This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Lexicon Pharma Falls on Concerns Raised by Merck-Pfizer Diabetes Partnership

Updated with analyst quote.

THE WOODLANDS, Tex. ( TheStreet) -- Lexicon Pharmaceuticals (LXRX - Get Report) are down 15% Monday following the announcement of a diabetes partnership between Merck (MRK - Get Report) and Pfizer (PFE - Get Report), raising worries that Lexicon may be having trouble nailing a diabetes deal of its own.

Merck and Pfizer -- more often viewed as bitter rivals -- are taking the unusual step of collaborating on the development and marketing of Pfizer's diabetes drug ertugliflozin, the companies announced Monday.

Lexicon is developing a similar drug, LX4211, but can't or won't advance it into phase III studies without a partner to help pay the costs. Merck choosing Pfizer immediately raised concerns that Lexicon might be having trouble finding a partner of its own.

Lexicon shares are down 18% to $1.86 in Monday trading.

Pfizer's ertugliflozin and Lexicon's LX4211 belong to a new class of oral diabetes drugs known as sodium-dependent glucose transporter (SGLT) inhibitors that work by blocking the reabsorption of glucose into the bloodstream.

The FDA approved the first SGLT inhibitor from Johnson & Johnson (JNJ - Get Report), known as Invokana, at the end of March.

A competing drug co-developed by Bristol-Myers Squibb (BMY - Get Report) and AstraZeneca (AZN) was rejected by FDA last year due to safety concerns, although the drug was approved in Europe.

Merck and Pfizer will share the costs of developing ertugliflozin as a standalone diabetes medicine but will also work to combine the new drug with Merck's biggest-selling diabetes drug Januvia.

Lexicon has completed a phase II study of LX4211 but is seeking a Big Pharma partner to take on the responsibility of paying for phase III studies. The company was asked about the progress of partnership talks for LX4211 on its last quarterly confererence call held on Feb. 21.

Jeffrey Wade, Lexicon's CFO:

Sure. So we're continuing to make good progress in our partnership discussions for LX4211, it's a -- I mean, we're pleased with the progress, there is not anything that we're waiting on in particular for that. And we are continuing to plan for the advancement of LX4211 into Phase III this year with a partnership in place. So that continues to be our expectation.

CEO Arthur Sands:

So the only thing I'd add there is that you also asked if there were any particular issues or problems identified, and there are not. So we're very pleased with all the diligence proceeding as they've gone forward. It's a very thorough process and it takes time. But we do think we're on a good track there.

Lexicon is presenting at an investor conference on Tuesday. No doubt, management will be asked for another LX4211 partnership update given Monday's Merck-Pfizer tie-up.

"We had the chance to speak with LXRX [Lexicon] management this morning who remains very confident in the ongoing partnering process for LX4211 and that a Phase 3 program for the drug will start in 2H13, with a partner in place. Management stated that the MRK/PFE deal does not alter its go forward partnering plans in any way," wrote J.P. Morgan analyst Cory Kasimov, in an email note to clients.

-- Reported by Adam Feuerstein in Boston.

Follow Adam Feuerstein on Twitter.
Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BMY $72.26 2.89%
JNJ $112.48 -0.26%
LXRX $13.96 0.14%
MRK $55.74 -1.01%
PFE $32.91 -0.27%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs