Therapeutics Company Advances Gene Therapy Breakthrough
Research Report

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In an updated research note on October 7, H.C. Wainwright & Co. analysts Mitchell Kapoor and Dr. Raghuram Selvaraju noted significant risk reduction for Lexeo Therapeutics Inc. (LXEO:NASDAQ) as formal alignment with the FDA makes LX2006 increasingly likely to gain approval.

Following the FDA’s written confirmation of openness to a pooled Phase 1/2 plus pivotal dataset and acceptance of an earlier (<12-month) LVMI assessment for accelerated approval (AA), the analysts increased their probability of approval (POA) to 50% from the previous 40% and moving our projected launch to 2028 from 2030, while maintaining their 10% peak-penetration assumption within the FA-CM population.

These adjustments raised H.C. Wainwright's price target to US$15 from US$9, reflecting formal FDA alignment and reduced risk timelines.

"We reiterate our Buy rating, viewing LXEO as one of the clearest gene therapy regulatory risk/reward setups ahead of the pivotal trial start and Biologics License Application (BLA) submission timing update expected in early 2026," the analysts wrote.

A Possible Platform Re-Rating Event

The initiation of the pivotal trial in 2026 is feasible and sets up data readout visibility within 12 months, Kapoor and Selvaraju wrote. They said they anticipate pivotal enrollment to begin by mid-2026 and believe the study could conclude within nine to 12 months of dosing if the FDA accepts an LVMI assessment earlier than 12 months. This assumes approximately 12–15 patients, consistent with prior guidance for 12 to 16 patients but smaller given pooled Phase 1/2 data and strong early efficacy. Enrollment should be swift (<3 months) based on precedent Phase 1/2 site readiness, an ongoing natural-history study pre-identifying eligible patients, and high patient demand following strong data disclosure.

These factors collectively support our view that Lexeo could have registrational data in hand by late 2027, setting up the next meaningful data-driven re-rating window, they noted.

LX2006 anchors near-term value while PKP2 offers underappreciated upside ahead of the pivotal start, according to the analysts. They said they expect BLA submission in 2027 and AA in 2028, assuming FDA concurrence on pooled data and comparability sufficiency. Final protocol and confirmatory study alignment in early 2026 should mark the next inflection point.

In parallel, the LX2020 (PKP2-ACM) program could provide an additional catalyst, with eight patients dosed in the HEROIC-PKP2 Phase 1/2 and interim data on track for the second half of 2025, the analysts said.

"We view PKP2 as a potential platform re-rating event if initial safety and expression replicate the strong cardiac tropism seen with LX2006, raising confidence in Lexeo’s AAVrh10 cardiac-specific vector," Kapoor and Selvaraju wrote. "We think LXEO could appreciate on LX2006 pivotal initiation, rapid enrollment, and interim efficacy updates to support AA."

We believe LXEO could appreciate on LX2006 pivotal initiation, rapid enrollment, and interim efficacy updates to support AA. FDA endorsement validates both LVMI as a surrogate and the clinical effect size. The abnormal-baseline cohort (n = 6) achieved an 18% mean LVMI reduction at six months and 23% at 12 months, far exceeding the FDA’s 10% threshold for clinical meaningfulness, the report said.

Five of six patients normalized LVMI; higher-dose cohorts improved by up to 33%, with supporting reductions in troponin I and lateral-wall thickness. This clear dose response and biomarker concordance confirm that LX2006 reverses pathologic hypertrophy and establish LVMI as an FDA-accepted surrogate endpoint for AA, the pair wrote.

A Well-Defined Regulator Roadmap

Durability and safety remain top-tier among systemic adeno-associated viral vector programs, bolstering long-term regulatory confidence, the analysts said. Cardiac improvements have lasted beyond 12 months and, in some patients, have deepened through 18–24 months, accompanied by neurological stabilization or slight improvement on mFARS (approximately 1–2-point mean improvement versus an expected +1–2-point annual decline in natural history).

Among 17 treated participants, there were no Grade 3+ events, no complement activation, only temporary low-grade LFT elevations, and one asymptomatic Grade 2 myocarditis case at one year. At a dose over 100 times lower than most systemic adeno-associated viral vector (AAV) therapies, LX2006 achieves a level of efficacy and safety that few peers have matched.

The CMC comparability workstream is advancing alongside the pivotal start, minimizing the risk of CMC-driven delays, the report said. As part of discussions on the pooled-data strategy, Lexeo and the FDA agreed that enhanced comparability data would be provided to support the transition from HEK293 to Sf9 manufacturing. This package includes both analytical characterization and a murine bridging study comparing pre- and post-change material. Lexeo has already submitted initial analytical data, and management described the remaining work as relatively modest in exchange for the acceleration this approach enables. The Sf9 platform — already in GMP use for the company’s PKP2 program — demonstrates lower empty-capsid ratios and high-yield performance at commercial scale, reinforcing management’s confidence that manufacturing will not constrain timelines.

Formal FDA alignment and a defined confirmatory path strengthen the narrative of an approvable product, according to the report by Kapoor and Selvaraju. The agency has documented alignment on both co-primary endpoints — LVMI and frataxin expression — and will work with Lexeo to finalize the pivotal protocol, including the precise LVMI timepoint (<12 months), in early 2026. While not confirmed, management expects that a confirmatory post-approval study may utilize mFARS as the primary endpoint, with design details to be agreed upon before BLA filing. This two-step path, accelerated approval based on cardiac efficacy and full approval based on neurological benefit, provides a well-defined regulatory roadmap.

Valuation and Risks

Using a 13% discount rate and a 2% terminal growth rate, the firm's discounted cash flow (DCF)-based analysis estimates an enterprise value of approximately US$1.23 billion, resulting in a 12-month price target of US$15 per share. They said they consider thier discount rate assumption conservative, given the clinical and pre-clinical data generated to date for Lexeo's pipeline assets.

Similarly, they said they believe their 2% terminal growth rate is appropriate to account for the numerous opportunities from the company’s extensive pipeline of gene therapies for various indications.

"We do not include any of these additional earlier-stage programs in our valuation assessment," the report noted. "We ascribe a 50% probability of approval to LX2006 in Friedreich's ataxia cardiomyopathy (FA CM), 25% probability of approval to LX2020 in PKP2-associated arrhythmogenic cardiomyopathy, and 15% for LX1001 in APOE4 homozygous Alzheimer's disease (AD)." 

The analysts said risks include but are not limited to: (1) delays in advancing pipeline candidates into and through clinical assessment; (2) failure to generate favorable clinical data from ongoing programs; and (3) potential long-term dilution risk.