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☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐			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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes

☑

No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

☑

No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer              Accelerated filer  ☑       Non-accelerated filer          

Smaller reporting company    ☐       Emerging growth company  ☐        

If an emerging growth company, indicate by check mark if the registration has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

☐

No

☑

						Page
Factors Affecting Forward-Looking Statements									2
Part I – Financial Information									3
Item 1.			Financial Statements			3
			Condensed Consolidated Balance Sheets - June 30, 2020 (unaudited) and December 31, 2019			3
			Condensed Consolidated Statements of Comprehensive Loss (unaudited) - Three and Six Months Ended June 30, 2020 and 2019			4
			Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (unaudited) - Three and Six Months Ended June 30, 2020 and 2019			5
			Condensed Consolidated Statements of Cash Flows (unaudited) - Six Months Ended June 30, 2020 and 2019			6
			Notes to Condensed Consolidated Financial Statements (unaudited)			7
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			17
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			22
Item 4.			Controls and Procedures			22
Part II – Other Information									24
Item 1.			Legal Proceedings			24
Item 1A.			Risk Factors			24
Item 2			Unregistered Sales of Equity Securities and Use of Proceeds			27
Item 6.			Exhibits			28
			Signatures			29

The Lexicon name and logo and XERMELO^® are registered trademarks of Lexicon Pharmaceuticals, Inc. Zynquista™ is a trademark of Lexicon Pharmaceuticals, Inc.

						As of June 30,						As of December 31,
						2020						2019
Assets						(unaudited)
Current assets:
Cash and cash equivalents						$	86,943					$	36,112
Short-term investments						114,923						235,547
Accounts receivable, net						30,876						56,532
Inventory						3,989						4,243
Prepaid expenses and other current assets						9,461						5,320
Total current assets						246,192						337,754
Property and equipment, net of accumulated depreciation and amortization of $63,360 and $61,741, respectively						11,524						14,047
Goodwill						44,543						44,543
Intangible assets, net of accumulated amortization of $5,886 and $5,003, respectively						18,833						19,716
Other assets						1,448						1,655
Total assets						$	322,540					$	417,715
Liabilities and Equity
Current liabilities:
Accounts payable						$	29,763					$	12,178
Accrued liabilities						57,338						42,151
Current portion of long-term debt, net of deferred issuance costs						10,457						11,012
Total current liabilities						97,558						65,341
Long-term debt, net of deferred issuance costs						234,807						234,171
Other long-term liabilities						862						1,102
Total liabilities						333,227						300,614
Commitments and contingencies
Stockholders’ Equity/(Deficit):
Preferred stock, $0.01 par value; 5,000 shares authorized; no shares issued and outstanding						—						—
Common stock, $0.001 par value; 225,000 shares authorized; 107,898 and 106,679 shares issued, respectively						108						106
Additional paid-in capital						1,470,862						1,462,172
Accumulated deficit						(1,477,126)						(1,341,444)
Accumulated other comprehensive income						312						84
Treasury stock, at cost, 793 and 407 shares, respectively						(4,843)						(3,817)
Total stockholders’ equity/(deficit)						(10,687)						117,101
Total liabilities and equity/(deficit)						$	322,540					$	417,715

						Three Months Ended June 30,																		Six Months Ended June 30,
						2020						2019						2020						2019
Revenues:
Net product revenue						$	8,985					$	8,672					$	16,862					$	15,412
Collaborative agreements						25						860						33						3,299
Royalties and other revenue						153						150						267						187
Total revenues						9,163						9,682						17,162						18,898
Operating expenses:
Cost of sales (including finite-lived intangible asset amortization)						728						1,327						1,296						1,880
Research and development, including stock-based compensation of $1,949, $1,903, $4,125 and $3,671, respectively						57,301						12,637						112,482						24,659
Selling, general and administrative, including stock-based compensation of $2,309, $1,863, $4,565 and $3,506, respectively						14,113						14,263						28,801						28,373
Impairment loss on buildings						1,600						—						1,600						—
Total operating expenses						73,742						28,227						144,179						54,912
Loss from operations						(64,579)						(18,545)						(127,017)						(36,014)
Interest expense						(5,125)						(5,164)						(10,256)						(10,281)
Interest and other income, net						633						691						1,591						1,480
Net loss						$	(69,071)					$	(23,018)					$	(135,682)					$	(44,815)
Net loss per common share, basic and diluted						$	(0.65)					$	(0.22)					$	(1.27)					$	(0.42)
Shares used in computing net loss per common share, basic and diluted						107,073						106,272						106,804						106,164
Other comprehensive loss:
Unrealized gain (loss) on investments						(548)						53						228						98
Comprehensive loss						$	(69,619)					$	(22,965)					$	(135,454)					$	(44,717)

						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)

Balance at December 31, 2019						106,679						$	106					$	1,462,172					$	(1,341,444)					$	84					$	(3,817)					$	117,101
Stock-based compensation						—						—						4,432						—						—						—						4,432
Issuance of common stock under Equity Incentive Plans						1,032						2						—						—						—						—						2
Repurchase of common stock						—						—						—						—						—						(923)						(923)
Net loss						—						—						—						(66,611)						—						—						(66,611)
Unrealized gain on investments						—						—						—						—						776						—						776
Balance at March 31, 2020						107,711						108						1,466,604						(1,408,055)						860						(4,740)						54,777
Stock-based compensation						—						—						4,258						—						—						—						4,258
Issuance of common stock under Equity Incentive Plans						187						—						—						—						—						—						—
Repurchase of common stock						—						—						—						—						—						(103)						(103)
Net loss						—						—						—						(69,071)						—						—						(69,071)
Unrealized loss on investments						—						—						—						—						(548)						—						(548)
Balance at June 30, 2020						107,898						108						1,470,862						(1,477,126)						312						(4,843)						(10,687)

						Six Months Ended June 30,
						2020						2019
Cash flows from operating activities:
Net loss						$	(135,682)					$	(44,815)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization						1,806						1,811
Stock-based compensation						8,690						7,177
Amortization of debt issuance costs						726						708
Impairment loss on building						1,600						—
Changes in operating assets and liabilities:
Decrease in accounts receivable						25,656						344
Decrease in inventory						254						403
Increase in prepaid expenses and other current assets						(4,141)						(3,957)
Decrease in other assets						207						186
Increase (decrease) in accounts payable and other liabilities						32,532						(13,842)
Decrease in deferred revenue						—						(535)
Net cash used in operating activities						(68,352)						(52,520)
Cash flows from investing activities:
Purchases of property and equipment						—						(70)
Purchases of investments						(37,148)						(106,706)
Maturities of investments						158,000						91,600
Net cash provided by (used in) investing activities						120,852						(15,176)
Cash flows from financing activities:
Repurchase of common stock						(1,026)						(941)
Repayment of debt borrowings						(643)						(643)
Net cash used in financing activities						(1,669)						(1,584)
Net increase (decrease) in cash and cash equivalents						50,831						(69,280)
Cash and cash equivalents at beginning of period						36,112						80,386
Cash and cash equivalents at end of period						$	86,943					$	11,106
Supplemental disclosure of cash flow information:
Cash paid for interest						$	9,569					$	9,610

Basis of Presentation: The accompanying unaudited condensed consolidated financial statements of Lexicon Pharmaceuticals, Inc. (“Lexicon” or the “Company”) have been prepared in accordance with generally accepted accounting principles for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

Use of Estimates: The preparation of financial statements in conformity with U. S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

Cash, Cash Equivalents and Short-Term Investments: Lexicon considers all highly-liquid investments with original maturities of three months or less to be cash equivalents.  As of June 30, 2020, short-term investments consisted of U.S. treasury bills and corporate debt securities. As of December 31, 2019, short-term investments consisted of U.S. treasury bills. The Company’s short-term investments are classified as available-for-sale securities and are carried at fair value, based on quoted market prices of the securities.  The Company views its available-for-sale securities as available for use in current operations regardless of the stated maturity date of the security.  Unrealized gains and losses on such securities are reported as a separate component of stockholders’ equity.  Net realized gains and losses, interest and dividends are included in interest income.  The cost of securities sold is based on the specific identification method.

Inventory: Inventory is comprised of the Company’s approved product it is commercializing in the United States, XERMELO^® (telotristat ethyl). Inventories are determined at the lower of cost or market value with cost determined under the specific identification method and may consist of raw materials, work in process and finished goods. Inventory consisted of the following:

						As of June 30,						As of December 31,
						2020						2019
						(in thousands)
Raw materials						$	1,154					$	3,182
Work-in-process						$	2,185					$	153
Finished goods						650						908
Total inventory						$	3,989					$	4,243

Accrued liabilities: Accrued liabilities consisted of the following:

						As of June 30,						As of December 31,
						2020						2019
						(in thousands)
Accrued research and development services						$	47,721					$	29,033
Accrued compensation and benefits						6,697						9,644
Short term lease liability						553						553
Other						2,367						2,921
Accrued liabilities						$	57,338					$	42,151

Cost of Sales: Cost of sales consists of third-party manufacturing costs, freight and indirect overhead costs associated with sales of XERMELO. Product shipping and handling costs are included in cost of sales. Cost of sales also includes the amortization of the in-process research and development intangible asset for XERMELO using the straight-line method over the estimated useful life of 14 years.

Research and Development Expenses: Research and development expenses consist of costs incurred for company-sponsored as well as collaborative research and development activities. These costs include direct and research-related overhead expenses and are expensed as incurred.  Technology license fees for technologies that are utilized in research and development and have no alternative future use are expensed when incurred. Substantial portions of the Company’s preclinical and clinical trials are performed by third-party laboratories, medical centers, contract research organizations and other vendors. For preclinical studies, the Company accrues expenses based upon estimated percentage of work completed and the contract milestones remaining. For clinical studies, expenses are accrued based upon the number of patients enrolled and the duration of the study. The Company’s estimates of the clinical study costs and costs to transition activities from Sanofi for development of sotagliflozin for type 2 diabetes, heart failure and chronic kidney disease, including the costs to close out those studies, were based on actual costs incurred for activities completed subsequent to the transition date and estimates of the services to be received and efforts to be expended pursuant to contracts with multiple vendors and the CRO that has conducted and managed and is now closing out the clinical studies on its behalf. The Company monitors patient enrollment, the progress of clinical studies and related activities to the extent possible through internal reviews of data reported to the Company by the vendors and clinical site visits. The Company’s estimates depend on the timeliness and accuracy of the data provided by the vendors regarding the status of each program and total program spending. The Company periodically evaluates the estimates to determine if adjustments are necessary or appropriate based on information it receives.

						Expected Volatility						Risk-free Interest Rate						Expected Term						Dividend Rate
June 30, 2020:
Employees						90		%				1.3		%				4						—		%
Officers and non-employee directors						78		%				1.4		%				8						—		%
June 30, 2019:
Employees						63		%				2.4		%				4						—		%
Officers and non-employee directors						63		%				2.6		%				8						—		%

						Options						Weighted Average Exercise Price
						(in thousands)
Outstanding at December 31, 2019						7,695						$	8.95
Granted						3,445						3.25
Expired						(236)						12.92
Forfeited						(298)						7.45
Outstanding at June 30, 2020						10,606						7.05
Exercisable at June 30, 2020						4,972						$	9.72

						Shares						Weighted Average Grant Date Fair Value
						(in thousands)
Outstanding at December 31, 2019						2,830						$	6.35
Granted						3,144						3.27
Vested						(1,219)						6.56
Forfeited						(339)						4.16
Outstanding at June 30, 2020						4,416						$	4.27

Net Loss per Common Share: Net loss per common share is computed using the weighted average number of shares of common stock outstanding. Shares associated with convertible debt, stock options and restricted stock units are not included because they are antidilutive.

2.           Recent Accounting Pronouncements

						As of June 30, 2020
						Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Estimated Fair Value
						(in thousands)
Cash and cash equivalents						$	86,943					$	—					$	—					$	86,943
Securities maturing within one year:
U.S. treasury securities						110,503						312						—						110,815
Corporate debt securities						4,108						—						—						4,108
Total short-term investments						$	114,611					$	312					$	—					$	114,923
Total cash and cash equivalents and investments						$	201,554					$	312					$	—					$	201,866
						As of December 31, 2019
						Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Estimated Fair Value
												(in thousands)
Cash and cash equivalents						$	36,112					$	—					$	—					$	36,112
Securities maturing within one year:
U.S. treasury securities						235,463						94						(10)						235,547
Total short-term investments						$	235,463					$	94					$	(10)					$	235,547
Total cash and cash equivalents and investments						$	271,575					$	94					$	(10)					$	271,659

•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 June 30, 2020
						Level 1						Level 2						Level 3						Total
						(in thousands)
Assets
Cash and cash equivalents						$	86,943					$	—					$	—					$	86,943
Short-term investments						110,815						4,108						—						114,923
Total cash and cash equivalents and investments						$	197,758					$	4,108					$	—					$	201,866

						Assets and Liabilities at Fair Value as of December 31, 2019
						Level 1						Level 2						Level 3						Total
						(in thousands)
Assets
Cash and cash equivalents						$	36,112					$	—					$	—					$	36,112
Short-term investments						235,547						—						—						235,547
Total cash and cash equivalents and investments						$	271,659					$	—					$	—					$	271,659

5.          Debt Obligations

Convertible Debt. In November 2014, Lexicon completed an offering of $87.5 million in aggregate principal amount of its 5.25% Convertible Senior Notes due 2021 (the “Convertible Notes”). The conversion feature did not meet the criteria for bifurcation as required by generally accepted accounting principles and the entire principal amount was recorded as long-term debt on the Company’s condensed consolidated balance sheets.

The Convertible Notes are governed by an indenture (the “Indenture”), dated as of November 26, 2014, between the Company and Wells Fargo Bank, N.A., as trustee. The Convertible Notes bear interest at a rate of 5.25% per year, payable semiannually in arrears on June 1 and December 1 of each year, beginning on June 1, 2015. The Convertible Notes mature on December 1, 2021. The Company may not redeem the Convertible Notes prior to the maturity date, and no sinking fund is provided for the Convertible Notes.

Ipsen. In October 2014, Lexicon entered into a License and Collaboration Agreement, which was subsequently amended in March 2015 (collectively, the “Ipsen Agreement”), with Ipsen for the development and commercialization of XERMELO outside of the United States and Japan (the “Licensed Territory”).

Sanofi. In November 2015, Lexicon entered into a Collaboration and License Agreement, which was subsequently amended in July 2017 (collectively, the “Sanofi Agreement”), with Sanofi for the worldwide development of Lexicon’s diabetes drug candidate sotagliflozin. In December 2016, Sanofi terminated its rights under the Sanofi Agreement with respect to Japan.

•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, or Ipsen, an exclusive, royalty-bearing right to commercialize XERMELO outside of the United States and Japan. Ipsen is commercializing XERMELO in the United Kingdom, Germany and multiple additional countries. We are also developing telotristat ethyl as a treatment for biliary tract cancer and are 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 diabetes. The FDA has issued a complete response letter regarding our application for regulatory approval to market sotagliflozin for type 1 diabetes in the United States and has confirmed that position in denying two appeals of the complete response letter. 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.

•We are developing LX9211, an orally-delivered small molecule drug candidate, as a treatment for neuropathic pain. We have reported top-line results from two Phase 1 clinical trials of LX9211 and are preparing to initiate a Phase 2 clinical trial of LX9211.

Compounds from our most advanced drug programs, as well as compounds from a number of additional drug discovery and development programs that we have advanced into various stages of clinical and preclinical development, originated from our own internal drug discovery efforts. These efforts were driven by a systematic, target biology-driven approach in which we used gene knockout technologies and an integrated platform of advanced medical technologies to systematically study the physiological and behavioral functions of almost 5,000 genes in mice and assessed the utility of the proteins encoded by the corresponding human genes as potential drug targets. We have identified and validated in living animals, or in vivo, more than 100 targets with promising profiles for drug discovery.

						Three Months Ended June 30,																		Six Months Ended June 30,
						2020						2019						2020						2019
Total revenues						$	9.2					$	9.7					$	17.2					$	18.9
Dollar decrease						$	(0.5)											$	(1.7)
Percentage decrease						(5)		%										(9)		%

•Net product revenue – Net product revenue for the three months ended June 30, 2020 increased 21% to $9.0 million, and for the six months ended June 30, 2020 increased 19% to $16.9 million as compared to the corresponding periods in 2019 from revenues recognized from the sale of XERMELO in the United States. Revenue from sales of bulk tablets of XERMELO to Ipsen were $1.3 million for the three and six months ended June 30, 2019. 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 and six months ended June 30, 2019 was $0.9 million and $3.3 million, primarily due to revenues recognized from clinical trial activities and a milestone for the first commercial sale in Canada under the collaboration and license agreement with Ipsen.

						Three Months Ended June 30,																		Six Months Ended June 30,
						2020						2019						2020						2019
Total cost of sales						$	0.7					$	1.3					$	1.3					$	1.9
Dollar decrease						$	(0.6)											$	(0.6)
Percentage decrease						(45)		%										(31)		%

						Three Months Ended June 30,																		Six Months Ended June 30,
						2020						2019						2020						2019
Total research and development expense						$	57.3					$	12.6					$	112.5					$	24.7
Dollar increase						$	44.7											$	87.8
Percentage increase						353		%										356		%

•Third-party and other services – Third-party and other services for the three months ended June 30, 2020 increased to $48.9 million from $3.2 million, and for the six months ended June 30, 2020 increased to $94.2 million from $5.6 million as compared to the corresponding periods in 2019 primarily due to increases in external clinical development costs relating to sotagliflozin subsequent to the termination of our collaboration with Sanofi. 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 June 30, 2020 decreased 16% to $4.5 million, and for the six months ended June 30, 2020 decreased 11% to $10.0 million as compared to the corresponding periods in 2019, primarily due to lower headcount. Salaries, bonuses, employee benefits, payroll taxes, recruiting and relocation costs are included in personnel costs.

•Stock-based compensation – Stock-based compensation expense for each of the three months ended June 30, 2020 and 2019 was $1.9 million, and for the six months ended June 30, 2020 increased 12% to $4.1 million as compared to the corresponding period in 2019, primarily due to shorter vesting periods of the annual restricted stock unit awards granted in recent years.

•Facilities and equipment – Facilities and equipment costs for each of the three months ended June 30, 2020 and 2019 was $0.6 million, and for each of the six months ended June 30, 2020 and 2019 was $1.3 million.

•Other – Other costs for the three months ended June 30, 2020 decreased 12% to $1.3 million as compared to the corresponding period in 2019, primarily due to decreases in travel and continuing medical education grants, and for each of the six months ended June 30, 2020 and 2019 was $2.8 million.

						Three Months Ended June 30,																		Six Months Ended June 30,
						2020						2019						2020						2019
Total selling, general and administrative expense						$	14.1					$	14.3					$	28.8					$	28.4
Dollar increase (decrease)						$	(0.2)											$	0.4
Percentage increase (decrease)						(1)		%										2		%

•Personnel – Personnel costs for the three and six months ended June 30, 2020 decreased 4% to $6.8 million and $14.3 million, respectively, as compared to the corresponding periods in 2019, primarily due to lower headcount. 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 June 30, 2020 increased 11% to $3.2 million, and for the six months ended June 30, 2020 increased 10% to $6.1 million as compared to the corresponding periods in 2019, primarily due to higher legal fees.

•Stock-based compensation – Stock-based compensation expense for the three months ended June 30, 2020 increased 24% to $2.3 million, and for the six months ended June 30, 2020 increased 30% to $4.6 million as compared to the corresponding periods in 2019, primarily due to shorter vesting periods of the annual restricted stock unit awards granted in recent years.

•Facilities and equipment – Facilities and equipment costs for each of the three months ended June 30, 2020 and 2019 were $0.5 million and for each of the six months ended June 30, 2020 and 2019 were $0.9 million.

•Other – Other costs for the three months ended June 30, 2020 decreased 32% to $1.3 million, and for the six months ended June 30, 2020 decreased 17% to $3.0 million as compared to the corresponding periods in 2019, primarily due to decreases in travel expenses due to the COVID-19 pandemic.

Interest and Other Income, Net. Interest and other income, net for the three months ended June 30, 2020 and 2019 was $0.6 million and $0.7 million, respectively, and for the six months ended June 30, 2020 and 2019 was $1.6 million and $1.5 million, respectively.

Net loss and Net loss per Common Share. Net loss increased to $69.1 million in the three months ended June 30, 2020 from $23.0 million in the corresponding period in 2019. Net loss per common share increased to $0.65 in the three months ended June 30, 2020 from $0.22 in the corresponding period in 2019. Net loss increased to $135.7 million in the six months ended June 30, 2020 from $44.8 million in the corresponding period in 2019. Net loss per common share increased to $1.27 in the six months ended June 30, 2020 from $0.42 in the corresponding period in 2019.

Other commitments. In April 2019, Zynquista was 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. Upon the achievement of certain European regulatory pricing approvals, we will be required to make certain royalty payments, totaling $4.5 million, in three equal annual installments of $1.5 million.

Facilities. In August 2018, our subsidiary, Lex-Gen Woodlands, L.P., entered into a term loan and security agreement, refinancing the previously existing mortgage on our facilities in The Woodlands, Texas. The loan agreement provides for a $12.9 million mortgage on the property and has a two-year term with a 10-year amortization. The mortgage loan bears interest at a rate per annum equal to the greater of (a) the 30-day LIBOR rate plus 5.5% and (b) 7.5% and provides for a balloon payment of $10.3 million due in August 2020.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Item 4.  Controls and Procedures

Securities Class Action Litigation. On January 28, 2019, a purported securities class action complaint captioned Daniel Manopla v. Lexicon Pharmaceuticals, Inc., Lonnel Coats, Jeffrey L. Wade and Pablo Lapuerta, M.D. was filed against us and certain of our officers in the U.S. District Court for the Southern District of Texas, Houston Division. A first amended complaint was filed on July 30, 2019 and we filed a motion to dismiss such first amended complaint on September 30, 2019. The plaintiff filed an opposition to our motion to dismiss on November 14, 2019 and we filed a reply in support of our motion to dismiss on December 13, 2019. The lawsuit purports to be a class action brought on behalf of purchasers of our securities during the period from March 11, 2016 through July 29, 2019. The complaint alleges that the defendants violated federal securities laws by making materially false and misleading statements and/or omissions concerning data from our Phase 3 clinical trials of sotagliflozin in type 1 diabetes patients and the prospects of FDA approval of sotagliflozin for the treatment of type 1 diabetes. The complaint purports to assert claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint seeks, on behalf of the purported class, an unspecified amount of monetary damages, interest, fees and expenses of attorneys and experts, and other relief.

Normal Course Legal Proceedings. In addition, we are from time to time party to claims and legal proceedings that arise in the normal course of our business and that we believe will not have, individually or in the aggregate, a material adverse effect on our results of operations, financial condition or liquidity.

Item 1A.  Risk Factors

Period						Total Number of Shares Purchased						Average Price Paid Per Share						Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs						Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (3)
April 1-30, 2020						52,318			(1)			$	1.96		(2)			—						—
May 1-31, 2020						—						$	—					—						—
June 1-30, 2020						—						$	—					—						—

Item 6.  Exhibits

Exhibit No.						Description
10.1			—			Real Estate Purchase and Sale Agreement, dated July 10, 2020, between Lex-Gen Woodlands, L.P. and C Cubed Holdings, LLC (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated July 10, 2020 and incorporated by reference herein).
*31.1			—			Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*31.2			—			Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*32.1			—			Certification of Principal Executive and Principal Financial Officers Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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.

Lexicon Pharmaceuticals, Inc.

Date:

July 29, 2020

By:

/s/ Lonnel Coats

Lonnel Coats

President and Chief Executive Officer

Date:			July 29, 2020			By:			/s/ Jeffrey L. Wade
									Jeffrey L. Wade
									Executive Vice President, Corporate and Administrative Affairs and Chief Financial Officer

Exhibit No.						Description
10.1			—			Real Estate Purchase and Sale Agreement, dated July 10, 2020, between Lex-Gen Woodlands, L.P. and C Cubed Holdings, LLC (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated July 10, 2020 and incorporated by reference herein).
*31.1			—			Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*31.2			—			Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*32.1			—			Certification of Principal Executive and Principal Financial Officers Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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.