Lexicon Fundamentals Healthy

Lexicon Pharmaceuticals Inc. (LXRX - Snapshot Report) is focused on defining the functions of genes using the gene knockout technology. Based on its proprietary technology, the company has attracted both drug-based collaborations and strategic equity investors.

The company is currently engaged in research and development of small molecule drugs in a broad area of diseases. We are pleased with the progress made by the company with its gene knockout technology and its "10-TO-10" clinical program. The company has four candidates in clinical studies and cash position is relatively strong. We maintain our Buy rating on Lexicon. Our price target is $3.50.

We see the Genome5000 target identification platform as a viable discovery tool, which should allow the company to continue to receive and grow its research alliance revenues. We believe the company will enter into several such agreements in 2008 and beyond, which should help drive top-line growth. We are currently modeling total revenue of $37.3 million for 2008.

The fundamentals of the company look strong, and the shares are attractive at current level of $281 million market cap. We believe that Lexicon shares trade at a discount due to the early stage nature of its pipeline products and lack of a meaningful push toward profitability before 2011.

Read the full analyst report on LXRX.

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