Lexicon Pharma Inks Data Collaboration Deal With AC Bioscience

Lexicon Pharmaceuticals has entered into a collaboration agreement with AC Bioscience, enabling the use of preclinical and clinical data for LX2931, without granting any right or license under any of Lexicon’s patent rights for the compound.

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Lexicon’s (LXRX) LX2931 is a small molecule sphingosine-1-phosphate (S1P) lyase inhibitor that is currently not in active development at the company. As per the agreement, Lexicon will receive an upfront payment and is eligible to receive milestone payments totaling up to $5.3 million.

Praveen Tyle, executive vice president of Lexicon’s research and development stated, “In line with our realignment around the rapid development of the LX9211 program, we continue to evaluate our pipeline and determine the most effective way to advance our broad library of compounds and targets.”

“We are pleased to collaborate with AC Bioscience to accelerate their efforts around S1P and look forward to learning additional information about this potentially interesting pathway,” added Tyle.

Last week, Citigroup analyst Yigal Nochomovitz upgraded Lexicon to Buy from Hold and increased the price target to $6 from $2.10, after adding sotagliflozin for heart failure (HF) in type 2 diabetes (T2D) to his model following positive data revealed by the company.

Nochomovitz stated that while questions about the regulatory path remain, he believes that the strength of the CV outcomes data as evidenced by back-to-back NEJM articles last month should go a long way in supporting a label for sotagliflozin in T2D patients with HF (SOLOIST population). He also expects partnership discussions to regain momentum on the heels of this data.

“We see sota in T2D patients with CKD (SCORED population) as upside to our valuation and do not currently include this indication in our model. Lexicon expects to meet with FDA to discuss the data in early 2021,” added Nochomovitz. (See LXRX stock analysis on TipRanks)

Lexicon scores a Moderate Buy analyst consensus, backed by 3 recent Buys, 1 Hold and 1 Sell. With shares down 27.5% year-to-date, the average price target of $4 reflects upside potential of 32% over the coming year.