- Sanofi will pay $260 million to exit a diabetes drug collaboration with Lexicon Pharmaceuticals, settling a dispute that arose when the French pharma provided notice to Lexicon in July that it would end the partnership.
- As a result, Lexicon will regain all rights to Zynquista, a drug approved in Europe for Type 1 diabetes. Money received from Sanofi will be used to fund ongoing development of drug, Lexicon said.
- Sanofi's decision to pull back was prompted by mixed results from three Phase 3 studies of Zynquista in Type 2 diabetes, two of which showed blood sugar lowering that missed trial goals.
A dispute and a settlement deal was probably not how Lexicon envisioned its partnership with Sanofi would end.
Inked in 2015, the companies' research collaboration had lined up $1.4 billion in milestone payments on top of the $300 million Sanofi paid upfront. The bulk of that money will go uncollected, as over $1 billion was linked to approvals in the U.S. and sales milestones.
While Zynquista (sotagliflozin) cleared regulatory review in the EU, the Food and Drug Administration rejected the drug for Type 1 diabetes in March.
Through the settlement deal, Lexicon will get $208 million upfront plus another $52 million payable over the next year — funds that, alongside the biotech's existing cash, will fund Zynquista studies through the end of 2020.
In a statement, Sanofi said its payments would enable the completion of the Type 2 diabetes development program, including two outcomes studies.
Sanofi will also transition responsibilities for regulatory filings to Lexicon, which plans to submit the drug for approval in U.S. and Europe for that patient population.
Results for ongoing Phase 3 studies are expected in the coming months, while data from the longer-term heart studies remains further out.
With Sanofi gone, Lexicon will likely be searching for another pharma company with which to partner.
"We believe that this potential, along with a European approval in type 1 diabetes, offer an attractive opportunity for potential collaborators as we work to maximize the global potential for Zynquista and to achieve greater operational flexibility," said Lexicon CEO Lonnel Coats, in a statement.
Securing such a deal may prove a challenge, however, notes Stifel analyst Stephen Willey, who cited in a Sept. 11 note to clients Lexicon's lack of leverage and outcomes data on Zynquista.
Shares in Lexicon did rebound on news of the settlement, rising by 35% to trade at $2.30 a share Wednesday. That price is still roughly 60% lower than what Lexicon shares traded at prior to Sanofi's July notice of its intent to exit the deal.