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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Lexicon Pharmaceuticals Inc | NASDAQ:LXRX | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.01 | -0.57% | 1.73 | 1.75 | 1.77 | 208 | 09:01:42 |
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
q
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
76-0474169
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
(I.R.S. Employer
Identification Number)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, par value $0.001
|
LXRX
|
The Nasdaq Global Select Market
|
Yes
|
þ
|
|
No
|
|
Yes
|
þ
|
|
No
|
|
Yes
|
|
|
No
|
þ
|
|
|
As of September 30,
|
|
As of December 31,
|
||||
|
|
2019
|
|
2018
|
||||
Assets
|
|
(unaudited)
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
170,203
|
|
|
$
|
80,386
|
|
Short-term investments
|
|
126,101
|
|
|
79,666
|
|
||
Accounts receivable, net of allowances of $4
|
|
56,841
|
|
|
5,924
|
|
||
Inventory
|
|
4,476
|
|
|
4,680
|
|
||
Prepaid expenses and other current assets
|
|
5,973
|
|
|
2,668
|
|
||
Total current assets
|
|
363,594
|
|
|
173,324
|
|
||
Property and equipment, net of accumulated depreciation and amortization of $61,257 and $60,006, respectively
|
|
14,540
|
|
|
15,865
|
|
||
Goodwill
|
|
44,543
|
|
|
44,543
|
|
||
Other intangible assets, net of accumulated amortization of $4,561 and $3,237, respectively
|
|
20,157
|
|
|
50,119
|
|
||
Other assets
|
|
1,754
|
|
|
285
|
|
||
Total assets
|
|
$
|
444,588
|
|
|
$
|
284,136
|
|
Liabilities and Equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
20,907
|
|
|
$
|
17,759
|
|
Accrued liabilities
|
|
11,511
|
|
|
14,482
|
|
||
Current portion of deferred revenue
|
|
1,117
|
|
|
3,395
|
|
||
Current portion of long-term debt, net of deferred issuance costs
|
|
11,289
|
|
|
1,115
|
|
||
Total current liabilities
|
|
44,824
|
|
|
36,751
|
|
||
Deferred revenue, net of current portion
|
|
—
|
|
|
23,651
|
|
||
Long-term debt, net of deferred issuance costs
|
|
233,837
|
|
|
243,887
|
|
||
Deferred tax liabilities
|
|
—
|
|
|
6,014
|
|
||
Other long-term liabilities
|
|
1,215
|
|
|
238
|
|
||
Total liabilities
|
|
279,876
|
|
|
310,541
|
|
||
Commitments and contingencies
|
|
|
|
|
||||
Stockholders’ Equity (Deficit):
|
|
|
|
|
||||
Preferred stock, $.01 par value; 5,000 shares authorized; no shares issued and outstanding
|
|
—
|
|
|
—
|
|
||
Common stock, $.001 par value; 225,000 shares authorized; 106,679 and 106,162 shares issued, respectively
|
|
106
|
|
|
106
|
|
||
Additional paid-in capital
|
|
1,458,693
|
|
|
1,447,954
|
|
||
Accumulated deficit
|
|
(1,290,306
|
)
|
|
(1,471,577
|
)
|
||
Accumulated other comprehensive income (loss)
|
|
36
|
|
|
(12
|
)
|
||
Treasury stock, at cost, 407 and 236 shares, respectively
|
|
(3,817
|
)
|
|
(2,876
|
)
|
||
Total stockholders’ equity (deficit)
|
|
164,712
|
|
|
(26,405
|
)
|
||
Total liabilities and equity (deficit)
|
|
$
|
444,588
|
|
|
$
|
284,136
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
||||||||
Net product revenue
|
|
$
|
8,351
|
|
|
$
|
6,286
|
|
|
$
|
23,763
|
|
|
$
|
19,062
|
|
Collaborative agreements
|
|
285,910
|
|
|
556
|
|
|
289,209
|
|
|
26,792
|
|
||||
Royalties and other revenue
|
|
187
|
|
|
124
|
|
|
374
|
|
|
284
|
|
||||
Total revenues
|
|
294,448
|
|
|
6,966
|
|
|
313,346
|
|
|
46,138
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
||||||||
Cost of sales (including finite-lived intangible asset amortization)
|
|
577
|
|
|
551
|
|
|
2,457
|
|
|
1,922
|
|
||||
Research and development, including stock-based compensation of $1,698, $1,472, $5,369 and $4,522, respectively
|
|
26,659
|
|
|
13,763
|
|
|
51,318
|
|
|
87,936
|
|
||||
Selling, general and administrative, including stock-based compensation of $1,864, $1,405, $5,370 and $4,327, respectively
|
|
13,898
|
|
|
15,579
|
|
|
42,271
|
|
|
47,191
|
|
||||
Impairment loss on intangible asset
|
|
28,638
|
|
|
—
|
|
|
28,638
|
|
|
—
|
|
||||
Total operating expenses
|
|
69,772
|
|
|
29,893
|
|
|
124,684
|
|
|
137,049
|
|
||||
Income (loss) from operations
|
|
224,676
|
|
|
(22,927
|
)
|
|
188,662
|
|
|
(90,911
|
)
|
||||
Interest expense
|
|
(5,204
|
)
|
|
(5,252
|
)
|
|
(15,485
|
)
|
|
(15,552
|
)
|
||||
Interest and other income, net
|
|
600
|
|
|
783
|
|
|
2,080
|
|
|
2,698
|
|
||||
Net income (loss) before taxes
|
|
220,072
|
|
|
(27,396
|
)
|
|
175,257
|
|
|
(103,765
|
)
|
||||
Income tax benefit
|
|
6,014
|
|
|
—
|
|
|
6,014
|
|
|
—
|
|
||||
Net income (loss)
|
|
$
|
226,086
|
|
|
$
|
(27,396
|
)
|
|
$
|
181,271
|
|
|
$
|
(103,765
|
)
|
Net income (loss) per common share, basic
|
|
$
|
2.13
|
|
|
$
|
(0.26
|
)
|
|
$
|
1.71
|
|
|
$
|
(0.98
|
)
|
Net income (loss) per common share, diluted
|
|
$
|
1.95
|
|
|
$
|
(0.26
|
)
|
|
$
|
1.59
|
|
|
$
|
(0.98
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Shares used in computing net income (loss) per common share, basic
|
|
106,272
|
|
|
105,881
|
|
|
106,200
|
|
|
105,800
|
|
||||
Shares used in computing net income (loss) per common share, diluted
|
|
116,640
|
|
|
105,881
|
|
|
116,742
|
|
|
105,800
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
||||||||
Unrealized gain (loss) on investments
|
|
(50
|
)
|
|
147
|
|
|
48
|
|
|
151
|
|
||||
Comprehensive income (loss)
|
|
$
|
226,036
|
|
|
$
|
(27,249
|
)
|
|
$
|
181,319
|
|
|
$
|
(103,614
|
)
|
|
|
Common Stock
|
|
Additional
|
|
|
|
Accumulated Other
|
|
|
|
|
|||||||||||||||
|
|
Shares
|
|
Par Value
|
|
Paid-In Capital
|
|
Accumulated Deficit
|
|
Comprehensive Gain (Loss)
|
|
Treasury Stock
|
|
Total
|
|||||||||||||
Balance at December 31, 2018
|
|
106,162
|
|
|
$
|
106
|
|
|
$
|
1,447,954
|
|
|
$
|
(1,471,577
|
)
|
|
$
|
(12
|
)
|
|
$
|
(2,876
|
)
|
|
$
|
(26,405
|
)
|
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
3,411
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,411
|
|
||||||
Issuance of common stock under Equity Incentive Plans
|
|
517
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Repurchase of common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(941
|
)
|
|
(941
|
)
|
||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,797
|
)
|
|
—
|
|
|
—
|
|
|
(21,797
|
)
|
||||||
Unrealized gain on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45
|
|
|
—
|
|
|
45
|
|
||||||
Balance at March 31, 2019
|
|
106,679
|
|
|
106
|
|
|
1,451,365
|
|
|
(1,493,374
|
)
|
|
33
|
|
|
(3,817
|
)
|
|
(45,687
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
3,766
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,766
|
|
||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,018
|
)
|
|
—
|
|
|
—
|
|
|
(23,018
|
)
|
||||||
Unrealized gain on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
53
|
|
|
—
|
|
|
53
|
|
||||||
Balance at June 30, 2019
|
|
106,679
|
|
|
106
|
|
|
1,455,131
|
|
|
(1,516,392
|
)
|
|
86
|
|
|
(3,817
|
)
|
|
(64,886
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
3,562
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,562
|
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
226,086
|
|
|
—
|
|
|
—
|
|
|
226,086
|
|
||||||
Unrealized loss on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50
|
)
|
|
—
|
|
|
(50
|
)
|
||||||
Balance at September 30, 2019
|
|
106,679
|
|
|
$
|
106
|
|
|
$
|
1,458,693
|
|
|
$
|
(1,290,306
|
)
|
|
$
|
36
|
|
|
$
|
(3,817
|
)
|
|
$
|
164,712
|
|
|
|
Common Stock
|
|
Additional
|
|
|
|
Accumulated Other
|
|
|
|
|
|||||||||||||||
|
|
Shares
|
|
Par Value
|
|
Paid-In Capital
|
|
Accumulated Deficit
|
|
Comprehensive Gain (Loss)
|
|
Treasury Stock
|
|
Total
|
|||||||||||||
Balance at December 31, 2017
|
|
105,711
|
|
|
$
|
106
|
|
|
$
|
1,435,526
|
|
|
$
|
(1,365,241
|
)
|
|
$
|
(222
|
)
|
|
$
|
(1,904
|
)
|
|
$
|
68,265
|
|
Cumulative effect of change in accounting principle
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,212
|
|
|
—
|
|
|
—
|
|
|
14,212
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
3,074
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,074
|
|
||||||
Issuance of common stock under Equity Incentive Plans
|
|
337
|
|
|
—
|
|
|
25
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
||||||
Repurchase of common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(972
|
)
|
|
(972
|
)
|
||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(41,820
|
)
|
|
—
|
|
|
—
|
|
|
(41,820
|
)
|
||||||
Unrealized loss on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(172
|
)
|
|
—
|
|
|
(172
|
)
|
||||||
Balance at March 31, 2018
|
|
106,048
|
|
|
106
|
|
|
1,438,625
|
|
|
(1,392,849
|
)
|
|
(394
|
)
|
|
(2,876
|
)
|
|
42,612
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
2,898
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,898
|
|
||||||
Issuance of common stock under Equity Incentive Plans
|
|
67
|
|
|
—
|
|
|
367
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
367
|
|
||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(34,549
|
)
|
|
—
|
|
|
—
|
|
|
(34,549
|
)
|
||||||
Unrealized gain on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
176
|
|
|
—
|
|
|
176
|
|
||||||
Balance at June 30, 2018
|
|
106,115
|
|
|
106
|
|
|
1,441,890
|
|
|
(1,427,398
|
)
|
|
(218
|
)
|
|
(2,876
|
)
|
|
11,504
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
2,877
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,877
|
|
||||||
Issuance of common stock under Equity Incentive Plans
|
|
19
|
|
|
—
|
|
|
158
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
158
|
|
||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,396
|
)
|
|
—
|
|
|
—
|
|
|
(27,396
|
)
|
||||||
Unrealized gain on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
147
|
|
|
—
|
|
|
147
|
|
||||||
Balance at September 30, 2018
|
|
106,134
|
|
|
$
|
106
|
|
|
$
|
1,444,925
|
|
|
$
|
(1,454,794
|
)
|
|
$
|
(71
|
)
|
|
$
|
(2,876
|
)
|
|
$
|
(12,710
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
181,271
|
|
|
$
|
(103,765
|
)
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
2,719
|
|
|
2,771
|
|
||
Stock-based compensation
|
|
10,739
|
|
|
8,849
|
|
||
Amortization of debt issuance costs
|
|
1,087
|
|
|
957
|
|
||
Deferred tax benefit
|
|
(6,014
|
)
|
|
—
|
|
||
Impairment loss on intangible asset
|
|
28,638
|
|
|
—
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
||||
(Increase) decrease in accounts receivable
|
|
(50,917
|
)
|
|
1,912
|
|
||
(Increase) decrease in inventory
|
|
204
|
|
|
(2,807
|
)
|
||
(Increase) decrease in prepaid expenses and other current assets
|
|
(3,305
|
)
|
|
1,039
|
|
||
Decrease in other assets
|
|
330
|
|
|
—
|
|
||
Decrease in accounts payable and other liabilities
|
|
(645
|
)
|
|
(4,906
|
)
|
||
Decrease in deferred revenue
|
|
(25,929
|
)
|
|
(25,529
|
)
|
||
Net cash provided by (used in) operating activities
|
|
138,178
|
|
|
(121,479
|
)
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Purchases of property and equipment
|
|
(70
|
)
|
|
(58
|
)
|
||
Purchases of investments
|
|
(176,987
|
)
|
|
(84,475
|
)
|
||
Maturities of investments
|
|
130,600
|
|
|
195,358
|
|
||
Net cash (used in) provided by investing activities
|
|
(46,457
|
)
|
|
110,825
|
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Proceeds from issuance of common stock
|
|
—
|
|
|
550
|
|
||
Repurchase of common stock
|
|
(941
|
)
|
|
(972
|
)
|
||
Proceeds from debt borrowings, net of fees
|
|
—
|
|
|
12,529
|
|
||
Repayment of debt borrowings
|
|
(963
|
)
|
|
(14,212
|
)
|
||
Net cash used in financing activities
|
|
(1,904
|
)
|
|
(2,105
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
|
89,817
|
|
|
(12,759
|
)
|
||
Cash and cash equivalents at beginning of period
|
|
80,386
|
|
|
61,661
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
170,203
|
|
|
$
|
48,902
|
|
|
|
|
|
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
||||
Cash paid for interest
|
|
$
|
13,243
|
|
|
$
|
10,470
|
|
|
|
|
|
|
||||
Supplemental disclosure of non-cash activities:
|
|
|
|
|
||||
Unrealized gain on investments
|
|
$
|
48
|
|
|
$
|
151
|
|
|
|
As of September 30,
|
|
As of December 31,
|
||||
|
|
2019
|
|
2018
|
||||
|
|
(in thousands)
|
||||||
Raw materials
|
|
$
|
3,228
|
|
|
$
|
3,564
|
|
Work-in-process
|
|
153
|
|
|
232
|
|
||
Finished goods
|
|
1,095
|
|
|
884
|
|
||
Total inventory
|
|
$
|
4,476
|
|
|
$
|
4,680
|
|
|
|
Expected Volatility
|
|
Risk-free Interest Rate
|
|
Expected Term
|
|
Dividend
Rate
|
|||
September 30, 2019:
|
|
|
|
|
|
|
|
|
|||
Employees
|
|
88
|
%
|
|
2.2
|
%
|
|
4
|
|
—
|
%
|
Officers and non-employee directors
|
|
78
|
%
|
|
2.6
|
%
|
|
8
|
|
—
|
%
|
September 30, 2018:
|
|
|
|
|
|
|
|
|
|||
Employees
|
|
58
|
%
|
|
2.6
|
%
|
|
4
|
|
—
|
%
|
Officers and non-employee directors
|
|
63
|
%
|
|
2.8
|
%
|
|
8
|
|
—
|
%
|
|
|
Options
|
|
Weighted Average Exercise Price
|
|||
|
|
(in thousands)
|
|
|
|||
Outstanding at December 31, 2018
|
|
6,152
|
|
|
$
|
10.68
|
|
Granted
|
|
2,360
|
|
|
5.10
|
|
|
Expired
|
|
(211
|
)
|
|
9.95
|
|
|
Forfeited
|
|
(475
|
)
|
|
10.28
|
|
|
Outstanding at September 30, 2019
|
|
7,826
|
|
|
9.04
|
|
|
Exercisable at September 30, 2019
|
|
4,181
|
|
|
$
|
10.62
|
|
|
|
Shares
|
|
Weighted Average Grant Date
Fair Value
|
|||
|
|
(in thousands)
|
|
|
|||
Outstanding at December 31, 2018
|
|
1,286
|
|
|
$
|
10.17
|
|
Granted
|
|
2,285
|
|
|
5.14
|
|
|
Vested
|
|
(517
|
)
|
|
9.60
|
|
|
Forfeited
|
|
(279
|
)
|
|
6.52
|
|
|
Outstanding at September 30, 2019
|
|
2,775
|
|
|
$
|
6.51
|
|
2.
|
Recent Accounting Pronouncements
|
3.
|
Cash and Cash Equivalents and Investments
|
|
|
As of September 30, 2019
|
||||||||||||||
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Cash and cash equivalents
|
|
$
|
170,203
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
170,203
|
|
Securities maturing within one year:
|
|
|
|
|
|
|
|
|
||||||||
U.S. treasury securities
|
|
126,065
|
|
|
44
|
|
|
(8
|
)
|
|
126,101
|
|
||||
Total short-term investments
|
|
$
|
126,065
|
|
|
$
|
44
|
|
|
$
|
(8
|
)
|
|
$
|
126,101
|
|
Total cash and cash equivalents and investments
|
|
$
|
296,268
|
|
|
$
|
44
|
|
|
$
|
(8
|
)
|
|
$
|
296,304
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
As of December 31, 2018
|
||||||||||||||
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
||||||||
|
|
|
|
(in thousands)
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
80,386
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
80,386
|
|
Securities maturing within one year:
|
|
|
|
|
|
|
|
|
||||||||
U.S. treasury securities
|
|
73,983
|
|
|
—
|
|
|
(9
|
)
|
|
73,974
|
|
||||
Corporate debt securities
|
|
5,695
|
|
|
—
|
|
|
(3
|
)
|
|
5,692
|
|
||||
Total short-term investments
|
|
$
|
79,678
|
|
|
$
|
—
|
|
|
$
|
(12
|
)
|
|
$
|
79,666
|
|
Total cash and cash equivalents and investments
|
|
$
|
160,064
|
|
|
$
|
—
|
|
|
$
|
(12
|
)
|
|
$
|
160,052
|
|
4.
|
Fair Value Measurements
|
•
|
Level 1 - quoted prices in active markets for identical investments, which include U.S. treasury securities
|
•
|
Level 2 - other significant observable inputs (including quoted prices for similar investments, market corroborated inputs, etc.), which includes corporate debt securities
|
•
|
Level 3 - significant unobservable inputs
|
|
|
Assets and Liabilities at Fair Value as of September 30, 2019
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
$
|
170,203
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
170,203
|
|
Short-term investments
|
|
126,101
|
|
|
—
|
|
|
—
|
|
|
126,101
|
|
||||
Total cash and cash equivalents and investments
|
|
$
|
296,304
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
296,304
|
|
|
|
Assets and Liabilities at Fair Value as of December 31, 2018
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
$
|
80,386
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
80,386
|
|
Short-term investments
|
|
73,974
|
|
|
5,692
|
|
|
—
|
|
|
79,666
|
|
||||
Total cash and cash equivalents and investments
|
|
$
|
154,360
|
|
|
$
|
5,692
|
|
|
$
|
—
|
|
|
$
|
160,052
|
|
5.
|
Debt Obligations
|
|
(in thousands)
|
||
2019
|
$
|
152
|
|
2020
|
620
|
|
|
2021
|
632
|
|
|
2022
|
645
|
|
|
2023
|
—
|
|
|
Total undiscounted operating lease liability
|
2,049
|
|
|
Less: amount of lease payments representing interest
|
(281
|
)
|
|
Present value of future lease payments
|
1,768
|
|
|
Less: short-term operating lease liability
|
(553
|
)
|
|
Long-term operating lease liability
|
$
|
1,215
|
|
7.
|
Collaboration and License Agreements
|
•
|
The exclusive license granted to Ipsen to develop and commercialize XERMELO in the Licensed Territory;
|
•
|
The obligation to participate in committees which govern the development of XERMELO until commercialization; and
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
|
|
|
||||||||||||
(In thousands, except per share amounts)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
$
|
226,086
|
|
|
$
|
(27,396
|
)
|
|
$
|
181,271
|
|
|
$
|
(103,765
|
)
|
Add interest expense on Convertible Notes
|
|
1,277
|
|
|
—
|
|
|
3,790
|
|
|
—
|
|
||||
Adjusted net income (loss)
|
|
$
|
227,363
|
|
|
$
|
(27,396
|
)
|
|
$
|
185,061
|
|
|
$
|
(103,765
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
|
||||||||
Shares used in computing net income (loss) per common share, basic
|
|
106,272
|
|
|
105,881
|
|
|
106,200
|
|
|
105,800
|
|
||||
Add effect of potential dilutive securities:
|
|
|
|
|
|
|
|
|
||||||||
Share based awards
|
|
3
|
|
|
—
|
|
|
177
|
|
|
—
|
|
||||
Convertible Notes
|
|
10,365
|
|
|
—
|
|
|
10,365
|
|
|
—
|
|
||||
Shares used in computing net income (loss) per common share, diluted
|
|
116,640
|
|
|
105,881
|
|
|
116,742
|
|
|
105,800
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per share - basic
|
|
$
|
2.13
|
|
|
$
|
(0.26
|
)
|
|
$
|
1.71
|
|
|
$
|
(0.98
|
)
|
Net income (loss) per share - diluted
|
|
$
|
1.95
|
|
|
$
|
(0.26
|
)
|
|
$
|
1.59
|
|
|
$
|
(0.98
|
)
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
We are commercializing XERMELO® (telotristat ethyl), an orally-delivered small molecule drug, in the United States for the treatment of carcinoid syndrome diarrhea in combination with somatostatin analog, or SSA, therapy in adults inadequately controlled by SSA therapy. We have granted Ipsen Pharma SAS an exclusive, royalty-bearing right to commercialize XERMELO outside of the United States and Japan. Ipsen is commercializing XERMELO in multiple countries, including the United Kingdom and Germany, and is preparing to commercialize XERMELO in certain additional countries. We are also developing telotristat ethyl as a treatment for biliary tract cancer and are currently conducting a Phase 2a clinical trial of telotristat ethyl in biliary tract cancer patients.
|
•
|
We are developing Zynquista™ (sotagliflozin), an orally-delivered small molecule drug candidate, as a treatment for type 1 and type 2 diabetes. Zynquista has been approved in the European Union for use as an adjunct to insulin therapy to improve glycemic control in adults with type 1 diabetes and a body mass index ≥ 27 kg/m2, who could not achieve adequate glycemic control despite optimal insulin therapy. The U.S. Food and Drug Administration has issued a complete response letter regarding the application for regulatory approval to market sotagliflozin for type 1 diabetes in the United States.
|
•
|
We are developing LX9211, an orally-delivered small molecule drug candidate, as a treatment for neuropathic pain. We are currently conducting a Phase 1 clinical trial of LX9211 and are preparing to initiate a Phase 2 clinical trial of LX9211.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Total revenues
|
|
$
|
294.4
|
|
|
$
|
7.0
|
|
|
$
|
313.3
|
|
|
$
|
46.1
|
|
Dollar increase
|
|
$
|
287.5
|
|
|
|
|
$
|
267.2
|
|
|
|
||||
Percentage increase
|
|
4,127
|
%
|
|
|
|
579
|
%
|
|
|
•
|
Net product revenue – Net product revenue for the three months ended September 30, 2019 increased 33% to $8.4 million, and for the nine months ended September 30, 2019 increased 25% to $23.8 million as compared to the corresponding periods in 2018 from revenues recognized from the sale of XERMELO in the United States and sales of bulk tablets of XERMELO to Ipsen. Product revenues are recorded net of estimated product returns, pricing discounts including rebates offered pursuant to mandatory federal and state government programs and chargebacks, prompt pay discounts and distribution fees and co-pay assistance. Revenue recognition policies require estimates of the aforementioned sales allowances each period.
|
•
|
Collaborative agreements – Revenue from collaborative agreements for the three months ended September 30, 2019 increased to $285.9 million from $0.6 million, and for the nine months ended September 30, 2019 increased to $289.2 million from $26.8 million, as compared to the corresponding periods in 2018. Revenue from collaborative agreements for the three and nine months ended September 30, 2019 includes $260 million from the Termination Agreement with Sanofi and recognition of amounts allocated to the performance obligation for development activities of sotagliflozin in the Sanofi Agreement.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Total cost of sales
|
|
$
|
0.6
|
|
|
$
|
0.6
|
|
|
$
|
2.5
|
|
|
$
|
1.9
|
|
Dollar increase
|
|
$
|
0.0
|
|
|
|
|
$
|
0.6
|
|
|
|
||||
Percentage increase
|
|
5
|
%
|
|
|
|
28
|
%
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Total research and development expense
|
|
$
|
26.7
|
|
|
$
|
13.8
|
|
|
$
|
51.3
|
|
|
$
|
87.9
|
|
Dollar increase/(decrease)
|
|
$
|
12.9
|
|
|
|
|
$
|
(36.6
|
)
|
|
|
||||
Percentage increase/(decrease)
|
|
94
|
%
|
|
|
|
(42
|
)%
|
|
|
•
|
Third-party and other services – Third-party and other services for the three months ended September 30, 2019 increased 219% to $18.5 million as compared to the corresponding period in 2018 due to an increase in external clinical development costs related to sotagliflozin subsequent to the Termination Agreement, in which we regained the rights from Sanofi to sotagliflozin and the responsibilities for development and commercialization. Third-party and other services for the nine months ended September 30, 2019 decreased 60% to $24.0 million as compared to the corresponding period in 2018 primarily due to decreases in external clinical development costs relating to sotagliflozin and professional and consulting fees. Third-party and other services relate principally to our clinical trial and related development activities, such as nonclinical and clinical studies and contract manufacturing.
|
•
|
Personnel – Personnel costs for the three months ended September 30, 2019 increased 9% to $4.7 million, and for the nine months ended September 30, 2019 increased 2% to $16.0 million as compared to the corresponding periods in 2018, primarily due to higher incentive compensation. Salaries, bonuses, employee benefits, payroll taxes, recruiting and relocation costs are included in personnel costs.
|
•
|
Stock-based compensation – Stock-based compensation expense for the three months ended September 30, 2019 increased 15% to $1.7 million, and for the nine months ended September 30, 2019 increased 19% to $5.4 million as compared to the corresponding periods in 2018, primarily due to a shorter vesting period of the annual restricted stock unit awards granted in 2018 and 2019.
|
•
|
Facilities and equipment – Facilities and equipment costs for the three and nine months ended September 30, 2019 were $0.7 million and $2.0 million, respectively, and were comparable to the corresponding periods in 2018.
|
•
|
Other – Other costs for the three months ended September 30, 2019 decreased 26% to $1.1 million, and for the nine months ended September 30, 2019 decreased 25% to $3.8 million, as compared to the corresponding periods in 2018, primarily due to lower funding of continuing medical education grants.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Total selling, general and administrative expense
|
|
$
|
13.9
|
|
|
$
|
15.6
|
|
|
$
|
42.3
|
|
|
$
|
47.2
|
|
Dollar decrease
|
|
$
|
1.7
|
|
|
|
|
$
|
4.9
|
|
|
|
||||
Percentage decrease
|
|
11
|
%
|
|
|
|
10
|
%
|
|
|
•
|
Personnel – Personnel costs for the three and nine months ended September 30, 2019 were $6.6 million and $21.5 million, respectively, and were comparable to the corresponding periods in 2018. Salaries, bonuses, employee benefits, payroll taxes, recruiting and relocation costs are included in personnel costs.
|
•
|
Professional and consulting fees – Professional and consulting fees for the three months ended September 30, 2019 decreased 35% to $3.3 million, and for the nine months ended September 30, 2019 decreased 39% to $8.8 million as compared to the corresponding periods in 2018, primarily due to changes in marketing costs.
|
•
|
Stock-based compensation – Stock-based compensation expense for the three months ended September 30, 2019 increased 33% to $1.9 million, and for the nine months ended September 30, 2019 increased 24% to $5.4 million as compared to the corresponding periods in 2018, primarily due to a shorter vesting period of the annual restricted stock unit awards granted in 2018 and 2019.
|
•
|
Facilities and equipment – Facilities and equipment costs for the three and nine months ended September 30, 2019 were $0.5 million and $1.4 million, respectively, and were comparable to the corresponding periods in 2018.
|
•
|
Other – Other costs for the three months ended September 30, 2019 decreased 15% to $1.7 million, and for the nine months ended September 30, 2019 decreased 14% to $5.3 million as compared to the corresponding periods in 2018, primarily due to a decrease in contributions to charitable foundations.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
•
|
If we are unable to successfully and timely transition from Sanofi responsibility for ongoing clinical studies and other activities relating to sotagliflozin, including the ongoing comprehensive Phase 3 development program for sotagliflozin in type 2 diabetes, the sotagliflozin program will be significantly and negatively impacted. In such case, our business will suffer and our stock price will likely decline.
|
•
|
We depend heavily on entering into a new strategic collaboration for the development and commercialization of sotagliflozin. If we are unable to enter into such a strategic collaboration on commercially reasonable terms, or at all, we may not successfully complete ongoing Phase 3 clinical development, obtain regulatory approvals or successfully commercialize sotagliflozin in type 2 diabetes. In such case, our business will suffer and our stock price will likely decline.
|
•
|
We depend heavily on obtaining regulatory approval in the United States for sotagliflozin in type 1 diabetes. If we or a new collaborator fail to obtain such regulatory approval or fail to successfully commercialize sotagliflozin for type 1 diabetes in the United States upon regulatory approval, our business will suffer and our stock price will likely decline.
|
•
|
We depend heavily on the commercial success of XERMELO. If we do not achieve commercial success with XERMELO, our business will suffer and our stock price will likely decline.
|
•
|
Clinical testing of our drug candidates in humans is an inherently risky and time-consuming process that may fail to demonstrate safety and efficacy, which could result in the delay, limitation or prevention of regulatory approval.
|
•
|
Our drug candidates are subject to a lengthy and uncertain regulatory process that may not result in the necessary regulatory approvals, which could adversely affect our and our collaborators’ ability to commercialize products.
|
•
|
The commercial success of XERMELO and any other products that we or our collaborators may develop will depend upon the degree of market acceptance among physicians, patients, health care payers and the medical community.
|
•
|
If we are unable to maintain an effective and specialized sales force, marketing infrastructure and distribution capabilities, we will not be able to successfully commercialize XERMELO or any other products that we or our collaborators may develop.
|
•
|
If we are unable to obtain adequate coverage and reimbursement from third-party payers for XERMELO and any other products that we or our collaborators may develop, our revenues and prospects for profitability will suffer.
|
•
|
We may not be able to manufacture XERMELO and any other products that we or our collaborators may develop in commercial quantities, which would impair our ability to commercialize such products.
|
•
|
We and our collaborators are subject to extensive and rigorous ongoing regulation relating to XERMELO and any other products that we or our collaborators may develop.
|
•
|
We are subject to certain healthcare laws, regulation and enforcement; our failure to comply with those laws could have a material adverse effect on our results of operations and financial condition.
|
•
|
Current healthcare laws and regulations and future legislative or regulatory reforms to the healthcare system may negatively affect our revenues and prospects for profitability.
|
•
|
Pricing for pharmaceutical products has come under increasing scrutiny by governments, legislative bodies and enforcement agencies. These activities may result in actions that have the effect of reducing our revenue or harming our business or reputation.
|
•
|
Our competitors may develop products that impair the value of XERMELO or any other products that we or our collaborators may develop.
|
•
|
We will need additional capital in the future and, if it is unavailable, we will be forced to delay, reduce or eliminate our commercialization efforts or product development programs, including the ongoing Phase 3 development program for sotagliflozin in type 2 diabetes. If additional capital is not available on reasonable terms, we will be forced to obtain funds, if at all, by entering into financing agreements on unattractive terms.
|
•
|
We have a history of net losses, and we expect to continue to incur net losses and may not achieve or maintain profitability.
|
•
|
Our operating results have been and likely will continue to fluctuate, and we believe that period-to-period comparisons of our operating results are not a good indication of our future performance.
|
•
|
We have substantial indebtedness that may limit cash flow available to invest in the ongoing needs of our business.
|
•
|
If we do not effectively manage our affirmative and restrictive covenants under the BioPharma Term Loan, our financial condition and results of operations could be negatively affected.
|
•
|
We are significantly dependent upon our collaborations with Ipsen and other pharmaceutical and biotechnology companies. If pharmaceutical products are not successfully and timely developed and commercialized under our collaborations, our opportunities to generate revenues from milestones and royalties will be greatly reduced.
|
•
|
Conflicts with our collaborators could jeopardize the success of our collaborative agreements and harm our product development and commercialization efforts.
|
•
|
We depend on third-party manufacturers, including sole source suppliers, to manufacture commercial quantities of XERMELO. We may not be able to maintain these relationships and could experience supply disruptions outside of our control.
|
•
|
We rely on a single third-party logistics provider and two independent specialty pharmacies for distribution of XERMELO in the United States, and their failure to distribute XERMELO effectively would adversely affect sales of XERMELO.
|
•
|
We rely on third parties to carry out drug development activities.
|
•
|
We lack the capability to manufacture materials for nonclinical studies, clinical trials or commercial sales and rely on third parties to manufacture sotagliflozin, LX9211 and our other drug candidates, which may harm or delay our product development and commercialization efforts.
|
•
|
If we are unable to adequately protect our intellectual property, third parties may be able to use our products and technologies, which could adversely affect our ability to compete in the market.
|
•
|
We may be involved in patent litigation and other disputes regarding intellectual property rights and may require licenses from third parties for our planned nonclinical and clinical development and commercialization activities. We may not prevail in any such litigation or other dispute or be able to obtain required licenses.
|
•
|
Data breaches and cyber-attacks could compromise our intellectual property or other sensitive information and cause significant damage to our business and reputation.
|
•
|
We may be subject to damages resulting from claims that we, our employees or independent contractors have wrongfully used or disclosed alleged trade secrets of their former employers.
|
•
|
If we are unable to manage our growth, our business, financial condition, results of operations and prospects may be adversely affected.
|
•
|
The loss of key personnel or the inability to attract and retain additional personnel could impair our ability to operate and expand our operations.
|
•
|
Facility security breaches may disrupt our operations, subject us to liability and harm our operating results.
|
•
|
Our facilities are located near coastal zones, and the occurrence of a hurricane or other disaster could damage our facilities and equipment, which could harm our operations.
|
•
|
We have used hazardous chemicals and radioactive and biological materials in our business. Any claims relating to improper handling, storage or disposal of these materials could be time consuming and costly.
|
•
|
Our business has a substantial risk of product liability and we face potential product liability exposure far in excess of our limited insurance coverage.
|
•
|
Invus, L.P., Invus C.V. and their affiliates own a controlling interest in our outstanding common stock and may have interests which conflict with those of our other stockholders.
|
•
|
Invus has additional rights under our stockholders’ agreement with Invus, L.P. relating to the membership of our board of directors, which provides Invus with substantial influence over significant corporate matters.
|
•
|
Our stock price may be extremely volatile.
|
•
|
We are subject to securities litigation, which is expensive and could divert management attention.
|
•
|
Future sales of our common stock, or the perception that such sales may occur, may depress our stock price.
|
•
|
Conversion of our 5.25% Convertible Senior Notes due 2021 may dilute the ownership interest of our existing stockholders, including holders who had previously converted their notes, or may otherwise depress the price of our common stock.
|
•
|
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.
|
•
|
We may engage in future acquisitions, which may be expensive and time consuming and from which we may not realize anticipated benefits.
|
Item 6.
|
Exhibits
|
Exhibit No.
|
|
Description
|
†*10.1
|
—
|
|
*31.1
|
—
|
|
*31.2
|
—
|
|
*32.1
|
—
|
|
101.INS
|
—
|
XBRL Instance Document
|
101.SCH
|
—
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
—
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
—
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
—
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
—
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
*
|
Filed herewith.
|
†
|
Portions of the exhibit have been omitted.
|
|
|
Lexicon Pharmaceuticals, Inc.
|
|
|
|
|
|
Date:
|
November 7, 2019
|
By:
|
/s/ Lonnel Coats
|
|
|
|
Lonnel Coats
|
|
|
|
President and Chief Executive Officer
|
Date:
|
November 7, 2019
|
By:
|
/s/ Jeffrey L. Wade
|
|
|
|
Jeffrey L. Wade
|
|
|
|
Executive Vice President, Corporate and Administrative Affairs and Chief Financial Officer
|
Exhibit No.
|
|
Description
|
†*10.1
|
—
|
|
*31.1
|
—
|
|
*31.2
|
—
|
|
*32.1
|
—
|
|
101.INS
|
—
|
XBRL Instance Document
|
101.SCH
|
—
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
—
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
—
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
—
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
—
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
*
|
Filed herewith.
|
†
|
Portions of the exhibit have been omitted.
|
1 Year Lexicon Pharmaceuticals Chart |
1 Month Lexicon Pharmaceuticals Chart |
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