The first step towards profitability for biotech companies is FDA approval since it allows these companies to start realizing revenues from their treatments. One of the biotech stocks that is set to earn revenues for the first time is Lexicon Pharmaceuticals, Inc. (NASDAQ: LXRX) whose heart failure treatment was approved by the FDA last Friday. Although LXRX stock climbed 21% in the lead-up to FDA approval, the stock cooled down and is back to where it was before the approval – making it a biotech stock worth buying ahead of its first revenues.
LXRX Fundamentals
Since having a revenue-generating product adds value to any company, LXRX is on the same trajectory since its flagship drug INPEFA (sotagliflozin) for heart failure was approved by the FDA last Friday after hours. INPEFA is scheduled to be available for purchase in June which means that LXRX is set to realize its first revenues in Q3 2023. As generating revenues should increase the value of the company, the LXRX stock should increase to reflect this added value.
The marketplace for heart failure medications is vast and growing at an explosive rate. Currently, the market is valued at around $6.7 billion and is expected to grow at a CAGR of 7.6% from 2023 to 2031 reaching approximately $13.5 billion. This high growth rate indicates that there is high demand for heart failure medication in the market especially since around 6.7 million Americans suffer from heart failure. That number is expected to grow to around 8 million in 2030 which shows that there is no shortage in demand for heart failure treatments.
With this in mind, LXRX expects the wholesale price of INPEFA to be on par with existing branded heart failure medications. One of INPEFA’s most prominent competitors is Jardiance which was developed by Eli Lilly and Company (NYSE: LLY) and Boehringer Ingelheim. Jardiance current list price is $$570.48 for a month’s supply and INPEFA presents a unique proposition in heart failure – especially considering the drug’s differentiated benefit in hospitalized patients compared with existing treatments. Based on this, Piper Sandler analyst Yasmeen Rahimi expects INPEFA to generate $112 million in revenues by 2025 and $576 million by 2028.
INPEFA could be able to achieve these expectations since it is also a broad-label medication which means that it can be prescribed for an array of cardiac issues. In this way, LXRX could capitalize on a larger chunk of the market.
Although there is no available information regarding profit margins, an accurate estimate regarding the company reaching profitability may not be feasible. However, if LXRX realizes revenues in line with Rahimi’s estimates, profitability may not be a far-fetched dream since the company’s costs would decrease in the coming quarters thanks to INPEFA being approved. In light of this, LXRX stock could be a bargain at the current PPS especially since the stock cooled down from its initial run on the news of INPEFA’s FDA approval.
LXRX Financials
According to its Q1 2023 report, LXRX’s assets declined QoQ from $194.2 million to $162.7 million which is mainly attributable to the declines in cash from $46.3 million to $26 million and short term investments from $92 million to $79.9 million. Meanwhile, liabilities decreased slightly QoQ to $74.6 million from $77.1 million.
In terms of revenues, LXRX reported $24 thousand while operating costs increased YoY from $23.4 million to $31.1 million. Based on this, LXRX’s net loss widened from $23.4 million to $31.9 million. With this in mind, the company’s operating costs are expected to decrease in the future now that INPEFA is FDA approved and the expected revenues will offset LXRX’s costs.
Technical Analysis
LXRX stock is in a neutral trend with the stock trading in a sideways channel between its support at $2.85 and its resistance at $3.26. Looking at the indicators, LXRX stock is testing the 200 MA as support, however, it is trading below the 50 and 21 MAs. With the MACD approaching a bullish crossover, accumulation spiking, and the stock trading near its support, LXRX could be poised to rebound from current levels soon.
As for the fundamentals, LXRX’s main catalyst was INPEFA’s FDA approval which allows the company to start commercializing its treatment. As the company is now set to realize its first product revenues, LXRX could climb to reflect this added value – making the current PPS an attractive entry point.
LXRX Forecast
With LXRX’s INPEFA receiving FDA approval, the company is now on its path to profitability as it will receive its first product revenues. Considering INPEFA’s potential in the heart failure treatments market, LXRX could be well-positioned to achieve substantial revenues that might cover its operating costs as it has other treatments in clinical trials. As the stock has cooled down from its initial run and is now trading near support, the current PPS could prove to be a good entry into LXRX stock ahead of INPEFA’s market launch in June.
LXRX Fundamentals
Since having a revenue-generating product adds value to any company, LXRX is on the same trajectory since its flagship drug INPEFA (sotagliflozin) for heart failure was approved by the FDA last Friday after hours. INPEFA is scheduled to be available for purchase in June which means that LXRX is set to realize its first revenues in Q3 2023. As generating revenues should increase the value of the company, the LXRX stock should increase to reflect this added value.
The marketplace for heart failure medications is vast and growing at an explosive rate. Currently, the market is valued at around $6.7 billion and is expected to grow at a CAGR of 7.6% from 2023 to 2031 reaching approximately $13.5 billion. This high growth rate indicates that there is high demand for heart failure medication in the market especially since around 6.7 million Americans suffer from heart failure. That number is expected to grow to around 8 million in 2030 which shows that there is no shortage in demand for heart failure treatments.
With this in mind, LXRX expects the wholesale price of INPEFA to be on par with existing branded heart failure medications. One of INPEFA’s most prominent competitors is Jardiance which was developed by Eli Lilly and Company (NYSE: LLY) and Boehringer Ingelheim. Jardiance current list price is $$570.48 for a month’s supply and INPEFA presents a unique proposition in heart failure – especially considering the drug’s differentiated benefit in hospitalized patients compared with existing treatments. Based on this, Piper Sandler analyst Yasmeen Rahimi expects INPEFA to generate $112 million in revenues by 2025 and $576 million by 2028.
INPEFA could be able to achieve these expectations since it is also a broad-label medication which means that it can be prescribed for an array of cardiac issues. In this way, LXRX could capitalize on a larger chunk of the market.
Although there is no available information regarding profit margins, an accurate estimate regarding the company reaching profitability may not be feasible. However, if LXRX realizes revenues in line with Rahimi’s estimates, profitability may not be a far-fetched dream since the company’s costs would decrease in the coming quarters thanks to INPEFA being approved. In light of this, LXRX stock could be a bargain at the current PPS especially since the stock cooled down from its initial run on the news of INPEFA’s FDA approval.
LXRX Financials
According to its Q1 2023 report, LXRX’s assets declined QoQ from $194.2 million to $162.7 million which is mainly attributable to the declines in cash from $46.3 million to $26 million and short term investments from $92 million to $79.9 million. Meanwhile, liabilities decreased slightly QoQ to $74.6 million from $77.1 million.
In terms of revenues, LXRX reported $24 thousand while operating costs increased YoY from $23.4 million to $31.1 million. Based on this, LXRX’s net loss widened from $23.4 million to $31.9 million. With this in mind, the company’s operating costs are expected to decrease in the future now that INPEFA is FDA approved and the expected revenues will offset LXRX’s costs.
Technical Analysis
LXRX stock is in a neutral trend with the stock trading in a sideways channel between its support at $2.85 and its resistance at $3.26. Looking at the indicators, LXRX stock is testing the 200 MA as support, however, it is trading below the 50 and 21 MAs. With the MACD approaching a bullish crossover, accumulation spiking, and the stock trading near its support, LXRX could be poised to rebound from current levels soon.
As for the fundamentals, LXRX’s main catalyst was INPEFA’s FDA approval which allows the company to start commercializing its treatment. As the company is now set to realize its first product revenues, LXRX could climb to reflect this added value – making the current PPS an attractive entry point.
LXRX Forecast
With LXRX’s INPEFA receiving FDA approval, the company is now on its path to profitability as it will receive its first product revenues. Considering INPEFA’s potential in the heart failure treatments market, LXRX could be well-positioned to achieve substantial revenues that might cover its operating costs as it has other treatments in clinical trials. As the stock has cooled down from its initial run and is now trading near support, the current PPS could prove to be a good entry into LXRX stock ahead of INPEFA’s market launch in June.