Lexicon Still Heavily Dependent On Its Pipeline

Although Lexicon Pharmaceuticals (LXRX) has done what many biotechs fail to do, getting a drug through the clinical trial and FDA approval processes and onto the market, the commercialization of Xermelo really hasn’t helped the company or the stock, as the shares are quite a bit lower than when the drug was first approved and launched. At the same time, Lexicon has seen other pharmaceutical companies announce relatively solid data for their SGLT-2 drugs in Type 1 diabetes, the same market that Lexicon hopes to target (in partnership with Sanofi (SNY)) with sotagliflozin (or “sota”).

I continue to believe that the market is undervaluing the opportunity Lexicon has in the diabetes space with sota, but investors are in no mood to give the benefit of the doubt to a company that has long tested their patience. Accordingly, while I do see value here (potentially significant value), this may not be the easiest way to generate alpha, particularly as the launch of sota could be more challenging than once hoped.

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Lexicon Still Heavily Dependent On Its Pipeline