With the initiation of a Phase III trial, LX1032 just became the company’s most advanced compound, followed by LX4211, a SGLT-1/SGLT-2 inhibitor for the treatment of Type-2 diabetes. Analysts are focusing primarily on the opportunity in LX4211, as quality diabetes treatments represent a major market opportunity. Bristol-Myers Squibb (NYSE:BMY) purchased Amylin Pharmaceuticals for $7B this year in pursuit of the company’s Type-2 diabetes franchise. The uniqueness of the dual-inhibitor makes LX4211 an appealing target to large pharmaceuticals, and a partnership seems possible in the near future as the total diabetes care market continues to grow, expected to top $100B by 2016. BMY, Johnson and Johnson (NYSE:JNJ), and Eli-Lilly (NYSE:LLY) all have SGLT-2 inhibitor compounds in late development, validating the mechanism of LX4211, and Lexicon’’s candidate could be differentiated with the dual activity and potentially, lower GI side effects. The potential for telotristat etiprate should not be overlooked, however, as the drug may be able to satisfy a major unmet medical need. Carcinoid Syndrome patients have only one option in treatment, somatostatin analog therapy. Bears point out that the treatment is ruled largely by generics, severely inhibiting LX1032‘s ability to displace the existing therapy. Almost all patients eventually become refractory to the therapy, however, leaving LX1032 as the only potential product for patients who become resistant to somatostatin therapy. The FDA seems to agree, as telotristat etiprate received Fast-Track designation, as well as Orphan Drug status, indicating that the regulatory body recognizes the medical necessity. Carcinoid syndrome is a chronic condition caused by neuroendocrine tumors, often in the GI tract, and can result in malnutrition and heart disease in the long-term.
Notably, Lexicon has sufficient cash and equivalents, plus short-term investments, to continue operating for at least the next year without a capital raise. The company plans to initiate a Phase III trial for LX4211 in early 2013, and while it is still far from marketing either product, the stock may see more action as partnership discussions continue and excitement builds for the LX4211 and LX1032 trials.