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PropThink: Diabetes, Carcinoid Syndrome Drive Lexicon's Late-Stage Pipeline

Fri, 10/12/2012 - 7:36am
The Associated Press

By Jake King

Two pertinent announcements from Lexicon Pharmaceuticals (NASDAQ:LXRX) are giving shares a 7% lift on Friday morning. The company reported top-line data from the latest Phase II trial of telotristat etiprate (LX1032) in Carcinoid Syndrome (CS), and initiated a 105-patient Phase III trial testing the drug on patients that are refractory to somatostatin analog therapy, the current standard-of-care and only approved treatment for CS.

With the initiation of a Phase III trial, LX1032 just became the company's most advanced compound, followed by LX4211, a SGLT-1/SGLT-2 inhibitor for the treatment of Type-2 diabetes. Analysts are focusing primarily on the opportunity in LX4211, as quality diabetes treatments represent a major market opportunity. Bristol-Myers Squibb (NYSE:BMY) purchased Amylin Pharmaceuticals for $7B this year in pursuit of the company's Type-2 diabetes franchise. The uniqueness of the dual-inhibitor makes LX4211 an appealing target to large pharmaceuticals, and a partnership seems possible in the near future as the total diabetes care market continues to grow, expected to top $100B by 2016. BMY, Johnson and Johnson (NYSE:JNJ), and Eli-Lilly (NYSE:LLY) all have SGLT-2 inhibitor compounds in late development, validating the mechanism of LX4211, and Lexicon''s candidate could be differentiated with the dual activity and potentially lower GI side effects. The potential for telotristat etiprate should not be overlooked, however, as the drug may be able to satisfy a major unmet medical need. Carcinoid Syndrome patients have only one option in treatment, somatostatin analog therapy. Bears point out that the treatment is ruled largely by generics, severely inhibiting LX1032's ability to displace the existing products. Almost all patients eventually become refractory to the therapy, however, leaving LX1032 as the only potential product for patients who become resistant. The FDA seems to agree, as telotristat etiprate received Fast-Track designation, as well as Orphan Drug status, indicating that the regulatory body recognizes the medical necessity. Carcinoid syndrome is a chronic condition caused by neuroendocrine tumors, often in the GI tract, and can result in malnutrition and heart disease in the long-term.

Notably, Lexicon has sufficient cash and equivalents, plus short-term investments, to continue operating for at least the next year without a capital raise. The company plans to initiate a Phase III trial for LX4211 in early 2013, and while it is still far from marketing either product, the stock may see more action as partnership discussions continue and excitement builds for the LX4211 and LX1032 trials.

Click here to read this article in its original form at PropThink.com

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PropThink is an intelligence service that delivers long and short trading ideas to investors in the healthcare and life sciences sectors. Our focus is on identifying and analyzing technically-complicated companies and equities that are grossly over or under-valued. We offer daily market coverage, weekly feature stories, and a newsletter to investors who subscribe on PropThink.com. To learn more, follow us on Twitter or visit us at http://www.propthink.com.

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You should assume that as of the publication date of any report or letter, PropThink, LLC and persons or entities with whom it has relation ships (collectively referred to as "PropThink") has a position in all stocks (and/or options of the stock) covered herein that is consistent with the position set forth in our research report. Following publication of any report or letter, PropThink intends to continue transacting in the securities covered herein, and we may be long, short, or neutral at any time hereafter regardless of our initial recommendation. To the best of our knowledge and belief, all information contained herein is accurate and reliable, and has been obtained from public sources we believe to be accurate and reliable, and not from company insiders or persons who have a relationship with company insiders. PropThink was not compensated to publish this article. Our full disclaimer is available at  .

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