Zacks_Analysts' Blog : Lexicon Gets Orphan Drug Status - Analyst Blog

We are pleased with Lexicon Pharma (LXRX) receiving the orphan drug designation for LX1032 from the Committee for Orphan Medical Products (COMP) of the European Medicines Agency (EMEA). The drug is currently in phase II development for the treatment of gastrointestinal symptoms associated with carcinoid syndrome.

LX1032 is the first drug candidate for which Lexicon has received the orphan drug status from the EMEA. It already has fast track designation from the US FDA. With this status, the company will get many incentives in the form of regulatory assistance, reduced regulatory fees associated with marketing approval application and assistance with clinical trial design. A major advantage that comes with orphan drug status is that the product will enjoy ten years of marketing exclusivity once it is approved.

Apart from LX1032, Lexicon has other candidates in various stages of development including LX1031, LX2931 and LX6171. Additionally, the company has other candidates in the preclinical stage targeting autoimmune disease (LX2932), diabetes (LX4211/4212), Glaucoma (LX7101), dyslipidemia (LG482/483, Genentech alliance) and metabolic syndrome (LG985).

Lexicon has a program called Genome5000 for the discovery of the physiological and behavioral functions of 5,000 genes that are considered to be pharmaceutically important. The company has made significant progress with this program and has completed more than 82% of the analysis of the pharmaceutically important genes.

We are impressed with Lexicon’s “gene knockout" technology and its 10TO10 (advancing 10 drug candidates into human clinical trials by 2010) clinical program. We see the gene knockout technology as a viable platform having advantages over traditional drug discovering technology for identifying novel drug targets. These advantages will lead to better target selection resulting in higher success of Lexicon’s drug discovery and development efforts.

Lexicon derives its revenue mainly from collaborations and subscription from its genetic information. The financial position of the company is quite strong especially after the collaboration with Invus Group and Symphony Capital Partners. At the end of the last quarter, Lexicon had $145.5 million in cash and investments.  But the 10TO10 program requires substantial financial investment as new candidates are moved into clinical trials.  We believe Lexicon’s “gene knockout" technology will continue to attract more partners, going forward. Any kind of partnership will boost the top-line in the form of upfront and milestone payment as well as royalties. We maintain our Buy recommendation.