This has been quite the year for Lexicon Pharmaceuticals (NASDAQ:LXRX), as long-suffering shareholders have finally seen the stock do well on the back of optimism about the company's oral treatment
(telotristat etiprate) for the GI effects of carcinoid syndrome and its
progress into Phase III testing of its SGLT-1/SGLT-2 inhibitor
sotagliflozin for Type 1 diabetes. Now the company has achieved a more
surprising success, with Friday's announcement of a partnership with
diabetes giant Sanofi (NYSE:SNY) to develop and commercialize sotagliflozin for both Type 1 and Type 2 diabetes.
Lexicon
investors (or at least most of them) had pretty much written off the
chance of a major partnership more than a year ago, as the company had
been shopping the drug to partners for about two years without reaching
any sort of agreement. Now, though, the $1 billion-plus potential of
sotagliflozin in Type 2 diabetes is at least back on the table as a
point of discussion.
There are still plenty of unknowns here to
confound valuation. What sort of pricing will the company get for
telotristat etiprate? Will it become the go-to choice for patients
getting inadequate relief from somatostatin analogs? Does Sanofi have
the marketing muscle to drive meaningful market share with a drug that
will be quite late to market? Will sotagliflozin show any distinctive
efficacy or safety aspects in large-scale studies (good or bad) that
will impact its market potential? Will the company choose to rejuvenate
its internal drug development programs? These are all important
questions, but I would nevertheless argue that Lexicon remains
meaningfully undervalued today.
Read more here:
Lexicon Pharmaceuticals Produces Another Positive Surprise
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