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Why Lexicon Pharmaceuticals Inc. Shares Exploded Higher

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Lexicon Pharmaceuticals (NASDAQ: LXRX  ) , a clinical-stage biopharmaceutical company geared toward treating a wide array of human diseases, advanced as much as 34% after reporting positive clinical data on LX4211 for the treatment of type 2 diabetes in patients with moderate-to-severe renal impairment.

So what: According to the press release, LX4211, which is an inhibitor of both sodium glucose transporters SGLT1 and SGLT2, met its primary endpoint in a proof-of-concept trial by reducing elevated glucose levels after a meal. In addition to providing "clinically meaningful and statistically significant reductions in post-prandial glucose," LX4211 also helped raise GLP-1 levels. This is important as GLP-1 is a hormone that helps control glucose levels and appetite in the body.

Now what: There are 25.3 million diabetics in this country and another 79 million that are pre-diabetic -- and 90% of those cases will turn out to be type 2 diabetes, so this is certainly encouraging news. Of those cases, about 30% involve some level of renal impairment, giving Lexicon a wide potential target audience. The only semi-similar pathway of action currently approved in the U.S. is Johnson & Johnson's (NYSE: JNJ  ) Invokana, which is strictly an SGLT2 inhibitor. But if Lexicon's drug in mid- and late-stage trials exhibits similar effectiveness in terms of glucose control, weight-loss, and A1C reduction, it, too, could become a potential hit. I firmly believe that SGLT1 and SGLT2 therapies have the potential to make DPP-4 inhibitors practically obsolete within three years and this would certainly be another experimental candidate worth keeping a close eye on.

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Sean Williams

A Fool since 2010, and a graduate from UC San Diego with a B.A. in Economics, Sean specializes in the healthcare sector and investment planning. You'll often find him writing about Obamacare, marijuana, drug and device development, Social Security, taxes, retirement issues and general macroeconomic topics of interest.

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Related Tickers

11/27/2015 12:59 PM
LXRX $13.92 Up +0.18 +1.31%
Lexicon Pharmaceut… CAPS Rating: **
JNJ $102.37 Up +0.41 +0.40%
Johnson & Johnson CAPS Rating: ****