Lexicon Pharmaceuticals: Stuck in Phase II?

Hi Vinny,

I am a loyal follower and respect your opinion. I too am a long-term shareholder of CVM and see the potential of the company. That said, I wanted your opinion on two companies, of which I am already a shareholder, Lexicon Pharmaceuticals (LXRX) and Rexahn Pharmaceuticals (RNN). They have a strong and diverse pipeline, along with good management and partnerships. The companies are low-key, meaning that no bloggers have put them in the spotlight (although sometimes the spotlight isn't necessarily a good thing) and wanted your opinion.

I know your busy but would love to know what you think.

Thanks,

Marcel

VFC's Take: Lexicon Pharmaceuticals currently trades for a share price of $1.46 (as of Tuesday's close) with a market cap of over 250 million.

What I like about the company and its stock is that there are multiple 'small molecule' drug candidates in the pipeline - all treating different indications with decent sized market potential - so if one or two were to fail any of the ongoing trials, then the company has a safety net in the form of additional product candidates to fall back on.

I also like the fact that the four lead product candidates are in relatively the same spot in Phase II trials because news and updates could come in bunches, which could lead to fairly extreme volatility in the stock price. Another positive for the company is the fact that they have existing partnerships with some big time pharma players. Any drugs or products developed in conjunction with any of the existing agreements will bring in milestone payments for Lexicon.

On another note, the fact that all of these products are in Phase II brings up some additional notes and concerns. The current market cap is about as high as I like to go with companies that have nothing beyond Phase II and because 'product to market' is still a long ways away, financing is always an issue.

That being said, the company is not in any immediate need to raise cash, but rest assured there will be some dilution before it's all said and done - in my opinion.

LXRX is a decent long term speculative play, in my opinion, but I would like to have some trading shares on hand to play any spikes and dips in order to end up on 'house money' here because I don't wholly trust companies with nothing beyond Phase II.

Keep in mind that these are my initial impressions; invest according to your own DD and tolerance for risk.

Disclosure: No position.

Comments

[Penn Bioinv...:]

Have to give you credit for a nice job this time, Vinny.

Nov 11 06:36 PM

[posiedon:]

Let's see how did AGEN work out....these penny pharmas are a dime a dozen....

Nov 13 10:24 AM