UPDATE 1-Lexicon diabetes drug trial shows promise; shares soar

* Drug shows positive results in early stage trial

* Sees completing mid-stage trials by 2009 end or Q1 2010

* Says would look to partner drug after mid-stage studies

* Sees sufficient capital to run business through mid 2010

* Shares more than double to four-year high (Recasts, adds company comments, updates share movement)

By Vidya L Nathan

BANGALORE, Sept 15 (Reuters) - Lexicon Pharmaceuticals Inc (LXRX.O) said its experimental diabetes drug proved to be safe and well tolerated in an early stage study, driving its shares to more than double in value.

Data from mid-stage trials of the drug LX4211, which has started already, are expected to be available by the end of 2009 or the first quarter of 2010, following which the company would look for a marketing partner on it, Lexicon told Reuters.

However, the company does not face a time limit to sign a partnership as it has other options to avail cash, such as its existing rights offering with a key investor and a shelf offering filed with the U.S. Securities and Exchange Commission.

"We have enough capital to keep the business in operation through the middle of next year at this point," said the company spokesperson. It currently has $106.9 million in cash.

Lexicon also said it would examine which programs it would retain and which it would open up for partnering after data from its other product candidates undergoing mid-stage studies are available.

The company has three products in mid-stage studies targeting rheumatoid arthritis, carcinoid syndrome and irritable bowel syndrome, data from all of which are also expected by the end of 2009 or early 2010.

Lexicon would look for a partner on the drug to commercialize LX4211 -- which is an oral compound and results in excretion of glucose in urine -- in the large diabetes market.

"If everything plays out according to plan, and we make it all the way through phase 3 and the drug treats symptoms of diabetes and causes weight loss, then we do see this becoming a dominant player in the diabetes market," the company said.

Lexicon sees the drug candidate's potential benefit of weight loss and its oral administration giving it leverage over existing treatments for the indication.

Shares of the company closed up $1.01 at $2.63 Tuesday on Nasdaq. They had touched a high of $3.78 earlier in the day. (Additional reporting by Anuradha Ramanathan in Bangalore; Editing by Maju Samuel and Pradeep Kurup)