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Lexicon Pharmaceuticals, Inc. (LXRX - Snapshot Report) recently announced that its candidate telotristat etiprate (LX1032) has been granted orphan drug status by the US Food and Drug Administration (FDA). LX1032 is being developed to treat patients suffering from carcinoid syndrome.

Carcinoid syndrome refers to a chronic disorder resulting from tumors in the gastrointestinal tract. The disorder, which results in severe diarrhea in addition to flushing episodes, has the potential to cause cardiac valve disease in the long run.

We note that the orphan drug designation is granted in the US only to drugs that treat a disease affecting less than 200,000 people in the country. Moreover, the orphan drug status for LX1032 provides Lexicon Pharma with seven years of marketing exclusivity (from the day LX1032 is cleared by the FDA) in the US for carcinoid syndrome. We remind investors that LX1032 was granted fast track status by the FDA in 2008. The candidate already enjoys orphan drug status from the European Medicines Agency, which provides the drug with ten years of marketing exclusivity in the EU following approval.

We note that LX1032 has fared well in clinical trials so far for the carcinoid syndrome indication. In August last year, Lexicon Pharma presented encouraging data from a phase II study. The company plans to move the candidate to phase III study for the indication.

Apart from LX1032, Lexicon Pharma’s pipeline includes LX1033 (irritable bowel syndrome), LX2931 (rheumatoid arthritis), LX4211 (diabetes) and LX7101 (glaucoma).

Our Recommendation

Currently, we have a Neutral stance on Lexicon Pharma in the long run. The company carries a Zacks #3 Rank (Hold rating) in the short run.

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