Lexicon Pharmaceuticals, Inc.

Welcome to the Lexicon Pharmaceuticals Second Quarter 2026 Financial Results Conference Call. At this time, all participants are in listen-only mode. Following management's prepared remarks, we will hold a brief question and answer session. 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 a 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 Sotocliflozin, Pilvapidin, LX9851, and 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?

Thank you, Lisa, and good day, everyone. Thanks for joining us. Look, I want to begin by focusing on our most recent and major accomplishments. The Completion of Enrolment in Sonata HCM, our Phase 3 Study of Soda Gaflosin in Hypertrophic Cardiomyopathy, or HCM. This study is the largest Phase 3 study to date in both obstructive and non-obstructive HCM. This marks an important milestone for patients living with the symptoms of HCM, as soda 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 enrolment 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 enrolment in Sonata, we've also made other important progress across our portfolio. I'll start by providing an update on Venquista, where we're at an important and exciting moment for the program. If you recall, the FDA asked for three things to support a resubmission of our new drug application. A prospective study, adequate patient exposure, and GKA rates below those observed in our previous clinical trials. I'll ask Craig to take over here.

The FDA has previously confirmed that Steno 1, an open-label, investigator-initiated study of sodaglifosin being conducted by the Steno Diabetes Center in Denmark, may serve as that prospective study. Steno 1 is on the verge of achieving the exposure levels previously identified by FDA as necessary to support the resubmission and the DKA rates observed to date in the study in patients treated with soda 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 center one 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 timeline, we could not be more pleased with the data we've received to date. This is a huge step forward for Zinquista, 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 licensing theatrists Thank you for joining us. Vietris anticipates regulatory decisions in Australia and Canada and additional regulatory submissions in other markets this year. Turning to 9851, a first-in-class ACSL-5 inhibitor for obesity, a Phase I study is underway and being conducted by our licensee, Novo Nordisk. We have previously received two $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 Pilavapidin, 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 and other potentially high-value indications and we look forward to sharing data from these preclinical studies as early as later this year.

Yeah, 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 Zinquisto. 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 sodaglifosin, 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 sodaglifosin is uniquely positioned to address the tremendous unmet need in this space. Hypertropic 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 thickened 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 exercising tolerance that often impact patient quality of life. Soda'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 soda 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, soda 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 Thank you for joining us. as well as safety in patients with symptomatic HCM. We are pleased that the trial was significantly over-enrolled and, as such, should positively impact the overall study powering. The study included a substantial majority of patients with an 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 KC-CQ-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 SOTUS potential across the spectrum of symptomatic HCM, and we look forward to sharing top-line results in the first quarter of 2027. Moving to Synquista, 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 Stena 1 study will have achieved the number of patient years of sodagliflozin exposure that FDA had previously identified as being necessary to support refiling. The DKA rates observed in the Steno trial amongst patients treated with soda remain similar to those observed in the standard of care group in the study and well below that observed in our previous in tandem 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 as most recently as this week. Concurrent with our FDA discussions, we have been in continuous dialogue with the center 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, and 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 MPEFA, 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 Impefa. 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 a penny per share, in the corresponding period in 2025. for the second quarter of 2025 included non-cash 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 a penny 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 auction finance. A second $20 million tranche is available for draw, elect the comp 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 Hercule's consent and specified timing requirements. The loan facility provides for an initial interest-only period of 18 months with the potential for two six-month extensions. We are also reiterating our operating expense guidance for 2026 of between $100 and $110 million and continue to anticipate R&D to be between $63 and $68 million and SG&A to be between $37 and $42 million. During the second quarter, we initiated targeted investments in pre-commercial 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. Thank you, Scott.

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 soda and the impact we can have for patients. First and foremost is our opportunity for soda 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, soda'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 Zynqvista 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?

Thank you. At this time, you will conduct the question and answer session. To ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question today is from Yigal with Citigroup. Your line is open.

Hi, this is Yuan Kim on from Yigal. Thanks for taking our question. On Sonata, given that there's a substantial majority of NHDM patients with a meaningful OHDM cohort as well, how should we think about that next in terms of the commercial and regulatory value of the study, its overall 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 non-obstructive 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 at 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 non-obstructive. and particularly with the significant over-enrollment, this gives us even more confidence in the primary endpoint that we selected and our power to observe that primary endpoint. And also to reinforce, while there are more non-obstructive patients in the trial, we believe that there's a significant enough number of the obstructive patients that gives us great confidence that we'll be able to observe and find meaningful the results in both the obstructive and non-obstructive groups.

From a commercial perspective, we see that there's opportunity across the spectrum of disease, both in obstructive and non-obstructive. Obstructive, clearly, where there are already approved agents, but still a significant number of patients remain symptomatic. And non-obstructive, 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 phase one. What would constitute a supportive data package for NOVA to move the program forward?

Yeah, 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 phase one 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.

Great. Congrats on the progress. Thanks so much.

Thank you.

Thank you.

Our next question is from Andrew Tsai with Jefferies. Your line is open.

Hello. It's Brian Bolton now with Andrew Tsai. Just on type 1 diabetes, you were resubmitting on June 4. I think it was around mid-26 before So the facts assume approval could be closer to MIS-27, assuming it's close to resubmission. Could you just talk a little bit about why that's taking longer to prove data? Thank you.

Yeah, it's a great question, and, you know, we've been working very hard with both the FDA and CENO, and I hope I've been effective at communicating over time that CENO is an investigator-initiated trial that was never designed for a regulatory purpose. And we've been continuously at work with CENO to pull all of the data together. We had a certain regulatory path that we were considering, but just based on the ability of CENO 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 Sotoclifosin patients as well as the control group because FDA wanted to see the control group in the study as well and extraordinarily encouraging the race 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 soda-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 in tandem trial. So, you know, to me it's just a matter of how long is it going to take to pull the details together from SANO 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 SANO. the outset of this process of a favorable risk-benefit.

And I think the other thing to keep in mind here regarding the timing, you know, we expect and as we outlined, we think that the submission could be as early as the end of October, which with a six-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 timeline. Thank you very much.

Thank you. One moment, please. Our next question is from Roana Ruiz with B-Rank Partners. Your line is open.

Hey, morning, everyone. 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 both the overall results and informing future prescribing because I noticed that you're talking about majority of patients are N-HCM. So what does that mean for the O-HCM proportion of patients in the trial?

Yeah, thanks, Rana. Great, great question. You know, we haven't broken out and we probably won't until we share the baseline characteristics of the study at an upcoming medical meeting. 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 single largest enrolling country, it 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 medications, Underlying HCM medication for at least six months. But I can say that we do have patients in the trial that are on a CMI, and both patients that are at the baseline were considered obstructive by the criteria and non-obstructive 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 non-obstructive 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 non-obstructive, 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 soda fits into the HCM landscape? We've been following a couple of biotechs that are gearing up to start phase three trials and could potentially enter aftersoda as well into the market. How do you see prescribers making decisions between these different programs?

Yeah, I think, you know, overall, the important thing is that this is a complementary mechanism to the currently approved agents and potentially newer agents as well. So, you know, 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 standalone or combination therapy with other agents. Now, there are a few unique attributes to soda in this market that really all go 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 I'm looking to address CMI if they are still symptomatic.

Got it. Thanks.

Thank you.

Our next question is from Yasmine Rahimi from Piper Stansler.

Your line is open. Good morning team. Thank you so much for all the great updates and again congrats on Sonata. Excited to look forward to the data. Good question for you is, you know, obviously the population contains both obstructive and non-obstructive 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 you could talk about sort of, you know, 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 hasn't already been answered, but... maybe just the type of data that were generated by the PI for CENQUESTA 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.

Yeah, thanks Yaz. Great questions. There's a really good question about the statistical analysis plan and you know 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. and the overall population between placebo and the treated group. And as I said previously and Micah said, that includes both the obstructive and non-obstructive. 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 at the primary endpoint of week 26 placebo-adjusted KCCQ scores is not going to change. I hope that answers the first. I'll 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 case of DKA. We have the detailed narratives of every single patient that's developed DKA. They've been translated. We've been in contact 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. 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 were on soda or not. So I feel that we've really detailed gone through this in a really extensive way.

Let me just pile on there 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've been able to collect in collaboration with the FDA is now an exposure on soda that really is just a little less than what we saw in the entire in tandem program. So an in-fandom program was the largest trial in type 1 diabetes for glycemic control. So this is a significant amount of data, significant amount of exposure, and as we mentioned in the prepared remarks, what we're seeing in the DKA rates between soda and the standard of care is similar. Exactly... you know 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.

Thank you so much.

Thank you. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. One moment for our next question. 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 two very important late stage programs for Soda Diplosin in Type 1 Diabetes and HCN 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.