LXRX- DD Report Feb 13, 2024

$LXRX — DD Report #4 / 13.02.25Full

Report: https://docs.google.com/document/d/117ILkfcvuS8bhmYQmRGJbUFCA9vYvQn9vc9hfcJ2UVs/edit?usp=sharing
Our considerations
Opportunity Type — Medium term (catalyst by end of Q1 25 / 1-5 weeks)
Risk — Medium

Overview: $LXRX is a stock that appears to have found a comfortable support-level at $0.66, with a maximum potential downside of $0.62. With expected upcoming catalysts related to the publication of phase 2b topline data for the company’s novel LX9211 drug, this offers the opportunity for an attractive safe investment with low downside and high potential upside.

Upcoming catalyst: Lexicon Pharmaceuticals began enrollment for their phase 2b study of LX9211 on November 26th 2024. Given that topline data is typically published at least 12 weeks onwards, we can expect topline results to be published between the 18th February and mid-March 2025.
The market has shown a history of reacting positively to previous data readouts, meaning that we can expect the same for phase 2b readout; although, possibly at a larger scale.

This is because phase 2 results tend to have a 4x greater impact than phase 1 results.

Low dilution risk: Lexicon Pharmaceuticals has $268,000,000 in total assets, providing them with an extended cash runway of just over a year based on a burn rate of around $200,000,000. Consequently, we believe that there is relatively low risk of dilution in the short-term.

Commercial licensing deal: $LXRX experienced a significant price depreciation in recent months, caused by an FDA ruling that the risks of their primary Sotafiglozin drug do not exceed the benefits. Despite this, the drug still continues to be marketed outside Europe, where revenues have increased year-on-year. Moreover, the drug continues to be used for those with heart failure under the brand-name “Inepfa”. Similarly, a $25,000,000 licensing deal was struck with distributor Viatris towards the end of 2025. Consequently, we believe that the depreciation caused by the FDA ruling was largely an overreaction, and news relating to the topline data readout should trigger a significant correction. RISK WARNING: Lexicon Pharmaceuticals has a relatively large float of 346,270,000, which may be too large for some investors interested in playing penny stocks. Whilst we usually target low-float stocks, in consideration of other factors, we do not view this as a major concern, especially given the large institutional ownerships, however we still believe that this information is worth considering when making an investment decision. DISCLAIMER: This is not financial advice. Please conduct your own due diligence before making any investment decisions. Affiliates of Montgolfier Stocks currently own positions in $SNOA, and have not been paid or solicited by anyone to conduct research

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