On Thursday, H.C. Wainwright adjusted its outlook on Lexicon Pharmaceuticals (NASDAQ:LXRX), reducing the price target to $6.00 from the previous $10.00, while retaining a Buy rating on the stock.
This adjustment comes after the Advisory Committee (AdCom) meeting concerning Lexicon's sotagliflozin for treatment in Type 1 Diabetes (T1D) with Chronic Kidney Disease (CKD). The committee's vote on the drug's indication for glycemic control in a specific patient population defined by Lexicon resulted in 3 Yes and 11 No votes.
The AdCom, which convened yesterday, engaged in a thorough review of the trial designs and data from the inTandem and SCORED studies. Despite the majority negative vote, the Food and Drug Administration (FDA) had previously indicated a willingness to consider a new patient population that might benefit most from sotagliflozin's risk/benefit profile. This flexibility allowed the voting panel to deliberate on whether the data demonstrated benefits without increased risks across various eGFR categories.
During the discussions, AdCom members provided their rationale for their votes. Although there were seven definitive No votes, the analyst from H.C. Wainwright noted that four out of the 11 No votes seemed to recognize the potential for approving sotagliflozin for an alternative eGFR subpopulation with values ranging from ≥60 to
The decision to maintain a Buy rating but reduce the price target was primarily influenced by the exclusion of Zynquista from revenue projections, pending further clarity from the FDA on the drug's approval path. The analyst expressed caution regarding the prediction of the outcome for the upcoming Prescription Drug User Fee Act (PDUFA) date in December. It is anticipated that the FDA will request a new study in the approved target population, leading to the possibility of a second Complete Response Letter (CRL) for the supplemental New Drug Application (sNDA).
In other recent news, Lexicon Pharmaceuticals has made significant strides in its operations. The company reported new findings from its Phase 3 SCORED clinical trial, indicating renal benefits of its drug sotagliflozin for patients with diabetic kidney disease. In financial updates, Lexicon disclosed a net loss of $53.4 million in Q2 2024, with revenues of $1.6 million, primarily from sales of INPEFA, the marketed form of sotagliflozin.
Lexicon has also entered into an exclusive licensing agreement with Viatris for the commercialization of sotagliflozin outside of the United States and Europe, with a $25 million upfront payment from Viatris and potential for additional milestone payments. Analyst firms Piper Sandler and H.C. Wainwright have maintained positive ratings for Lexicon, indicating the potential of the company's drugs.
In other developments, Jeffrey L. Wade ended his tenure as president and COO, with Kristen L. Alexander stepping into the role of principal financial officer. Lexicon is preparing for an FDA review of Zynquista and has initiated patient enrollment for the Phase 3 SONATA trial of sotagliflozin in hypertrophic cardiomyopathy. The company also expects top-line data for the LX9211 study in diabetic peripheral neuropathic pain by Q2 2025.
InvestingPro Insights
Despite the recent setback in Lexicon Pharmaceuticals' (NASDAQ:LXRX) AdCom meeting for sotagliflozin, InvestingPro data reveals some interesting financial aspects of the company. As of the last twelve months ending Q2 2024, Lexicon's revenue growth stands at an impressive 794.59%, with quarterly revenue growth in Q2 2024 at 419.56%. This substantial growth aligns with an InvestingPro Tip indicating that analysts anticipate sales growth in the current year.
However, it's crucial to note that Lexicon is currently not profitable, with a negative gross profit of $60.97 million in the last twelve months. This is reflected in another InvestingPro Tip, which states that the company is quickly burning through cash. This information is particularly relevant given the potential need for additional studies following the AdCom's decision, which could further strain the company's financial resources.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Lexicon Pharmaceuticals, providing a deeper understanding of the company's financial health and market position.
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