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

Ipsen Needs Its Big Swing In Oncology To Connect

Given that I'm looking for French drugmaker Ipsen's (OTCPK:IPSEY) (IPN.PA) free cash flow to grow at mid-teens rate over the next 10 years, I don't think my estimates are all that conservative, but it still isn't enough to get me too excited about these shares. I do think there is a chance that the marketing partnership with Exelixis (NASDAQ:EXEL) can outperform and I definitely think that the company's opportunity in neuroendocrine tumors in the U.S. has historically been overlooked, but the company has a pretty wretched history of internal R&D and its M&A exploits have been no better.

I believe that it's generally not a good idea to invest in specialty pharma companies that lack strong internal R&D efforts (call it my "Valeant hypothesis" if you like), and I think the market has largely dialed in the value of this business. While I do see avenues for outperformance, I also see execution and competitive risks, as well as the concern that the company will squander future cash flows.

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Ipsen Needs Its Big Swing In Oncology To Connect

Seeking Alpha: Steady As She Goes For Lexicon Ahead Of Life-Changing Events

Life is going to get very interesting at Lexicon Pharmaceuticals (NASDAQ:LXRX) in the relatively near future. The company will know by the end of November whether the FDA will approve LXRX's lead drug telotristat etiprate ("telotristat"), and investors will get an initial look at top-line results of sotagliflozin in about one month.

Both of these qualify, in my opinion, as life-changing events for the company. Approval of telotristat is generally expected, and I believe the drug should generate over $400 million in peak sales, and accounts for about 60% of my estimated fair value. The remainder is tied to sotagliflozin, which has the potential to be a differentiated option for Type 1 and Type 2 diabetics and generate over $1 billion in peak sales. While I continue to believe that the telotristat opportunity is underappreciated by the Street, the reality is that strong sotagliflozin data is a "must have" for bullish sentiment on the stock at this point.

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Steady As She Goes For Lexicon Ahead Of Life-Changing Events

Seeking Alpha: Lexicon Moving Forward, But Nobody Really Seems To Care

Years of disappointment and misleading guidance from prior management put Lexicon Pharmaceuticals (NASDAQ:LXRX) in a deep hole with respect to Street sentiment, but the company's execution is helping it slowly dig its way out. This year (2016) should see the company get its first product approved by the FDA, as well as key pivotal data on the Type 1 diabetes program.

While I'd certainly count myself in the camp of "long-suffering investors", I'm still generally more bullish on Lexicon than the sell-side. I believe sales of the company's lead drug telotristat etiprate can total more than $500 million at peak, supporting a fair value above today's price on its own. There's considerably more room for debate about the potential (and potential value) of Lexicon's Sanofi-partnered (NYSE:SNY) diabetes program, not to mention Lexicon's future R&D development plans, but these shares look like a risky play with an interesting skew to outsized potential gains.

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Lexicon Moving Forward, But Nobody Really Seems To Care

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.

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A Long-Awaited Success For Lexicon Pharmaceuticals

Seeking Alpha: Lexicon Undervalued As It Approaches A Major Event

Lexicon Pharmaceuticals (NASDAQ:LXRX) has gone through many odd twists and turns as it has tried to migrate from a provider of drug targets to a developer of experimental compounds. Like most biotechs, Lexicon has had several clinical failures but has moved past those failures to continue developing the more promising candidates in its pipeline. Included among those twists and turns is an unusual ownership structure where an investor group effectively controls the company by virtue of its 60% ownership of the shares.

Adding to the strangeness is that the pipeline candidate that gets the most attention for Lexicon is not necessarily its highest-potential drug. While successful commercialization of sotagliflozin would be a significant event, the odds of the company gaining significant share in the large diabetes market aren't all that favorable. On the other hand, telotristat etiprate gets less attention but could actually be the more valuable drug to Lexicon today. As it stands, I still believe Lexicon offers a good potential return in spite of its high risk.

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Lexicon Undervalued As It Approaches A Major Event

Seeking Alpha: Ipsen In Good Shape

Most American investors are familiar with large European drug companies like Sanofi and Novartis (NVS), but the mid-cap drugmakers like Ipsen (OTCPK:IPSEY) don't get as much attention. That's unfortunate, as Ipsen is one of several high-quality smaller European pharmaceutical companies.

Ipsen shares don't look significantly underpriced today, but there could some developments that could drive shares higher. Phase III data on tasquinimod could make this drug a viable alternative in the crowded prostate cancer space, and Ipsen may be on the prowl for licensing or acquisition opportunities to take advantage of a new U.S. oncology sales infrastructure. I'd more interested in these shares closer to EUR 30, but they look like a decent enough hold at today's level.

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Ipsen In Good Shape

Allergan Winning Wall Street's Beauty Pageant

These are rough times for the medical world. Major pharmaceutical companies like Pfizer (NYSE:PFE) and Lilly (NYSE:LLY) and prominent device companies like Medtronic (NYSE:MDT) and Covidien (NYSE:COV) are limping and wheezing as investors worry about growth prospects in a tough economy and an even tougher FDA. 

It would be reasonable to think that if these companies (that are largely protected by serving legitimate medical needs and getting full reimbursement from health insurance) are struggling, a company with more exposure to elective and self-pay products would be in even worse shape. Well, that does not seem to be the case for Allergan (NYSE:AGN). Although Allergan is seeing a hit to growth, Wall Street still seems smitten with this largely cosmetic-oriented company.   

A Saggy (But Positive) Quarter
Allergan did manage to surpass the consensus expectations for the third quarter. Product sales rose almost 6% on an as-reported basis, with pharmaceutical sales growing more than 5% and device sales up more than 8% (both were higher on an ex-currency basis). Allergan foresees solid growth in its pharmaceutical portfolio (from drugs like Restasis and Lumigan) and Botox was up more than 4%, despite competition from Medicis (NYSE:MRX). 

Please click the link to read the full piece at Investopedia:
http://stocks.investopedia.com/stock-analysis/2010/Allergan-Winning-Wall-Streets-Beauty-Pageant-AGN-PFE-LLY-MDT-COV-MRX1103.aspx