Shares of Lexicon Pharmaceuticals Inc. (NASDAQ:LXRX) fell 70.3% Monday to $1.69 as Sanofi SA terminated a $1.7 billion diabetes collaboration with the company. The decision followed two trials in which Zynquista (sotagliflozin), a dual SGLT inhibitor, failed to make a statistically significant dent in blood sugar control in patients with chronic kidney disease, a common result of diabetes. As a result, Sanofi will not launch the product in Europe, where its already approved as an adjunct to insulin therapy for type 1 diabetics, a spokesman told BioWorld.
In dispute with Sanofi, Lexicon called notice of the termination a breach of contract and held fast to optimism about Zynquista's odds of "achieving continued success in the balance of the core phase III program," CEO and president Lonnel Coats said.
Lexicon declined to make further comment on the termination ahead of an investor call it has scheduled for Thursday. But in a statement about the development, its chief medical officer Pablo Lapuerta pointed to the potential benefits of Zynquista for type 2 diabetics (T2D) demonstrated in other components of the phase III program, called Insynchrony. Although adults with severe CKD "narrowly missed statistical significance on A1C," he said, "we are very encouraged by the overall results in that study and look forward to phase III data from the remainder of the core studies from the Insynchrony program later this year."
A third study, SOTA-MET, comprised the remainder of top-line results reported by Sanofi Friday. It found that a 400 mg dose of Zynquista did demonstrate a statistically significant reduction in HbA1c vs. placebo at 26 weeks in patients already on metformin.
In total, the Insynchrony program consists of 11 phase III trials to evaluate the efficacy and safety of Zynquista in adults with T2D on various therapeutic backgrounds. The trials include placebo and active comparators and are also evaluating patients with CKD, cardiovascular risk factors, and heart failure, as well as patients age 55 and older. No imbalances or new safety signals were observed in the three studies for which it disclosed results, Sanofi said.
Trouble keeping pace
The Zynquista program has struggled to catch up with Eli Lilly and Co.'s 'gliflozin, Jardiance (empagliflozin; co-marketed with Boehringer Ingelheim GmbH) and to measure up to Sanofi's apparent expectations for it following the November 2015 deal it struck with Lexicon.
Announced in the same week Sanofi struck an agreement with Seoul-based Hanmi Pharmaceutical Co. Ltd. to develop a portfolio of experimental, long-acting diabetes treatments, the Lexicon deal carried $300 million up front up to $1.4 billion in milestones, plus royalties. Called "significant R&D alliances" by Sanofi's then-CEO, Oliver Brandicourt, both deals were intended to bolster Sanofi's standing in diabetes at a time of "tougher-than expected market conditions," he said during the company's fourth quarter 2015 earnings call. Sanofi's collaboration with Mannkind Corp.'s inhaled insulin Afrezza ended around the same time. (See BioWorld, Nov. 9, 2015 and Jan. 6, 2016.)
Despite those aspirations, Sanofi has suffered from sluggish performance relative to its big-pharma peers, with only Bayer AG, Novo Nordisk A/S and Bristol-Myers Squibb Co. posting worse returns in terms of share-price performance during a Brandicourt's tenure, according to a recent BioWorld analysis. Shares of Sanofi (NASDAX:SNY) rose 67 cents Monday to close at $43.03, up .2% from a year ago.
And despite its regulatory success in Europe, the Zynquista program has faced trouble with the FDA, drawing a complete response letter from the U.S. regulator in March. Lexicon's CEO Coats said at the time that his firm would not be making any comments about the "nature or content" of the CRL, beyond that the FDA found Zynquista not approvable. (See BioWorld, June 10, 2019 and March 25, 2019.)
J.P. Morgan analyst Jessica Fye said that the limited detail available on Insynchrony's outcomes suggested "Zynquista may offer limited benefit in patients with more advanced renal impairment."
"Part of our caution on the commercial opportunity for Zynquista as a late entrant in the T2D setting was that even with a label showing activity in CKD patients, it would be a challenge to gain meaningful share," she said. "The termination of the collaboration, however, represents a clear setback even relative to our low expectations as we expect it would be challenging for LXRX to commercialize Zynquista for type 2 independently."
Lexicon reported having cash and cash equivalents of $45.8 million as of March 31, the time of its first quarter earnings report. During its investor call, Thursday, it will update its financial and operating results, it said.