A Future Flush Candidate?

Lexicon Pharmaceuticals (LXRX) announced a $75 million 144A convertible note issue due 2021 in conjunction with a $50 million common stock offering.

HOCS Score: 48 overall, 56 growth, 33 safety

Despite the optical cheapness of the issue, the low HOCS score points to the speculative nature of the this biotech company. LXRX common shares trade for $1.25 and the market cap is $640 million. The company currently has no long-term debt outstanding.

Lexicon Pharmaceuticals is burning through about $25 million in R&D expenditures per quarter. At the end of last quarter, Lexicon had just under $58 million in cash and cash equivalents listed on their balance sheet. The drug furthest along the pipeline is Telotristat Etiprate, currently in a phase three trial for the treatment of Carcinoid Syndrome. Carcinoid Syndrome strikes cancer patients and results in extreme diarrhea and flushness due to the excessive production of serotonin. The company estimates a $350 million market in the US for the treatment and has signed a licensing deal with Ipsen for markets outside of North America and Japan.

 Other treatments under development include:

-Sotagliflozin, or LX4211, for treating diabetes 1 & 2 patients entering a phase three trial

-LX1033 for the  treatment for irritable bowel syndrome in phase 2 trials

-LX2931 for the treatment of Rheumatoid Arthritis in phase 2 trials

-LX7101 for the treatment of Glaucoma in phase 1 trials