directly addresses the underlying diastolic dysfunction that characterizes HCM. By improving how the heart uses energy and other mechanisms, we believe that SOTA has the potential to demonstrate similar benefits in both nHCM and oHCM. SGLT1 is expressed by cardiac myocytes and the level of expression is increased in cardiac diseases such as HCM and other cardiomyopathies. And as a reminder, SGLT2 is not routinely expressed in the myocardium. By inhibiting SGLT1, SOTA improves cardiac cell function in the heart through mechanisms such as enhanced calcium flux, improved energy utilization, reduced inflammatory and fibrosis markers and reduced epicardial fat. In addition to the cardiac benefits of SGLT1 inhibition, SGLT2 inhibition also has a positive effect on the cardiorenal dysfunction that is a hallmark of all patients with heart failure. As a result, SOTA is the only agent that works both inside and outside the heart to reduce the symptoms of HCM. As Mike highlighted earlier, we are excited to have completed enrollment in the SONATA-HCM trial, which is evaluating the effects on symptoms, function and other patient-reported outcomes as well as safety in patients with symptomatic HCM. We are pleased that the trial was significantly overenrolled and as such, should positively impact the overall study powering. The study included a substantial majority of patients with nHCM, providing a robust opportunity to evaluate SOTA in a patient group for whom effective treatment options remain limited as well as a meaningful cohort of patients with oHCM. As a reminder, the primary efficacy endpoint is improvement in symptoms as measured by the change from baseline to week 26 in the Kansas City Cardiomyopathy Questionnaire Clinical Summary Score or KCCQ CSS for the overall patient population. Patients with symptomatic HCM on a stable dose of guideline-directed HCM therapy, including cardiac myosin inhibitors were permitted to enroll in the trial. Our objective was to conduct a pragmatic study where the enrolled patients truly reflect the treatment paradigm for this disease. We believe that the final study population will enable a thorough assessment of SOTA's potential across the spectrum of symptomatic HCM, and we look forward to sharing top line results in the first quarter of 2027. Moving to Zynquista. I'd like to elaborate a bit on where we are in the resubmission process for our new drug application. By the end of August, we expect that the STENO1 study will have achieved the number of patient years of sotagliflozin exposure that FDA had previously identified as being necessary to support refiling. The DKA rates observed in the STENO trial amongst patients treated with SOTA remain similar to those observed in the standard of care group in the study and well below that observed in our previous inTandem studies. Based on our previous discussions with FDA, we believe that these levels of exposure and DKA rates support a resubmission of the NDA. We have been providing these data along with additional information from the study to the FDA on an ongoing basis, excluding and most recently as this week. Concurrent with our FDA discussions, we have been in continuous dialogue with the STENO group to ensure the appropriate collection and formatting of the necessary data fields and analysis parameters for NDA resubmission, which we believe could occur at the end of October 2026 based on our current estimates. Turning to our earlier-stage pipeline, LX9851, a first-in-class non-incretin oral small molecule inhibitor of ACSL5 is currently in Phase I development by our licensee, Novo Nordisk. We could not be more pleased with the continued collaboration with Novo on this promising compound, and we look forward to future results. I'll now turn it over to Scott to provide an update on the company's financials.

Thank you, Craig, and good morning, everyone. I'll begin with a review of our financial results for the quarter. Total revenues were $0.7 million for the quarter ended June 30, 2026, compared to $28.9 million for the corresponding period in 2025. Revenues for the second quarter of 2026 represented net sales of INPEFA, and revenues for the second quarter of 2025 included $27.5 million in licensing revenue recognized from the Novo Nordisk licensing agreement in addition to net sales of INPEFA. Research and development expenses for the second quarter of 2026 were $17.4 million compared to $15.7 million in the corresponding period of 2025, reflecting higher external costs in 2026 related to our ongoing SONATA-HCM Phase III clinical trial. Selling, general and administrative expenses for the second quarter of 2026 were $9.8 million compared to $9.4 million in the corresponding period of 2025. Net loss for the second quarter of 2026 was $31.8 million, or $0.07 per share compared to net income of $3.3 million or $0.01 per share in the corresponding period in 2025. Net loss for the second quarter of 2026 and net income for the second quarter of 2025 included noncash stock-based compensation expense of $3.3 million and $3.2 million, respectively. Net loss for the second quarter of 2026 also includes a loss on the early extinguishment of debt of $4.3 million, or $0.01 per share resulting from the early repayment of the company's term loans with Oxford Finance. The company replaced its debt facility in May of this year, which I will expand on momentarily. As of June 30, 2026, Lexicon had $190.6 million in cash, cash equivalents and short-term investments as compared to $125.2 million of cash, cash equivalents, short-term investments and restricted cash as of December 31, 2025. As previously noted, we have taken steps to improve our balance sheet and enhance our financial flexibility. And in May of this year, announced a $100 million debt facility with Hercules Capital. Under the terms of this agreement, an initial $55 million tranche was funded at closing and was utilized to repay our previous loan facility with Oxford Finance. A second $20 million tranche is available for draw Lexicon's option, subject to the achievement of certain clinical, regulatory and financial milestones and specified timing requirements. A third $25 million tranche is available for draw at Lexicon's option, subject to Hercules consent and specified timing requirements. The loan facility provides for an initial interest-only period of 18 months with the potential for 2 6-month extensions. We are also reiterating our operating expense guidance for 2026 of between $100 million and $110 million and continue to anticipate R&D to be between $63 million and $68 million and SG&A to be between $37 million and $42 million. During the second quarter, we initiated targeted investments in precommercial activities focused primarily on medical education and marketing preparation. These investments will also include market access activities as we approach the late-stage development of our assets, which is included in our estimates. We are incredibly pleased with our financial accomplishments thus far in 2026, including our capital raise in February and the new loan facility with Hercules. We have strengthened our balance sheet and improved our financial flexibility while remaining prudent with our expenses ahead of our important milestones expected in the coming months. I will now turn it back to Mike for closing remarks.

Yes. Thanks, Scott. Look, this quarter, we're really starting to see the output of the Lead to Succeed strategy, which we put in place 1.5 years ago. We're focused on driving opportunities that have the highest probability of impact where we believe we can truly make a difference and have the greatest chance for success. Indeed, using Lead to Succeed as our guiding principle, we believe the next 12 months have the potential to be one of the most transformational periods in Lexicon's history. We have significant opportunities ahead of us that could meaningfully expand the reach of SOTA and the impact we can have for patients. First and foremost is our opportunity for SOTA in HCM, where it has the potential to be the first and only medicine indicated to treat patients across the spectrum of disease. As Craig explained, SOTA's unique mechanism of action, which includes not only SGLT2 but also SGLT1 inhibition, differentiates it as a hemodynamic and metabolic agent and sets it apart from all other agents in HCM. SOTA also offers what we believe will be an ease of adoption for patients and prescribers, supporting its potential as a first-line treatment with broad use. At the same time, we've reached an instrumental point in the development of Zynquista in type 1 diabetes. Over the last 12 months, we've actively engaged with FDA and received clear feedback on their requirements for submission of our NDA. In addition to these late-stage opportunities, we're also making progress across our entire portfolio and continuing our commitment to operational excellence. Together, these priorities position Lexicon to drive value and growth while staying focused on areas of meaningful patient impact. Thanks again for joining today. We now look forward to taking your questions. Operator?

[Operator Instructions] Our first question today is from Yigal with Citigroup.

This is Joohwan Kim on for Yigal. On SONATA, given that there's a substantial majority of nHCM patients with a meaningful oHCM cohort as well, how should we think about that mix in terms of the commercial and regulatory value of the study if overall population is positive? And is directionality across both phenotypes more important in your view than the exact magnitude in each group?

Yes. Thank you for the question. It's Craig Granowitz. I'll start, and I'll turn it over to Mike to answer the commercial element. From the standpoint of the trial enrollment, this is really where the need is. As I mentioned during the prepared remarks, we're really looking at a pragmatic study that reflects the population that is currently available and in greatest need. And that really is a large number of nonobstructive patients where there really are no options that are available. With obstructive, there are both surgical and other options as well as medical options available. As I've mentioned in past calls, and I hope I was able to communicate, the trial was powered on the overall population. That was what we had discussed with the FDA that includes both obstructive and nonobstructive, and particularly with the significant over enrollment, this gives us even more confidence in the primary endpoint that we selected in our power to observe that primary endpoint. And also to reinforce, while there are more nonobstructive patients in the trial, we believe that there's a significant number -- a significant enough number in the -- of the obstructive patients that gives us great confidence that we'll be able to observe and find meaningful results in both the obstructive and nonobstructive groups.

Yes. And from a commercial perspective, we see that there's opportunity across the spectrum of disease, both in obstructive and nonobstructive, obstructive clearly where there are already approved agents, but still a significant number of patients remain symptomatic and nonobstructive where there are currently no approved agents. And this mechanism allows us to work in a space where we are the one and only SGLT inhibitor in HCM. And that provides applicability across the broad spectrum of disease either as a solo treatment for HCM or in combination with the other CMIs.

Got it. And if I could just ask one more question. On LX9851, I was curious how we should think about the bar for continued development coming out of the Phase I. What would constitute a supportive data package for Novo to move the program forward?

Yes. Look, for 9851 in terms of the bar for development, that really is a question now for Novo. What we can say is that we're incredibly pleased with how the partnership has progressed to date. Novo is very enthusiastic about this mechanism and the trial -- Phase I trial is progressing extremely well. So we have always thought that the combination of different mechanisms of oral medicines will probably be an important player, an important therapeutic option in obesity. And clearly, Novo being the leader of oral weight loss medicines is taking that approach with LX9851 as well. So we're really excited to see the continued development and progress that Novo is making.

Our next question is from Andrew Tsai with Jefferies.

It's Brian Balchin here for Andrew Tsai. Just on type 1 diabetes, you're resubmitting that now in Q4 versus I think it was around mid-'26 before. So is it fair to assume approval could be closer to mid-'27, assuming a Class II resubmission? Can you just talk a little bit about why that's taking longer to accrue data?

Yes. It's a great question. And we've been working very hard with both the FDA and STENO. And I hope I've been effective at communicating over time that STENO is an investigator-initiated trial that was never designed for regulatory purpose. And we've been continuously work with STENO to pull all of the data together. We had a certain regulatory path that we were considering, but just based on the ability of STENO to pull the data together in a timely way in the manner that the FDA wanted, it's just taking them more time. I think as both Mike and I reinforced, the most important aspects is that the trial has now achieved the exposure required by the FDA for sotagliflozin patients as well as the control group because FDA wanted to see the control group in the study as well and extraordinarily encouraging the rates of DKA that we're seeing. And as a reminder, this is an open-label trial. So we're getting monthly or even more frequent updates from STENO on the exposure data. The rates of diabetic ketoacidosis in the SOTA-treated group seems to be similar on an exposure basis to that in the standard of care. And that's certainly well below that, which was observed in the inTandem trial. So to me, it's just a matter of how long is it going to take to pull the details together from STENO in the format and the way that we have agreed with the FDA to submit, not do we have a drug that has met the requirements that FDA set out in the outset of this process of a favorable risk benefit.

And I think the other thing to keep in mind here regarding the timing, we expect and as we outlined, we think that the submission could be as early as the end of October, which with a 6-month review would put us nicely in Q2, but not at the end of Q2. But having said that, this is an unusual review because clearly, the FDA has seen a lot of the information that they'll see in this submission. And the actual data that they'll be reviewing from STENO is not as comprehensive as a normal review. So we will work with them very proactively as we have done in the past to see if there is possibility for a review quicker than the statutory time line.

Our next question is from Roanna Ruiz with Leerink Partners.

A couple from me. I wanted to ask a question about SONATA and if you're able to share the proportion of patients on CMIs? And how you think that might impact the -- both the overall results and informing future prescribing because I noticed that you're talking about majority of patients are nHCM. So what does that mean for the oHCM proportion of patients in the trial?

Yes. Thanks, Roanna. Great question. We haven't broken out and we probably won't until we share the baseline characteristics of the study at an upcoming medical meeting. But I can say that there are a fair number of patients on a CMI. But as you would expect, the availability of CMIs in the trial was rather limited. We included 20 countries in the study. And while the U.S. was the largest -- single largest enrolling country, was certainly not a majority of the patients. So I think sort of taking that into account and the protocol required patients to be on a stable dose of any of their underlying CMI -- underlying HCM medication for at least 6 months. But I can say that we do have patients in the trial that are on a CMI and both patients that the baseline were considered obstructive by the criteria and nonobstructive by the criteria. So what I would infer from that is that all of the patients are put on a CMI because they were obstructive at some point. So it is interesting to note, and as we were referencing repeatedly through our prepared comments, that even if you remove the outflow tract obstruction, patients are still symptomatic. So we have, in a sense, all different options. We have patients who are obstructive and nonobstructive in the trial and patients that are on CMI that are also at the baseline of enrollment in our trial that have either an obstruction by the definition of obstruction in the trial or nonobstructive. The single unifying characteristic of the trial is they all have a baseline KCCQ score of less than 85. And I think that really is the gold standard today is managing symptomatic relief of these patients.

Super helpful. And a follow-up question. Could you give us your updated thoughts about where you believe SOTA fits into the HCM landscape? We've been following a couple of biotechs that are gearing up to start Phase III trials and could potentially enter after SOTA as well in the market. How do you see prescribers making decisions between these different programs?

Yes. I think overall, the important thing is that this is a complementary mechanism to the currently approved agents and potentially newer agents as well. So this is really the way we've approached it with Lead to Succeed is that we can play in a way our own game and have the potential to be prescribed either as a stand-alone or combination therapy with other agents. Now there are a few unique attributes to SOTA in this market that really augur well for a first-line treatment option. The first is that it's an oral once-a-day medicine that's extremely well tolerated and very safe. And so that really has the propensity to be prescribed very easily with broad access for patients. And so we would see this naturally as an option that a broad range of prescribing physicians could turn to immediately for symptomatic HCM with the possibility of currently, if they have an obstruction, then looking to add the CMI if they are still symptomatic.

Our next question is from Yasmeen Rahimi from Piper Sandler.

Thank you so much for all the great updates and again, congrats on SONATA. Excited to look forward to the data. Craig, question for you is obviously, the population contains both obstructive and nonobstructive and the study is powered for a KCCQ in both populations. How do you envision between now and the top line data to maybe potentially explore the optionality if there is a path forward if you see statistical separation in one population versus another? Is that something that you guys would evaluate? What work goes into it? And how much flexibility do you have until you lock the database and provide that update? So if you could talk about sort of the statistical protocol, how you're thinking, whether you want to change it or not? And then the second question is, I'm sorry if it has already been answered, but maybe just the type of data that were generated by the PI for Zynquista as well as in-house to correlate together to make -- to ensure a filing to be near complete and the timing around that? And I'll jump back in the queue.

Yes. Thanks, Yas. Great questions. It's a really good question about the statistical analysis plan. And good clinical practice, normally, you want to finalize your SAP before you close your database. So we have a number of months theoretically that we can do that. In light of as we're completing enrollment, we are certainly taking a really another good hard look at the SAP. I don't think there's really probably going to be any changes to the primary endpoint. The primary endpoint is the KCCQ score at week 26 in the overall population between placebo and the treated group. And as I said previously and Mike has said, that includes both the obstructive and nonobstructive. I think depending upon market, how the market unfolds and as other piece of information come into the market over the next several months as this is a dynamic market, there might be some shifting in the order that we do the hierarchy in the statistical plan right now. The key secondary is New York Heart. I think there are potential things that we could think about in the hierarchy of the statistical plan. But I think right now, we're very much aligned internally and with our external Scientific Advisory Board and co-PIs that the primary endpoint of week 26 placebo-adjusted KCCQ score is not going to change. I think on the -- I hope that answers the first. I'll answer -- move to the second question on STENO. The amount of interaction we've had with STENO is extensive. And as I think I mentioned, we get monthly updates from STENO on patient enrollment, patient enrollment by group, number of cases of DKA. We have the detailed narratives of every single patient that's developed DKA. They've been translated. We've been in continuous dialogue with the PIs of that group. We've looked at their database. We've looked at their electronic medical records. We've looked at the ability of that electronic medical record, which is in a certain format to be downloaded into SAS, which is the format that FDA database requires for submission. We've looked at the programming of SAS. I mean we have really extensively looked at this from both a data quantity and quality standpoint. We've agreed on the key variables that FDA wants to see as baseline characteristics, the exposure of DKA. We -- as I said, we have the detailed narratives of the DKA cases. So we feel comfortable that we understand each individual patient that's developed a DKA event, whether or not they are on SOTA or not. So I feel that we've really detailed gone through this in a really extensive fashion.

Let me just pile on that quickly there, Craig. I just want to take a moment to really recognize the scope of this data and the scope of the study as well because what we have been able to collect in collaboration with the FDA is now an exposure on SOTA that really is just a little less than what we saw in the entire inTandem program. So inTandem program was the largest trial in type 1 diabetes for glycemic control. So this is a significant amount of data, a significant amount of exposure. And as we mentioned in the prepared remarks, what we're seeing in the DKA rates between SOTA and the standard of care is similar, exactly no more than standard of care. And so this is really compelling data that we've engaged with FDA over a number of months now. And we're at the precipice of being able to really have all that together and submit the NDA. And really, it's a pretty significant moment for this program, which has a history both with Lexicon and the FDA, as you know. So I'm really, really delighted that we've reached this milestone.

[Operator Instructions] I'm showing no other questions at this time. So I would now like to turn it back to Mike Exton, Chief Executive Officer of Lexicon.

Thanks, everyone. Look, thanks for joining us today. This has been a really important call and a really important point for Lexicon as we really execute lead to succeed. We've got a lot going on over the next 12 months, a lot to execute, but many milestones and potential catalysts ahead of us. And so I really want to thank the Lexicon team for all the effort that they've put in, in particularly progressing these 2 very important late-stage programs for sotagliflozin in type 1 diabetes and HCM and look forward to updating you further as we go throughout the rest of 2026. Thanks a lot, and have a great day.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.