Lexicon Pharmaceuticals (LXRX) PT Lowered to $5 at Leerink Partners

Leerink Partners analyst Roanna Ruiz lowered the price target on Lexicon Pharmaceuticals (NASDAQ: LXRX) to $5.00 (from $6.00) while maintaining a Outperform rating.

The analyst comments "Bottom Line: We believe the majority negative FDA Advisory Committee (AdCom) panel vote of 11 NO / 3 YES on Zynquista’s benefit-risk profile in a more targeted population of Type 1 diabetes (T1D) patients with chronic kidney disease (CKD) (T1D+CKD) indicates an “uphill battle” for Zynquista, and hence we lowered its POS (65% to 25%) and peak sales (~$225M to ~$100M) in our model, which reduced our PT from $6 to $5. That said, Zynquista was an incremental part of our valuation, and thus we constructively think this could be a “clearing event” that refocuses investors on other large opportunities in Lexicon's pipeline. Recall, Lexicon defined their T1D+CKD population as: eGFR ≥ 45 to <60 ml/min/1.73 m2 or eGFR ≥ 60 ml/min/1.73 m2 and UACR ≥ 30 mg/g. The AdCom panel debated several points in line with our prior take on the briefing documents, [LINK] including: a) insufficient available data to support conclusive benefit/risk assessment of Zynquista in the proposed subpopulations, b) challenges in extrapolating from Lexicon's Type 2 diabetes (T2D) Ph.3 SCORED data to impact of Zynquista use in T1D patients, and c) potential need for more deliberate risk mitigation strategies for diabetic ketoacidosis (DKA). Given this setback, we think a CRL may be possible by the PDUFA date on Dec. 20, 2024. However, despite the AdCom results, we continue to believe that Lexicon remains underappreciated at current levels, as Inpefa's heart failure launch could gain traction into 2025 as the company refines its commercial efforts, and Lexicon should still have multiple shots on goal across other pipeline programs targeting high unmet-need indications like hypertrophic cardiomyopathy (HCM), diabetic peripheral neuropathic pain (DPNP), and obesity (our initiation HERE). Reit. OP."

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