Lexicon inks $1 billion deal with Novo Nordisk for obesity drug

THE WOODLANDS, Texas - Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX), currently valued at $125.65 million, has announced an exclusive licensing agreement with Novo Nordisk A/S for the worldwide development and commercialization of its obesity treatment candidate, LX9851. This partnership could potentially bring Lexicon up to $1 billion in payments, including $75 million in upfront and near-term milestones. The deal comes at a crucial time, as InvestingPro data shows the company has been quickly burning through cash, though it maintains more cash than debt on its balance sheet.

LX9851, a novel oral medication developed by Lexicon, targets Acyl-CoA Synthetase 5 (ACSL5), which plays a crucial role in fat accumulation and energy balance. The drug candidate also appears to activate the ileal brake mechanism, potentially leading to increased satiety and reduced appetite. Preclinical in vivo studies, presented at Obesity Week 2024, indicated that LX9851 could significantly reduce weight, food intake, and fat mass, especially when used in combination with semaglutide, a GLP-1 agonist.

Under the agreement, Lexicon will complete certain Investigational New Drug (IND) application-enabling activities, while Novo Nordisk will take over the subsequent IND filing, development, manufacturing, and commercialization processes. Lexicon is also set to receive tiered royalties on net sales of LX9851.

Mike Exton, Ph.D., CEO and director of Lexicon, expressed enthusiasm about the partnership with Novo Nordisk, a leader in diabetes care and obesity management. He highlighted the deal’s potential to fortify Lexicon’s financial position and accelerate its research and development portfolio. Jacob Sten Petersen, Senior Vice President at Novo Nordisk, also noted the opportunity to explore a novel biology and further develop LX9851.

Lexicon’s Genome5000™ program, which underpins its drug discovery efforts, has investigated nearly 5,000 genes, leading to over 100 identified protein targets with therapeutic potential in various diseases. The company’s pipeline includes candidates in cardiology, neuropathic pain, metabolism, and other indications.

This announcement comes amid Lexicon’s ongoing efforts to secure its financial future and expand its product offerings. While the company has not disclosed the expected timeline for LX9851’s clinical development or regulatory approval process, InvestingPro analysis indicates the company’s current financial health score is weak, with an EBITDA of -$184.28 million in the last twelve months. However, the company maintains a strong current ratio of 5.44, suggesting adequate liquidity to fund near-term operations.Trading at $0.35 per share, Lexicon appears undervalued according to InvestingPro’s Fair Value analysis. Analyst price targets range from $0.80 to $6.00, suggesting significant potential upside. For deeper insights into Lexicon’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which covers this and 1,400+ other US equities with detailed analysis and actionable intelligence.

This news report is based on a press release statement from Lexicon Pharmaceuticals, Inc.

In other recent news, Lexicon Pharmaceuticals reported a better-than-expected earnings performance for the fourth quarter of 2024. The company posted an earnings per share (EPS) of -$0.09, surpassing the forecasted -$0.12. Lexicon’s revenue for the quarter reached $26.6 million, significantly exceeding the anticipated $7.16 million. The company also announced a full-year 2024 revenue of $31.1 million, despite a net loss of $200.4 million. Lexicon’s strategic focus remains on advancing its clinical development programs, including the potential start of Phase III trials for Pilavapatin, aimed at treating diabetic peripheral neuropathic pain. Additionally, Lexicon is pursuing partnership opportunities to enhance its product pipeline and commercialization efforts. The firm has ceased U.S. promotional activities for INPEFA and is actively seeking partnerships for its commercialization. Analyst firms have not provided recent upgrades or downgrades, but the company’s financial performance and strategic initiatives suggest a proactive approach to growth.

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