Lexicon Has Cleaned Up Its Balance Sheet To Take Another Run At A Meaningful Commercial Product

In a relatively short period of time Lexicon Pharmaceuticals (NASDAQ:LXRX) management has restructured the company around what is effectively a single-asset development strategy. I won't call the LX9211 development program a "hail Mary" play, but pain drug development is notoriously difficult, and if LX9211 doesn't work, Lexicon won't have the resources to leverage whatever else may be on the shelf. Management also still believes they can find a path forward for sotagliflozin in Type 1 diabetes, but I consider that a long shot with even worse odds than pain drug development.

My risk-adjusted fair value for Lexicon works out to a fair value of $2.50 per share. While that is clearly well above today's price, investors need to remember that LX9211 drives all of that value and pain drug development has historically offered poor outcomes, with even the drugs that make it through clinical development often falling short of revenue expectations.

 

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Lexicon Has Cleaned Up Its Balance Sheet To Take Another Run At A Meaningful Commercial Product