Pharma Announces Faster Approval Pathway for Neurodegenerative Disease
Research Report

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Lexeo Therapeutics Inc. (LXEO:NASDAQ) announced a faster approval pathway for LX2006 in Friedreich's ataxia (FA), supported by positive Phase 2 cardiac and neurological updates, reported Oppenheimer & Co. analysts Dr. Leland Gershell and Rohan Mathur.

This development strengthens the analysts' belief that LX2006 will receive accelerated approval for FA-associated cardiomyopathy by 2028, potentially generating over US$1 billion in peak U.S. sales.

Demonstrating manufacturing comparability is expected to be a straightforward requirement before the trial begins in the first half of 2026. Additionally, the analysts said they anticipated updates on LX2020's clinical development in PKP2-ACM soon.

"Following yesterday's positive market reception, we see significant further upside in LXEO shares as the company's programs advance," Gershell and Mathur wrote.

Interim updates show that patients in Phase 1/2 with abnormal LVMI (n=6) experienced 18% and 23% improvements at six and 12 months, respectively, the analysts noted. Dose-dependent improvements were indicated by mean reductions of 28% and 33% at mid and high doses. The FDA threshold is 10%. Fourteen of 16 participants had over 25% reduction in high-sensitivity troponin I and reduction/stabilization in lateral wall thickness.

Among 16 participants, mFARS scores improved at six months and beyond compared to natural history, with four patients benefiting at 24 months. Neurological improvements were observed regardless of concomitant Skyclarys, aiding regulatory discussions for a broad FA label upon full approval, the analysts wrote.

An Emerging Leader in Gene Therapies

Before the pivotal study, the company must demonstrate manufacturing comparability between the HEK293 process used in earlier phases and the Sf9-baculovirus platform for registration/commercial manufacturing through a murine bridging study, the analysts wrote. This comparability will support the revised plan for FDA review of LX2006's clinical data as a pooled dataset.

Lexeo is emerging as a leader in developing transformative gene therapies for rare cardiac and neurodegenerative diseases, Gershell and Mathur noted.

Lead candidate LX2006 is moving into a registration trial for FA cardiomyopathy, with previous data supporting the firm's US$1 billion+ US peak sales estimate. LX2020, targeting PKP2 arrhythmic cardiomyopathy, offers a potentially larger opportunity, with upcoming data expected to clarify its market path and commercial prospects.

'We Recommend Investors Build Positions'

Lexeo's technology emphasizes efficacy, safety, and scalability compared to other gene therapy approaches.

"With cash runway into 2028E, we recommend investors build positions," Gershell and Mathur wrote.

The analysts rated the stock Outperform. Their US$20 price target is based on a revenue multiples analysis, applying a 5x multiple to 2032E net sales of LX2006 (US$972 million) and 2034E net sales of LX2020 (US$761 million), in line with the 5-8x industry average.

"We assign 65% and 25% probability that LX2006 and LX2020 will achieve these levels. We apply a 12% discount rate to future revenue, in line with SMID-cap biotech," the wrote.