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Lexicon Pharmaceuticals, Inc. (LXRX) Bounces Back to New High After FDA Delay

Lexicon Pharmaceuticals, Inc. (LXRX) is making a comeback after the FDA requested more data on a key drug

Sep 15, 2016 at 11:59 AM
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Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX) is the latest biotech moving on drug data this morning, after the U.S. Food and Drug Administration (FDA) told the pharmaceutical company that it requires an additional three months and further analysis of clinical data to review LXRX's telotristat etiprate -- a carcinoid syndrome treatment. This FDA move means the earliest the medication could hit the market is early 2017.

While LXRX initially fell 2% to $18.46, the biotech stock is making a comeback, currently up 2% at $19.20. Earlier in the session, in fact, the shares rose as high as $19.35 to mark their loftiest level since October 2013, taking out the previous two-year high set earlier this month on upbeat Phase 3 trial results for diabetes drug, sotagliflozin. LXRX is up well over 40% so far in 2016.

In the option pits, calls are king on LXRX stock, although absolute volume is low. Call open interest currently sits at an annual high, with 11,886 contracts on the books, according to Trade-Alert. Of LXRX's top 10 open interest strikes, seven are calls. LXRX's October 15 call holds the top open interest spot, with over 3,800 contracts.

The out-of-the-money October 20 call claims the second highest open interest position -- although this could point to short sellers hedging, as opposed to option-player optimism, since LXRX has made very few moves north of $20 since breaking below this former round-number support back in early 2008. Even though LXRX short interest is down 8.5% over the last two reporting periods, a lofty 26.3% of LXRX's float remains sold short. This accumulation of shorted shares would take 19.2 days of trading to cover, at LXRX's average daily trading volume. 

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