LLY - Lexicon Pharmaceuticals: Moving To Maximize The Value Of Its Core Asset

2024-03-12 03:57:11 ET

Summary

• Lexicon Pharmaceuticals is actively working to create shareholder value by pursuing new indications for the lead drug sotagliflozin.
• The company reported $0.7 million in Inpefa sales for Q4 2023, below expectations, but these are still early days for what is a practice-changing pharmaceutical.
• Lexicon announced a potential new indication for sotagliflozin in hypertrophic cardiomyopathy and a path forward for the drug in Type 1 diabetes with chronic kidney disease.
• Management executed a large but dilutive private financing that should put liquidity concerns to rest in the near term and give the company the opportunity to fully invest in sotagliflozin/Inpefa.
• Lexicon could be substantially undervalued today, but there are significant execution, clinical, and regulatory risks that investors must consider.

Credit where due – while the Lexicon Pharmaceuticals (LXRX) investment thesis still has significant execution risk, management is not sitting by idly and is instead actively working to create shareholder value. Time will tell whether the company’s marketing strategy for Inpefa (sotagliflozin) will succeed in building meaningful share in the large congestive heart failure (or CHF) market, but the company’s persistence with sotagliflozin in other indications could well pay dividends, as could the development of LX9211 in diabetic peripheral neuropathy....

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