Thursday, H.C. Wainwright updated its outlook on Lexeo Therapeutics (NASDAQ: LXEO), increasing the price target to $23.00 from the previous $21.00. The firm reaffirmed its Buy rating on the stock. This adjustment comes after Lexeo Therapeutics achieved alignment with the U.S. Food and Drug Administration (FDA) regarding the pivotal development path of LX2006 for Friedreich's ataxia cardiomyopathy (FA CM).
Following a Type C meeting with the FDA, Lexeo Therapeutics has a clear accelerated development path forward for LX2006.
The pivotal trial for the drug will have co-primary endpoints: a 10% reduction in left ventricular mass index (LVMI) and an increase in frataxin expression to reach a target of 40% frataxin-positive (FXN+) area, measured by immunohistochemistry (IHC). Lexeo must demonstrate a benefit on both endpoints to confirm the drug's effectiveness.
The analyst from H.C. Wainwright noted the positive interim data from Lexeo aligns well with the pivotal trial design, which has led to an increased probability of success for LX2006 from 30% to 40%. The reassessment of the drug's prospects and the updated financial models reflecting Lexeo's reported research and development (R&D) and general and administrative (G&A) expenses contributed to the raised price target.
The firm's decision to maintain a Buy rating on Lexeo Therapeutics is based on the recent FDA development and the company's strategic positioning for LX2006. The updated price target reflects the firm's confidence in Lexeo's ability to navigate the regulatory pathway and bring the drug closer to potential commercialization.
In other recent news, Lexeo Therapeutics reported positive interim results from a Phase 1/2 study of its drug candidate LX1001, intended for the treatment of Alzheimer's disease. The study showed a dose-dependent increase in neuroprotective APOE2 expression and reductions in tau biomarkers.
The treatment has been well tolerated across all dose cohorts with no reports of amyloid-related imaging abnormalities. These findings were presented at the Clinical Trials on Alzheimer's Disease conference in Madrid, Spain.
Lexeo also reported promising interim phase 1/2 data from its LX-2006 drug in treating Friedreich's Ataxia cardiomyopathy. This news was accompanied by Stifel maintaining a 'Buy' rating on Lexeo, attributing positive signs of efficacy and a clean safety profile to bolstered confidence.
In financial updates, Lexeo reported a net loss of $0.64 per share for the second quarter of 2024, slightly better than H.C. Wainwright's forecasted loss of $0.65 per share. The company's R&D expenses amounted to $16.6 million, with SG&A expenses reported at $7.0 million. Lexeo concluded the quarter with approximately $175.0 million in cash reserves, expected to sustain operations into 2027.
Despite a recent cut in its price target from $22.00 to $21.00, H.C. Wainwright maintains a 'Buy' rating for Lexeo.
InvestingPro Insights
Recent InvestingPro data provides additional context to Lexeo Therapeutics' financial situation and market performance. The company's market capitalization stands at $252.59 million, reflecting its current valuation in the biotech sector. Notably, Lexeo's stock is trading near its 52-week low, with a significant 45.31% price decline over the past six months. This aligns with the challenging environment for biotech companies, especially those in the development stage.
InvestingPro Tips highlight that Lexeo holds more cash than debt on its balance sheet, which is crucial for a company in the resource-intensive drug development phase. However, the company is quickly burning through cash, a common characteristic of biotech firms investing heavily in R&D. This cash burn rate is particularly relevant given the upcoming pivotal trial for LX2006.
The absence of profitability over the last twelve months, as indicated by another InvestingPro Tip, is typical for biotech companies focused on drug development. Investors should note that analysts do not anticipate the company to be profitable this year, which is consistent with the ongoing investment in the LX2006 program and other pipeline candidates.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide deeper insights into Lexeo Therapeutics' financial health and market position.
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