LXRX stock is making a big move this week, with a gain of over 75% this week after Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX) ended a collaboration agreement with Sanofi (NASDAQ:SNY).
Sanofi News Gives Boost
The pharmaceutical sector has been one of the most dynamic sectors for investors for many decades, and it continues to be so as many companies are making important advancements. Every week there are important developments in the sector that are picked up by investors to work on their strategies.
This week, Lexicon Pharmaceuticals has proven to be one of the biggest gainers in the pharma sector for having wrested back control of its diabetes product Zynquista from Sanofi. The collaboration agreement with Sanofi was terminated, and that is going to net Lexicon $260 million as a payoff. These two developments led to the remarkable gains in LXRX stock this week so far.
Now, it goes without saying that a one-time windfall of $260 million is without a doubt a huge development for any company. Lexicon can now use the money to further expand its business and invest more in research and development activities.
At this point in time, there are three other products in Lexicon’s pipeline, and the fresh injection could help the company in speeding up that process considerably. On the other hand, the return of Zynquista to the Lexicon fold may be a positive development on the surface.
However, it is important to keep in mind that all the expenses related to the product will now need to be borne by the company. Research, development, and commercialization expenses are going to rise significantly for Lexicon Pharmaceuticals. On top of that, all regulatory issues are also going to be handled by the company.
This week, LXRX stock surged significantly, and the company’s valuation has surged to $245 million from $140 million in the blink of an eye. That said, analysts believe that it is unlikely that the stock is going to perform as well as some investors are expecting. However, it could prove to be a good short term play for LXRX stock traders.
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