Sanofi and Lexicon Pharmaceuticals will partner to develop and commercialize the Phase III candidate sotagliflozin (LX4211), the companies said today. The up-to-$1.7 billion-plus collaboration marks the pharma giant’s second billion-dollar-plus diabetes alliance announced in as many days.

Sotagliflozin is an oral dual inhibitor of sodium-glucose linked transporters 1 and 2 (SGLT-1 and SGLT-2). The compound is under study in two pivotal trials in type 1 diabetes, both of which are expected to report top-line results during the second half of 2016.

Phase III trials in type 2 diabetes are expected to begin next year.

According to Lexicon and Sanofi, sotagliflozin has shown encouraging results in Phase II studies, including reduced blood sugar (HbA1c), improved glycemic variability, and reduced meal-time insulin dose compared with placebo in type 1 diabetics. Phase II studies exploring treatment in people with type 2 diabetes—including those with renal impairment—showed lowering of HbA1c, weight loss, and blood pressure improvements.

No increase in hypoglycemic events was seen with sotagliflozin compared to background therapy in Phase II. The adverse event profile in the Phase II program was similar to other products in its class and reflected urinary glucose excretion associated with sotagliflozin's inhibition of SGLT-2, Sanofi and Lexicon added.

“Adding sotagliflozin to our portfolio, which includes medicines at virtually every stage of the treatment pathway, highlights our focus on providing a large and diverse set of therapeutic options for people with this disease,” Pascale Witz, Sanofi executive vice president, global divisions and strategic development, said in a statement.

“This agreement with Lexicon reinforces our commitment to helping people living with diabetes,” added Witz, who will lead the Global Diabetes and Cardiovascular Care Business Unit in the company's new organizational structure, announced in July and coming into effect in January 2016.

Lexicon president and CEO Lonnel Coats added that his company will continue to lead the development of sotagliflozin for type 1 diabetes, and that it still has rights to participate in the commercialization of sotagliflozin for type 1 diabetes in the United States.

Under the collaboration, Sanofi will obtain an exclusive worldwide license to develop, manufacture, and commercialize sotagliflozin. Lexicon will continue to oversee all clinical development activities relating to type 1 diabetes, while retaining an exclusive option to co-promote and having “a significant role, in collaboration with Sanofi,” in commercializing sotagliflozin for type 1 diabetes in the United States, the companies said.

In addition, Sanofi will be responsible for all clinical development and commercialization activities of sotagliflozin for type 2 diabetes worldwide, as well as for commercialization of sotagliflozin for type 1 diabetes outside the United States. Lexicon agreed to spend up to $100 million toward funding a portion of planned type 2 diabetes development costs over the next three years.

Sanofi agreed in return to pay Lexicon $300 million up front, and up to $1.4 billion in payments tied to achieving development, regulatory, and sales milestones. Lexicon is also entitled to tiered, escalating double-digit percentage royalties of net sales of sotagliflozin.

“It has been our strategy to focus our resources on the development of sotagliflozin for type 1 diabetes and to pursue a strategic partnership with respect to type 2 diabetes only if it would strengthen stakeholder value under a fully integrated diabetes program. We believe this arrangement with Sanofi achieves that objective,” Coats added.

The collaboration agreement is subject to customary filing and review under the Hart-Scott-Rodino Antitrust Improvements Act.

Just yesterday, Sanofi joined Hanmi Pharmaceutical in launching an up to €3.9 billion ($4.2 billion) alliance to develop a portfolio of long-acting diabetes treatments using Hanmi's Long Acting Protein/Peptide Discovery (LAPSCOVERY) technology.

Sanofi’s mega-deals come as the pharma giant embarks on a series of turnaround moves under CEO Olivier Brandicourt, M.D., Ph.D. Addressing investors earlier today, Dr. Brandicourt said that Sanofi would place its Merial animal drug business and its European generic drug operations under review for possible sale—as well as slice company expenses by €1.5 billion ($1.6 billion) over the next five years.

Another Sanofi priority is strengthening its diabetes business in the face of challenges that include the loss of U.S. patent protection for longtime but declining blockbuster Lantus, and a slide in the company’s overall diabetes drug sales.

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