$LXRX DD (Update) — $0.70 SP biopharma with 82.61% ($235,796,000) institutional holding and major upcoming data readout; potential to cause a major short-squeeze event

I am sharing this across a few subreddits. Given how all research is highly analytical, sourced, and in-depth I hope this doesn't cause issues with any readers! Always do your own due diligence before making an investment decision!

$LXRX DD

Primary DD https://docs.google.com/document/d/117ILkfcvuS8bhmYQmRGJbUFCA9vYvQn9vc9hfcJ2UVs/edit?usp=sharing

Update DD https://docs.google.com/document/d/1xn9HyClI2lf0pZMlciJMi3LnkowysUMznOHulZcKD5A/edit?usp=sharing

━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━

Opportunity Type — Medium term (catalyst by end of Q1 25 / 1-5 weeks)
Risk — Medium/High

━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━

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.

━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━

EXECUTIVE SUMMARY

  • UPCOMING CATALYST → LXRX is approaching a critical Q1 2025 catalyst (by end of March 2025) with Phase IIb top-line results for LX9211.
    • CEO Mike Exton has said he is "optimistic" for the upcoming data readout, highlighting that the future of the company depends on a positive data readout.
    • Phase 2 results tend to have a 4x greater impact than phase 1 results.
  • MASSIVE INSTITUTIONAL INTEREST → Institutional confidence is high, with institutions holding $235.8M (82.6% of total shares).
    • Since June, around 100,000,000 shares have been added.
  • HIGHEST OPTIONS VOLATILITY ON THE NASDAQ → LXRX has the highest implied options volatility on NASDAQ (IV30 at 321%), indicating strong market expectations of significant price movement, likely upward, providing that there is a positive data release.
  • SIGNIFICANT SHORT INTEREST → LXRX has accrued significant short interest, stemming from the FDA rejection of 50% of use cases for its Sotagliflozin drug.
    • LX9211 is unrelated, meaning that a positive data-readout could easily force shorts to cover 43,025,344 shares. Considering that the daily average is 4,000,000 and the days-to-cover stands at just over 10 days, this could lead to a major short-squeeze event.
  • LOW IMPLIED RETAIL FLOAT → Due to massive institutional holdings, the actual retail float is just 58,672,590 in comparison to the total shares outstanding of 361,490,000.
    • This means that there is a stronger potential for a squeeze event.

━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━

THE FACTS

Institutional Ownership Breakdown

Shares 300,000,000
% of float 82.6%
Value of holdings ($) 235,796,000
Implied retail float 58,672,950

Short Interest Breakdown

Shares 43,025,344
% of float 23.61%
Days to cover 10.42

━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━

ADDENDUM

This research report is compiled by Montgolfier Stocks, an investing community dedicated to finding low-risk and undervalued stocks. Our reports are good for traders who don't have the time to spend entire days researching/trading. We compile them for fun, and simply enjoy sharing them.

We also want to create a professional, research-oriented and task-focused online community. No rockets, no hype, no exaggerations - just the facts (and bear cases and counterarguments are wanted and essential so that we can make the best investment decisions possible based on a full availability of information).

If you would like to join, the discord can be found in the google docs!

As always, we are completely transparent so feel free to ask me any questions over discord since I'm not active on Reddit other than to share these reports.

I have a stop-loss set at 62 cents which I will periodically assess.

━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━