On Thursday, Lexicon Pharmaceuticals (NASDAQ:LXRX), traded on NASDAQ:LXRX, maintained its Buy rating and $10.00 stock price target from H.C. Wainwright. The affirmation follows Lexicon's announcement on Wednesday of a strategic partnership with Viatris Inc. (NASDAQ:VTRS), which has obtained the rights to market Lexicon's drug sotagliflozin outside the U.S. and European Union.
The collaboration is set to expand the global reach of sotagliflozin, also known as sota, a dual SGLT2/SGLT1 inhibitor with applications in various medical conditions. Currently, sota is available in the U.S. for heart failure under the brand INPEFA, and in Europe, it is marketed for type 1 diabetes (T1D) as Zynquista.
Moreover, sota is in the advanced stages of clinical trials for T1D patients who also suffer from chronic kidney disease (CKD), with a critical FDA Advisory Committee meeting scheduled for October 31. The drug is also progressing towards Phase 3 trials for hypertrophic cardiomyopathy (HCM), which are expected to commence in the second half of 2024.
Under the terms of the agreement, Lexicon retains commercialization rights within the U.S. and E.U. and will receive a $25 million upfront payment from Viatris. Furthermore, Lexicon is eligible for up to $12 million in regulatory milestones and as much as $185 million in sales milestones.
The deal also includes tiered royalties on annual net sales, ranging from the double digits to the upper teens. Viatris will be responsible for all regulatory and commercialization efforts in the licensed regions, while Lexicon will be the supplier of sota at a pre-determined transfer price.
The partnership with Viatris, a company with experience in launching cardiovascular therapeutics, is expected to bolster the commercial potential of sota globally. This collaboration offers Lexicon multiple avenues for revenue and growth, considering sota's wide applicability in treating cardiometabolic complications.
In other recent news, Lexicon Pharmaceuticals has been making significant strides in the biopharmaceutical industry. The company has entered into an exclusive licensing agreement with Viatris Inc. for the development and commercialization of the diabetes drug sotagliflozin outside the United States and Europe. Lexicon is set to receive an upfront payment of $25 million from Viatris, with potential for additional regulatory and sales milestone payments.
Moreover, Lexicon reported a net loss of $53.4 million in Q2 2024, with revenues of $1.6 million, primarily from sales of INPEFA, the marketed form of sotagliflozin. In terms of executive changes, Jeffrey L. Wade has ended his tenure as president and COO, with Kristen L. Alexander stepping into the role of principal financial officer.
Analysts from Piper Sandler and H.C. Wainwright have maintained positive ratings for Lexicon, highlighting the potential of the company's drugs. The company is also preparing for an FDA review of Zynquista and has initiated patient enrollment for the Phase 3 SONATA trial of sotagliflozin in hypertrophic cardiomyopathy.
Lexicon anticipates top-line data for the LX9211 study in diabetic peripheral neuropathic pain by Q2 2025. These are among the recent developments at Lexicon Pharmaceuticals.
InvestingPro Insights
Lexicon Pharmaceuticals' recent strategic partnership with Viatris aligns well with several key financial indicators and market trends. According to InvestingPro data, Lexicon's revenue growth has been impressive, with a 794.59% increase over the last twelve months as of Q2 2024. This substantial growth could be further accelerated by the new partnership and potential market expansions for sotagliflozin.
InvestingPro Tips highlight that Lexicon holds more cash than debt on its balance sheet, which is crucial for a biotech company investing heavily in research and development. This strong financial position could provide the necessary runway for Lexicon to capitalize on the opportunities presented by the Viatris partnership and ongoing clinical trials.
Another relevant InvestingPro Tip notes that analysts anticipate sales growth in the current year, which aligns with the expected revenue streams from the Viatris deal, including the $25 million upfront payment and potential milestone payments.
For investors seeking a more comprehensive analysis, InvestingPro offers 10 additional tips that could provide deeper insights into Lexicon's financial health and market position.
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