Executive Summary

Revenue and EPS materially beat Wall Street: Q2 revenue $28.87M vs $4.87M consensus and diluted EPS $0.01 vs $(0.08) consensus, driven by $27.54M of LX9851 licensing revenue recognition; net product (INPEFA) revenue was $1.32M . S&P Global consensus used for comparisons.*
Management cut 2025 total OpEx guidance to $105–$115M (from $135–$145M), with R&D cut to $70–$75M (from $100–$105M) and SG&A maintained at $35–$40M, reflecting an R&D-focused repositioning and cost transfers to Novo under the LX9851 license .
Pipeline execution advanced: pilavapadin Phase 2b analyses support 10 mg dose for Phase 3 with partnership discussions underway; SONATA-HCM Phase 3 passed 100 sites across 20 countries; LX9851 IND-enabling on track for 2025 completion with Novo to file the IND; Viatris initiated ex-U.S. filings and reported first approval in UAE for sotagliflozin .
Near-term stock catalysts: full pilavapadin Phase 2 data presentation (Sept), additional SONATA site ramp to 130 by Q3-end 2025, incremental ex-U.S. sotagliflozin filings/approvals driving potential 2026 royalty streams; consensus revisions likely to reflect one-time LX9851 license recognition and lower OpEx run-rate .

What Went Well and What Went Wrong

What Went Well
- Licensing-driven P&L inflection: Q2 revenue jumped to $28.87M (from $1.65M YoY) with $27.54M recognized from the Novo LX9851 agreement; net turned positive ($3.25M) vs $(53.43)M YoY .
- Cost discipline: SG&A fell to $9.35M vs $39.19M YoY on strategic repositioning; OpEx cut and FY25 OpEx guidance lowered materially .
- Pipeline momentum and partner leverage: “Partnership discussions for pilavapadin are underway…,” SONATA-HCM site initiations >100 across 20 countries; Novo collaboration progressing with IND enabling on track; Viatris progressing global filings/first UAE approval for sotagliflozin .
What Went Wrong
- Commercial softness: INPEFA net product revenue of $1.32M declined vs $1.62M YoY amid significantly reduced U.S. marketing; U.S. sales remain modest .
- Non-recurring revenue mix: Q2 topline and profitability depended on LX9851 license recognition ($27.54M), a one-time driver; $17.5M remains to be recognized in H2 as obligations are completed .
- Continued cash drawdown: Cash/investments fell to $139.0M (plus $29.0M restricted) from $194.8M at 3/31/25 and $238.0M at 12/31/24, reflecting severance and operations despite debt reduction steps .

Financial Results

Metric	Q2 2024	Q1 2025	Q2 2025
Total Revenues ($M)	$1.65	$1.26	$28.87
Net Product Revenue ($M)	$1.62	$1.26	$1.32
Licensing Revenue ($M)	$0.00	$0.00	$27.54
Total Operating Expenses ($M)	$57.00	$26.94	$25.13
Income (Loss) from Operations ($M)	$(55.35)	$(25.68)	$3.74
Net Income (Loss) ($M)	$(53.43)	$(25.30)	$3.25
Diluted EPS ($)	$(0.17)	$(0.07)	$0.01

Segment revenue mix (composition)

Revenue Component ($M)	Q2 2024	Q2 2025
Net Product (INPEFA)	$1.62	$1.32
Licensing	$0.00	$27.54
Total	$1.65	$28.87

KPIs and Balance Sheet

KPI	Q4 2024	Q1 2025	Q2 2025
Cash & Investments ($M)	$238.00	$194.84	$139.01
Restricted Cash ($M)	$0.00	$0.00	$29.00
Long-term Debt, net ($M)	$100.30	$58.64	$56.11
Wtd. Avg. Diluted Shares (MM)	361.49	362.07	363.57

Notes: Q2 revenue was primarily licensing ($27.54M) from Novo Nordisk LX9851; net product revenue was $1.32M . Cost declines reflect late-2024 repositioning and reduced INPEFA marketing .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Operating Expenses	FY 2025	$135M–$145M	$105M–$115M	Lowered
R&D Expenses	FY 2025	$100M–$105M	$70M–$75M	Lowered
SG&A Expenses	FY 2025	$35M–$40M	$35M–$40M	Maintained
LX9851 Licensing Revenue Recognition	2H 2025	N/A	~$17.5M to be recognized as IND-enabling completes	New disclosure

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24, Q1’25)	Current Period (Q2’25)	Trend
Pilavapadin (LX9211) in DPNP	Q4’24: 10 mg dose identified; Phase 3 in 2025; partnership plans . Q1’25: robust 10 mg signal; EoP2 planned; partner outreach ongoing .	Secondary analyses completed; 10 mg confirmed; Sci. advisory board support; partner discussions underway; full data planned for Sept .	Positive momentum; partner validation increasing
SONATA-HCM (sotagliflozin)	Q1’25: powered for broad label; enrollment ramp; pragmatic KCCQ endpoint; no REMS expected .	>100 sites initiated across 20 countries; target 130 by Q3-end; non-obstructive enrollment advantage in U.S.; no competing registrational trials enrolling .	Accelerating execution; favorable enrollment backdrop
LX9851 (obesity) with Novo	Q1’25: exclusive license announced; IND-enabling on track; Novo to file IND; potential oral/combination use .	IND-enabling on track for 2025 completion; expected trigger of near-term milestones; Novo engagement “unbridled” .	On track; strong partner engagement
INPEFA commercialization	Q4’24: ceased active promotion; product remains available . Q1’25: anticipate stable U.S. revenue with limited promotion .	Q2 net product revenue $1.32M; YoY decline; focus on ex-U.S. via Viatris .	U.S. revenue subdued; ex-U.S. strategy advancing
Ex-U.S. Sotagliflozin via Viatris	Q1’25: UAE & Saudi filings; Canada expected .	First approval in UAE; filings in Saudi; Canada/Australia/NZ/Mexico/SEA targeted in 2025 .	Expanding footprint; royalty potential in 2026
Legislative/policy for non-opioid pain	Q1’25: market need emphasized .	Active engagement on Alternatives to PAIN Act; bipartisan support noted .	Supportive policy backdrop strengthening

Management Commentary

“We continue to make great strides against the strategy we set forth as an R&D focused company… Partnership discussions for pilavapadin are underway… IND-enabling work for LX9851 is on schedule… Patient enrollment in our SONATA Phase 3… is accelerating with site initiations now surpassing 100.” — CEO Mike Exton .
“We’re lowering our operating expense projections… Total OpEx now expected to be $105–$115M; R&D $70–$75M… SG&A $35–$40M… Remaining $17.5M of licensing revenue from Novo recognized in 2H as IND-enabling completes.” — CFO Scott Coiante .
“SONATA-HCM is the only ongoing registrational trial currently evaluating a treatment in both obstructive and non-obstructive HCM… surpassed 100 sites in 20 countries; target 130 by end of Q3 2025.” — CMO Craig Granowitz .
“Viatris has recently received its first approval of sotagliflozin in the UAE… filings in Saudi Arabia and expects to file in Canada, Australia, New Zealand, Mexico and Southeast Asia before year-end.” — CEO Mike Exton .

Q&A Highlights

Pilavapadin Phase 3 design and regulatory path: Expect two parallel DPNP trials (~600 pts each, 10 mg vs placebo, 12-week pain endpoint); EoP2 meeting not a gating item for partnering; active legislative tailwinds for non-opioid pain .
HCM competitive landscape and enrollment: No competing registrational HCM trials currently enrolling; early U.S. skew to non-obstructive enrollment; echo scheduling can be a rate-limiter for sites, but protocol burden is lower than CMIs .
LX9851 development expectations: Novo expected to pursue oral and combination strategies (e.g., with GLP‑1s), attacking Phase 1 “with vigor” post-IND .
Guidance details: OpEx guidance includes stock-based compensation; operating expense reductions reflect transfer of LX9851 costs to Novo and R&D prioritization .

Estimates Context

Q2 2025 Actual vs S&P Global Consensus

Metric	Consensus (Q2 2025)	Actual (Q2 2025)
Revenue ($)	$4,867,500*	$28,866,000
Primary EPS ($)	$(0.0775)*	$0.01
Estimates Count (EPS/Rev)	4 / 4*	—

Interpretation: Large beats on revenue and EPS were driven by recognition of $27.54M in LX9851 licensing revenue; management expects the remaining ~$17.5M to be recognized in 2H 2025 as IND-enabling work completes, suggesting consensus will need to adjust for this non-recurring phasing and a lower OpEx base going forward .

*Values retrieved from S&P Global.

Key Takeaways for Investors

Q2 upside was primarily non-recurring license recognition; normalize for this in run-rate models and focus on OpEx cuts that structurally lower cash burn .
2025 P&L now has clearer visibility: ~$17.5M of remaining LX9851 license revenue in 2H and materially lower OpEx (R&D $70–$75M; OpEx $105–$115M) .
Pilavapadin has de-risked Phase 3 parameters (10 mg, reproducible signal), with partner involvement likely; Sept data disclosure is an important catalyst .
SONATA-HCM execution benefits from an open enrollment field and pragmatic design (KCCQ primary), positioning sotagliflozin for broad utility across obstructive and non-obstructive HCM if successful .
Ex-U.S. leverage via Viatris (first UAE approval, multiple filings pending) could create 2026 royalty optionality with limited internal spend .
U.S. INPEFA revenue remains modest under reduced promotion; near-term commercial upside is likely ex-U.S. via partner markets rather than U.S. sell-through .
Balance sheet remains adequate to prosecute the pipeline post-debt reduction steps, but cash declined to $139.0M plus $29.0M restricted; watch cash trajectory vs clinical milestones and potential near-term LX9851 milestones .

Supporting Detail and Additional Disclosures

Non-GAAP: Company did not present non-GAAP metrics; results include stock-based compensation ($3.2M in Q2 2025) .
Cash and debt: Cash/investments $139.0M and restricted cash $29.0M at 6/30/25; long-term debt (net) $56.1M .
Conference call replay and slide deck available via investor relations site .

References: Q2 2025 8‑K and press release ; Q2 2025 earnings call transcript ; Q1 2025 8‑K/press and call ; Q4 2024 press release .

LEXICON PHARMACEUTICALS, INC. (LXRX)·Q2 2025 Earnings Summary