Lexicon Pharmaceuticals (LXRX) Stock Continues Climbing

Lexicon Pharmaceuticals LXRX Stock News

Lexicon Pharmaceuticals, Inc. (NASDAQ: LXRX) is making a run for the top this morning, following up on the strong gains that we saw from the stock yesterday. The gains come after a breakup between the company and Sanofi (SNY), leading to a large payment and sending the stock up more than 30% today. Here’s the scoop:

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LXRX Stock Is Rocketing Yet Again

After climbing more than 20% int he market yesterday, Lexicon Pharmaceuticals is climbing yet again today. The gains come after news broke yesterday that the company terminated its alliance with Sanofi surrounding the development and commercialization of Zynquista.

The termination of the alliance included the settlement of related disputes between LXRX and SNY and became effective on September 9, 2019. As part of the termination, the company will regain all rights to Zynquista and assume full responsibility for the worldwide development and commercialization of the drug.

Zynquista is being ceveloped as a potential treatment for both type 1 and type 2 diabetes.

According to the settlement terms, Sanofi will pay $260 million to Lexicon. $208 million of this total is payable as an upfront payment. Sanofi will have 12 months to pay the remaining $52 million. Moreover, Sanofi has agreed to coordinate with Lexicon in the transition of responsibility for ongoing clinical studies and other activities.

In a statement, Lonnel Coats, President and CEO at LXRX, had the following to offer:

Our four-year alliance with Sanofi has been a productive one, with Zynquista receiving marketing approval in Europe in type 1 diabetes and advancing into late-stage studies in type 2 diabetes. Regaining worldwide rights allows us to advance our efforts to realize the full value of the Zynquista program as we prepare for regulatory filings in the U.S. and in Europe in type 2 diabetes, with data coming over the next few months from the remainder of the core Phase 3 studies and over the longer term from two outcomes studies with potential for demonstrating cardiovascular and renal benefits. We believe that this potential, along with a European approval in type 1 diabetes, offer an attractive opportunity for potential collaborators as we work to maximize the global potential for Zynquista and to achieve greater operational flexibility.

Why Investors Are So Excited Here!

Investors are excited for a good reason here. First and foremost, Lexicon Pharmaceuticals will regain full rights to the treatment. This means that upon commercialization, profits will not have to be shared with Sanofi. Moreover, should the company decide to move forward with a new commercialization partner, it may do so, generating further licensing fees and potential milestone and royalty payments.

In the meantime, LXRX is going to be handed a check for more than $200 million nearly immediately. This funding will not only be enough to fund further operations, the funds will be enough to cover the costs associated with the further development of the treatment.

So, for LXRX, the deal is a win/win. The company gets the rights and gets a serious infusion of funds. All in all, this greatly expands the long-run value of the stock.

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