Novo Nordisk will pay Lexicon Pharmaceuticals $75 million up front to license its experimental obesity treatment. The news sent penny stock Lexicon into the stratosphere.
Lexicon is taking a different tact with its weight-loss drug. While the most popular drugs today mimic hormones called GLP-1 and GIPR, Lexicon's drug blocks a protein called ACSL5. ACSL5 plays a role in fat accumulation and energy balance. It might also delay stomach emptying and suppress appetite.
Including milestone payments, the deal is worth up to $1 billion.
Leerink Partners analyst Roanna Ruiz says the deal gives Lexicon "much-needed capital flexibility." It also makes sense, mechanistically. Novo Nordisk will likely combine Lexicon's LX9851 with Wegovy, its GLP-1-focused weight-loss drug.
Lexicon stock soared 64.1%, closing at 57 cents. Novo Nordisk stock slipped 1.2% to 69.30.
Novo Nordisk Is On A Licensing Spree
This is the second big weight-loss deal from Novo Nordisk this week. On Monday, Novo licensed a drug from The United Laboratories International for $200 million up front and up to $1.8 billion in potential milestone payments. The drug mimics a trio of hormones related to satiety and blood sugar.
Novo Nordisk is looking for ways to improve on Wegovy's weight loss as it competes against Zepbound from Eli Lilly. Zepbound focuses on GLP-1 and GIPR and tends to outperform the weight loss seen with Wegovy.
The new deal with Lexicon gives Novo Nordisk another possible Wegovy combination candidate.
Studies have shown mice who don't have the ACSL5 protein had reduced fat mass, improved insulin sensitivity and protection against diet-induced obesity, Leerink's Ruiz said. Lab tests suggest adding LX9851 to Wegovy could boost weight loss by 20% vs. Wegovy alone.
Further, it appears LX9851 could reduce the risk of weight regain even after patients stop treatment.
"Big picture, the deal aligns with Novo's strategy to maintain dominance in the obesity space by adding complementary mechanisms to pair with their GLP-1 franchise," she said.
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