Sanofi Pays $260 Million to Terminate Diabetes Alliance with Lexicon Pharma

Chain Breaking

In November 2015, Paris-based Sanofi inked an exclusive license deal with Texas-based Lexicon Pharmaceuticals to develop Zynquista (sotagliflozin) for type 1 and 2 diabetes. The deal had the upside potential of $1.7 billion but showed mixed results in three Phase III clinical trials. Sanofi announced it had terminated the collaboration, but Lexicon lashed out, alleging Sanofi’s termination was “invalid” and the company was “in breach of contract.”

Lexicon announced it was terminating the alliance and had settled with Sanofi effective September 9. As part of the termination deal, Lexicon regains all rights to Zynquista and takes over full responsibility for global development and commercialization of the drug for both type 1 and type 2 diabetes. Sanofi is paying Lexicon $260 million, with $208 million payable upfront. The remaining $52 million is due within 12 months and Sanofi will work with Lexicon to transition various clinical trials and other activities.

“Our four-year alliance with Sanofi has been a productive one, with Zynquista receiving marketing approval in Europe in type 1 diabetes and advancing into late-stage studies in type 2 diabetes,” said Lonnel Coats, president and chief executive officer of Lexicon.

He went on to say, “Regaining worldwide rights allows us to advance our efforts to realize the full value of the Zynquista program as we prepare for regulatory filings in the U.S. and in Europe in type 2 diabetes, with data coming over the next few months from the remainder of the core Phase III studies and over the longer term from two outcomes studies with potential for demonstrating cardiovascular and renal benefits. 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.”

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Zynquista inhibits two proteins involved in blood sugar regulation, sodium-glucose linked transporters 1 and 2 (SGLT-1 and SGLT-2). SGLT1 covers glucose absorption in the gastrointestinal tract. SGLT2 manages glucose reabsorption in the kidneys.

In Phase II trials, Zynquista showed positive data such as decreased hemoglobin A1C, a standard marker for both type 1 and type 2 diabetes.

The original deal with Sanofi was to develop, manufacture, and commercialize the drug globally with the exception of Japan. Lexicon handled clinical development for type 1 diabetes and Sanofi oversaw clinical development for type 2 diabetes. At that time, Sanofi paid Lexicon $300 million upfront and agreed to up to $1.4 billion in various milestones. Lexicon was eligible for tiered, double-digit royalties on net sales.

Sanofi, however, argued that the drug failed the SOTA-CKD4 clinical trial when the 200 mg and 400 mg doses did not show a statistically significant decrease in A1C compared to placebo at 26 weeks in patients with type 2 diabetes-CKD4.

However, Pablo Lapuerta, Lexicon’s executive vice president and chief medical officer, indicated in a separate statement on Friday, “Although the SOTA-CKD4 study appears to have narrowly missed statistical significance on A1C, 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.”

InSynchrony is made up of 11 Phase III clinical trials of Zynquista in type 2 diabetes who have a variety of therapeutic treatments, such as diet and exercise, metformin, basal insulin or sulfonylurea.

In its dueling statement, Sanofi reported Friday, “Given the primary endpoint results of blood sugar control (HbA1C) reduction in the SOTA-CKD3 and SOTA-CKD4 studies, Sanofi provided notice to Lexicon that it is terminating the collaboration to develop, manufacture, and commercialize Zynquista in all ongoing global type 1 and type 2 diabetes programs.”

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