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On Tuesday, Leerink Partners made a significant adjustment to the price target of Lexeo Therapeutics (NASDAQ:LXEO) shares, reducing it to $10.00 from the previous $16.00, while still maintaining an Outperform rating on the stock. The stock, currently trading at $2.64, has experienced significant volatility, falling over 80% in the past year. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value assessment, with analysts maintaining targets ranging from $15 to $28. The adjustment comes in light of Lexeo’s announcement of a private placement agreement. The biotechnology company has entered into an agreement with a consortium of institutional and healthcare accredited investors for the sale of 20,790,120 common shares at a price of $2.8825 per share. Additionally, pre-funded warrants to purchase 6,963,556 common shares are included in the deal for certain investors, priced at $2.8824 per share, with an exercise price of $0.0001.
Each share sold in the private placement is bundled with a warrant to purchase half a common share at an exercise price of $2.82. This strategic financial move is expected to close on May 28, with gross proceeds anticipated to be approximately $80 million. The influx of capital is projected to extend the company’s cash runway into the year 2028, which is a year longer than previously expected.
The funds raised from this private placement are likely to support the continued development of Lexeo’s pipeline, including their potential treatment for Friedreich ataxia cardiomyopathy, LX2006. An efficacy readout for this treatment is expected in 2027. Following the announcement, Leerink Partners has updated its financial model for Lexeo to reflect the disclosed terms of the private placement.
Leerink’s continued Outperform rating indicates their positive outlook on Lexeo’s stock, despite the lowered price target. The new target is based on the recent financial developments and the firm’s analysis of Lexeo’s market potential, especially considering the upcoming milestones for its clinical programs. Investors will be watching closely as Lexeo moves towards its efficacy readout in 2027, which could be a pivotal moment for the company and its stock performance.
In other recent news, Lexeo Therapeutics announced the successful arrangement of an $80 million private placement. The financing round, co-led by Frazier Life Sciences and Janus Henderson Investors, aims to support the development of Lexeo’s clinical programs, including LX2006 for Friedreich ataxia cardiomyopathy. Meanwhile, H.C. Wainwright adjusted its price target for Lexeo to $15 from $23, maintaining a Buy rating. This revision reflects recent developments in the gene therapy sector and increased investor expectations. H.C. Wainwright also highlighted promising data from Lexeo’s LX2006 trials, emphasizing improvements in frataxin expression and a favorable safety profile. Additionally, Leerink Partners reduced their price target to $18 from $19 but maintained an Outperform rating, noting the potential in Lexeo’s PKP2 gene therapy program. The firm believes the market may be undervaluing Lexeo’s assets and future prospects. Investors are keenly awaiting further updates on Lexeo’s pivotal study for FA-CM, expected to clarify timelines for data release and potential approval.
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