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On Tuesday, H.C. Wainwright analyst Mitchell Kapoor maintained a Buy rating on Lexeo Therapeutics (NASDAQ:LXEO) with a steady price target of $23.00, representing significant upside from the current price of $1.79. This aligns with the broader analyst consensus, as InvestingPro data shows strong institutional confidence in the stock. Kapoor emphasized the promising results from the updated Phase 1/2 data for LX2006, Lexeo's one-time AAV gene therapy aimed at treating Friedreich's ataxia cardiomyopathy (FA CM).
The latest data set from Lexeo included 16 patients who were treated with LX2006 across three different dosage levels. Notably, a significant proportion of patients with abnormal left ventricular mass index (LVMI) at baseline experienced a reduction in LVMI, meeting the FDA-aligned threshold for the co-primary endpoint in the LX2006 pivotal trial design for FA CM. While the company maintains a healthy balance sheet with more cash than debt and a current ratio of 5.52, InvestingPro analysis indicates the company is burning through cash rapidly, with negative EBITDA of $105.14 million in the last twelve months.
Kapoor highlighted that all patients assessed three months post-treatment showed an increase in frataxin expression compared to baseline. This is particularly noteworthy as increased frataxin levels are a key therapeutic goal in FA CM treatment. The highest dose of LX2006 showed that three out of four patients achieved more than a 100% increase in frataxin expression.
The analyst also pointed out the favorable safety profile of LX2006, with no signs of frataxin over-expression and no liver enzyme elevations. This safety aspect was underscored as significant, considering the liver-related issues encountered by other genetic medicines companies.
Summarizing the findings, Kapoor expressed a continued positive outlook on Lexeo's prospects in treating FA CM. The reiteration of the Buy rating and the 12-month price target of $23 per share reflects confidence in the therapy's potential and Lexeo's position in the market. With a current market capitalization of just $59.42 million, InvestingPro analysis suggests the stock is currently undervalued, though investors should note that comprehensive financial analysis and 14 additional ProTips are available through the InvestingPro platform, including detailed insights into the company's valuation metrics and growth potential.
In other recent news, Lexeo Therapeutics reported a fourth-quarter loss of $0.78 per share, missing analyst estimates of a $0.72 loss. Despite this, the company shared promising interim data from its clinical trials, which resulted in a significant 40% surge in its stock price. Lexeo announced that its LX2020 HEROIC-PKP2 Phase 1/2 trial showed substantial increases in PKP2 protein expression and reductions in premature ventricular contractions, highlighting the potential of its gene therapy programs. Furthermore, Lexeo provided updates on its LX2006 program for Friedreich's ataxia cardiomyopathy, revealing alignment with the FDA on using frataxin expression as an endpoint.
In terms of financial outlook, Leerink Partners adjusted their price target for Lexeo from $19 to $18, while maintaining an Outperform rating. This adjustment follows Lexeo's recent clinical updates, which Leerink views as a positive development despite a tempered market reaction. H.C. Wainwright also reaffirmed a Buy rating with a $23 price target, citing Lexeo's progress in its LX2006 drug development. Both firms remain optimistic about Lexeo's future prospects, with significant developments expected in 2025. The company ended 2024 with $128.5 million in cash and investments, projecting sufficient funds to continue operations into 2027.
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