Sunday, August 16, 2015

Seeking Alpha: A Long-Awaited Success For Lexicon Pharmaceuticals

Back in April of this year, I thought that the Street was focusing too much on the failure of Lexicon Pharmaceuticals (NASDAQ:LXRX) to find a partner for its diabetes drug sotaglifozin and the risks of its go-it-alone strategy focusing on development of the drug for Type 1 diabetes. In contrast, I thought there was an unappreciated opportunity in the company's Phase III asset for carcinoid patients refractory to somatostatin analogs (or SSAs) like octreotide, as Phase II results were encouraging and a global market opportunity of $1 billion could be in play.

On Monday morning Lexicon investors got the news they were hoping to see. Although the company didn't offer all that many specifics, management did announce that the Phase III TELESTAR study did see the drug (telotristat etiprate) achieve a statistically significant benefit for the primary endpoint. The data that the company did release suggest solid efficacy relative to placebo, with the magnitude of benefit improving over time and a generally good safety/tolerability profile.

With this result, there is an outside chance that the company could have its first drug approval in hand before the end of the 2016. This clinical update adds about $4 to my fair value estimate, though risks remain in securing approval and commercializing the drug in the U.S.; partner Ipsen (OTCPK:IPSEY) will handle marketing outside of the U.S. and Japan.

Read more here:
A Long-Awaited Success For Lexicon Pharmaceuticals

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