Weird Results From Lexicon

The company behind one of my smallest investment positions, Lexicon Pharmaceuticals (Nasdaq: LXRX) announced some puzzling clinical trial data today.

The company announced top-line Phase 2a results on LX2931 - a drug LXRX is developing for rheumatoid arthritis. Although the drug was well-tolerated, it may not be all that effective. The 70mg and 110mg doses showed no statistically significant improvements versus a placebo in the ACR20 score.

ACR20 is a commonly-used metric that means xx% of patients saw a 20% improvement in tender/swollen joints and 20% or better improvement in 3 of 5 other criteria (sed rate, patient assessment, physician assessment, pain, disability). Large trials of RA drugs will often also examine ACR50 and ACR70 rates, as ACR20 is generally seen as the minimum amount of efficacy needed to be clinically useful).

Anyways, the 150mg dose of LX2931 showed a response of 60% (versus 49% in placebo).

What's weird about this is the high placebo response rates. Looking at trials of Abbott's (NYSE: ABT) Humira and Amgen's (Nasdaq: AMGN) Enbrel, you see ACR20s in the high 50's (Abbott) to mid 70s (Amgen) (though these were not all single-agent studies!), but placebo response rates in the low-teens to mid-30s. So why did the patients in this study see such a high placebo response? And even more to the point, if there was something unusual going on, that means you have to wonder whether there was any worthwhile response to the drug at all.

If LXRX can get the partnership and/or funding to continue studying this drug and the drug shows high 50s/low 60s response rate with normal historical placebo response, the company may have something here, especially as the side-effects appear to be pretty mild (though larger trials will have to establish/confirm this). After all, the market for rheumatoid arthritis drugs is a multi-billion dollar opportunity and there's always room for something better, safer, cheaper or some combination of the three.

This is definitely not the sort of clean, slam-dunk trial success that this company/stock needed. It's a tiny position for me, so I'm going to ride it out and see what happens. What's more, it's the company's efforts in diabetes that seem most exciting and most interesting today ... and if somebody is looking for an *extremely* risky early-stage biotech, that might be a good reason to check this one out.

Disclosure - I own share of LXRX