H.C. Wainwright maintains $4 target on Lexicon shares

On Monday, H.C. Wainwright reaffirmed their Buy rating and $4.00 price target on Lexicon Pharmaceuticals (NASDAQ:LXRX), whose shares currently trade at $0.57 and have surged over 56% in the past week. The reaffirmation follows a significant licensing agreement with Novo Nordisk (NYSE:NVO) on March 28. The deal focuses on the development of Lexicon’s early-stage oral small molecule, LX9851, aimed at treating obesity and related metabolic disorders. According to InvestingPro data, analyst targets for LXRX range from $0.80 to $6.00, suggesting significant upside potential.

Under the licensing agreement’s terms, Lexicon, currently valued at $206 million in market capitalization, will complete the Investigational New Drug (IND)-enabling activities for LX9851. Afterward, Novo Nordisk will take charge of filing the IND and will obtain exclusive worldwide rights to develop, manufacture, and commercialize LX9851 for all potential indications. Lexicon stands to gain up to $1 billion in combined upfront payments and potential development, regulatory, and sales milestone payments. This includes up to $45 million upfront, $485 million for specific regulatory and commercial launch milestones, and $475 million for achieving certain sales milestones.

Additionally, Lexicon is set to receive tiered royalties on annual net sales of LX9851, ranging from single-digit to low double-digit percentages. The preclinical studies of LX9851 have shown promising results, indicating its capability to reduce fat mass without impacting lean body mass and to enhance and sustain weight loss effects, even after discontinuing the use of semaglutide, a GLP-1 receptor agonist.

H.C. Wainwright’s analyst views the agreement with Novo Nordisk, a leading company in the diabetes and obesity sector, as a validation of LX9851’s potential as a novel, non-incretin option for metabolic disorders. The firm anticipates further regulatory and clinical updates and has reiterated its Buy rating and price target for Lexicon Pharmaceuticals. InvestingPro analysis shows the company maintains a healthy balance sheet with more cash than debt and a strong current ratio of 5.44. Discover 12 additional exclusive ProTips and comprehensive financial analysis in the Pro Research Report, available with an InvestingPro subscription.

In other recent news, Lexicon Pharmaceuticals reported a smaller-than-expected loss for the fourth quarter of 2024, with an earnings per share (EPS) of -$0.09, surpassing the forecast of -$0.12. The company also achieved significant revenue growth, posting $26.6 million, well above the anticipated $7.16 million. Additionally, Lexicon announced an exclusive licensing agreement with Novo Nordisk for the development and commercialization of its obesity treatment candidate, LX9851, potentially bringing in up to $1 billion in payments, including $75 million in upfront and near-term milestones. The partnership allows Novo Nordisk to handle the subsequent IND filing, development, manufacturing, and commercialization processes. Lexicon will receive tiered royalties on net sales of LX9851. CEO Mike Exton expressed optimism about the deal’s potential to strengthen Lexicon’s financial position and accelerate its research and development efforts. Meanwhile, the company is continuing to focus on innovative treatments, such as Pilavapatin for diabetic peripheral neuropathic pain and LX9851 for obesity.

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