Lexicon Pharma (LXRX) Tops Q3 EPS by $1.22, Revenues Beat

Lexicon Pharma (NASDAQ: LXRX) reported Q3 EPS of $1.95, $1.22 better than the analyst estimate of $0.73. Revenue for the quarter came in at $294.45 million versus the consensus estimate of $64.25 million.

Third Quarter 2019 Financial Highlights

• Revenues: Revenues for the three months ended September 30, 2019 increased to $294.4 million from $7.0 million for the corresponding period in 2018, primarily due to an increase of collaborative revenues of $260 million from the termination of the alliance with Sanofi and recognition of the remaining amount of $23.5 million allocated to performance obligations from the initial agreement with Sanofi and an increase in net product revenue. Net product revenues for the three months ended September 30, 2019 consisted of $8.4 million from net sales of XERMELO in the U.S., which were up 33% from the prior year quarter.
• Cost of Sales: Cost of sales related to sales of XERMELO for each of the three months ended September 30, 2019 and 2018 was $0.6 million.
• Research and Development (R&D) Expenses: Research and development expenses for the three months ended September 30, 2019 increased to $26.7 million from $13.8 million for the corresponding period in 2018, primarily due to an increase in external clinical development costs related to sotagliflozin subsequent to the termination of the alliance with Sanofi, in which Lexicon regained the rights and responsibilities for development and commercialization for sotagliflozin.
• Selling, General and Administrative (SG&A) Expenses: Selling, general and administrative expenses for the three months ended September 30, 2019 decreased to $13.9 million from $15.6 million for the corresponding period in 2018, primarily due to decreased marketing costs.
• Impairment Loss on Intangible Asset: An impairment loss for the three months ended September 30, 2019 of $28.6 million was recognized to an indefinite lived intangible asset associated with Lexicon’s 2010 acquisition of Symphony Icon, due to the decision to terminate research and development activities related to a program for irritable bowel syndrome that was among the assets acquired.
• Income Tax Benefit: An income tax benefit of $6.0 million for the three months ended September 30, 2019 was recognized in connection with the impairment loss on the indefinite lived intangible asset, which resulted in a decrease to the deferred tax liability and created an income tax benefit.
• Net Income (Loss): Net income for the three months ended September 30, 2019 was $226.1 million, or $1.95 per diluted share, as compared to a net loss of $27.4 million, or a loss of $0.26 per share, in the corresponding period in 2018. For the three months ended September 30, 2019 and 2018, net income included non-cash, stock-based compensation expense of $3.6 million and $2.9 million, respectively.
• Cash and Investments: As of September 30, 2019, Lexicon had $296.3 million in cash and investments, as compared to $160.1 million as of December 31, 2018. The cash position as of September 30, 2019 includes proceeds of $208 million in connection with the termination of the alliance with Sanofi.

“We continue to make good progress on our XERMELO business, with XERMELO net sales growing more than 30% in the third quarter of 2019 versus the same period in 2018,” said Lonnel Coats, Lexicon’s president and chief executive officer. “We now have full rights for Zynquista. We expect to complete the core Phase 3 studies in type 2 diabetes in the near term and anticipate being in a position to file for regulatory approval for that indication in the U.S. and in Europe in the first half of 2020. We continue to have productive dialogue with the FDA on a path forward for Zynquista in type 1 diabetes in the U.S.”

For earnings history and earnings-related data on Lexicon Pharma (LXRX) click here.

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