Morningstar Rating

Stock Research and Analysis

by Karen Andersen, CFA

Bulls Say

Lexicon's sotagliflozin has generated strong data in midstage clinical trials, and we think the product looks differentiated from SGLT-2 inhibitors on the market.
The diabetes market is growing rapidly due to demographic trends and innovative new products, and we think the market for SGLT-2 inhibitors could reach $5 billion by 2018.
Positive Phase III data for rare-disease drug telotristat etiprate and the potential of sotagliflozin could make Lexicon an acquisition target. Read more 

Bears Say

Regulatory hurdles for safety in diabetes are particularly high, and extensive Phase III trials will deplete virtually all of Lexicon's cash.
J&J's Invokana was approved in the U.S. in 2013 and Lilly's Jardiance in 2014, putting pressure on Lexicon to show sotagliflozin's differentiation in Type 1 diabetes or face limited sales potential as a late entrant.
Novo Nordisk's GLP-1 analog Victoza and SGLT-2 inhibitors are also in testing for Type 1 diabetes, potentially giving LX4211 strong competition. Read more 

Management

We give Lexicon standard marks for stewardship, as a qualified management team has brought the firm's pipeline closer to the market, despite diluting shareholders and bringing in private equity firm (and now majority shareholder) Invus to fund this   Read more 

Profile

Lexicon Pharmaceuticals is a biopharmaceutical company that uses mouse genetics to discover the function of genes and find promising drug targets. Lexicon then designs and   Read more 

2 High-Quality Health-Care Bargains 
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