Zacks sees 222% upside in weight-loss market innovator Lexaria Bioscience
In a recent note, Zacks Small-Cap Research (Zacks SCR) laid out why it believes Lexaria Bioscience, a micro-cap company that is working on making popular weight-loss injections like Wegovy and Zepbound into pills using its patented technology, should be valued at $8 per share — 222% above the current market price. The company is set to begin a new phase of trials soon that may yield sufficient data to attract the attention of larger market players like Denmark’s Novo Nordisk, the maker of Wegovy, Zacks SCR notes.
Details
Zacks SCR has a target price of $8 per share for Lexaria, for a market capitalization of just over $43 million. This valuation is 3.2 times the current market price (the last close on December 10 of $2.50 per share) and nearly double (98% higher than) the price at the beginning of 2024.
Lexaria generates revenue through licensing and product sales, which can in part fund its research programs, points out Zacks SCR. Its lead program is investigating glucagon-like peptide-1 (GLP-1) agonists, which underpin popular diabetes and weight-loss drugs like Ozempic and Wegovy by Novo Nordisk of Denmark and Zepbound and Mounjaro by Eli Lilly of the U.S.
The company plans to begin phase Ib clinical trials in late 2024 or early 2025. In its report, Zacks SCR notes that these trials could provide sufficient data to attract the attention of “more established pharmaceutical companies,” like Novo Nordisk, that seek to “improve convenience for patients and extend the product life of their GLP-1 agonist franchise.”
According to MarketWatch, the two analysts who cover Lexaria rate it a “buy.” Their average target price of $10 per share is even higher than that of Zacks SCR.
About Lexaria
Lexaria’s DehydraTECH technology, according to the company, improves how active pharmaceutical ingredients (APIs) are delivered into the body. It combines APIs with specific fatty acids and carrier compounds, followed by dehydration, points out Zacks SCR. There are several advantages of DehydraTECH, including improved bioabsorption, taste masking, side effect reduction, and a simplified regulatory approval process, as previously gathered safety and efficacy data on APIs can be used.
Today, 95% of the GLP-1 agonist market is captured by semaglutide (the active ingredient in Novo Nordisk’s Ozempic and Wegovy) and tirzepatide (the active ingredient in Eli Lilly’s Zepbound and Mounjaro). Most of these drugs are currently available only as injections. Lexaria’s goal is to make them deliverable as pills. Rybelsus is the only tablet available at the moment, but it is reportedly less effective than injection-delivered competitors, according to Zacks SCR.
