Lexicon Fires Back after Sanofi Ends Up-to-$1.7B Diabetes Collaboration

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Sanofi has terminated a nearly four-year-old, potentially $1.7 billion-plus collaboration with Lexicon Pharmaceuticals to develop ZynquistaTM (sotagliflozin) for type 1 and type 2 diabetes after the oral dual inhibitor of sodium-glucose linked transporters 1 and 2 (SGLT-1 and SGLT-2) showed mixed results in three Phase III trials. In January, Sanofi and Lexicon cited the benefits of Zynquista during a presentation (pictured) to the FDA’s Endocrinologic and Metabolic Drugs Advisory Committee. [FDA]

Sanofi has terminated a nearly four-year-old, potentially $1.7 billion-plus collaboration with Lexicon Pharmaceuticals to develop ZynquistaTM (sotagliflozin) after the type 1 and type 2 diabetes candidate showed mixed results in three Phase III trials, including disappointing outcomes among patients with chronic kidney disease (CKD).

However, Lexicon has struck back at Sanofi, declaring the pharma giant’s notice of termination “invalid” and that Sanofi was “in breach of contract” by ending the partnership.

Sanofi’s decision sent Lexicon shares tumbling 66% in early trading this morning, to $1.92 as of 10 a.m.

Zynquista is an oral dual inhibitor of sodium-glucose linked transporters 1 and 2 (SGLT-1 and SGLT-2), two proteins responsible for glucose regulation. SGLT1 is responsible for glucose absorption in the gastrointestinal tract, and SGLT2 is responsible for glucose reabsorption by the kidney. Zynquista had shown encouraging results in Phase II studies, including reduced hemoglobin A1c (HbA1c) in people with type 1 and type 2 diabetes.

Following the Phase II studies, Sanofi obtained an exclusive license in November 2015 to develop, manufacture, and commercialize sotagliflozin worldwide except Japan. Lexicon has agreed to oversee all clinical development activities relating to type 1 diabetes, with Sanofi agreeing to oversee all clinical development activities of Zynquista for the treatment of type 2 diabetes.

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

In Phase III, Zynquista appears to have performed best in the SOTA-MET trial (NCT02926950) designed to compare the candidate with placebo on HbA1c reduction in patients with type 2 diabetes (T2D) who have inadequate glycemic control with metformin. At the 400 mg dose, Zynquista showed a statistically significant reduction in HbA1c compared to placebo at 26 weeks in patients on metformin, Sanofi acknowledged.

Dispute over CKD4 trial “failure”

According to Sanofi, Zynquista failed the SOTA-CKD4 trial (NCT03242018), as two doses of the candidate (200 mg and 400 mg) failed to show a statistically significant reduction in HbA1c, compared to placebo at 26 weeks in patients with type 2 diabetes-CKD4.

That’s not how Lexicon sees it, however.

“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,” Pablo Lapuerta, MD, Lexicon EVP and chief medical officer, said in a separate statement issued by his company on Friday.

The InSynchrony program consists of 11 Phase III clinical trials designed to evaluate the efficacy and safety of Zynquista in adults with type 2 diabetes on various therapeutic backgrounds—such as diet and exercise alone, metformin, a sulfonylurea, a dipeptidyl peptidase 4 inhibitor, or basal insulin. The trials include placebo and active comparators such as glimepiride and empagliflozin, and are also evaluating patients with CKD, cardiovascular risk factors, and heart failure, as well as patients age 55 and older.

Sanofi also told Lexicon that in the SOTA-CKD3 trial (NCT03242252), Zynquista failed to achieve a statistically significant reduction in HbA1c in the subpopulation of patients with type 2 diabetes-stage 3B CKD.

“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,” Sanofi said in its Friday statement announcing the termination.

Zynquista’s development in type 1 diabetes, in combination with insulin, suffered a key setback earlier this year when the FDA rebuffed Sanofi and Lexicon’s NDA by issuing a Complete Response Letter (CRL). “Sanofi and Lexicon will work closely with the FDA to determine the appropriate next steps, the companies said on March 22.

The CRL came two months after the FDA’s Endocrinologic and Metabolic Drugs Advisory Committee divided 8-8 on whether Zynquista’s overall benefits outweighed its risks enough to justify approval. Committee members voting no cited the increased risk of diabetic ketoacidosis. In a company statement, Lapuerta acknowledged: “Diabetic ketoacidosis is an inherent risk of type 1 diabetes and an increase was seen with sotagliflozin compared to insulin alone. We believe this can potentially be addressed with proper education and monitoring.”

Lexicon fires back at Sanofi

On Friday, following the termination notice, Lexicon shot back at Sanofi in a statement that accused Sanofi of breach of contract.

Lexicon cited a provision of the collaboration and license agreement stating that even if a valid termination of the alliance had been delivered, Sanofi has continuing contractual obligations to transition rights to Zynquista and continue to fund ongoing clinical trials for a contractually specified period of time following termination.

Sanofi acknowledged the need for a transition in its statement, which said the pharma giant “expressed willingness to work with Lexicon to ensure a smooth transition of the studies.”

“Sanofi remains committed to working and supporting the investigators and patients enrolled in the studies while next steps are discussed with Lexicon,” Sanofi added.

SOTA-CKD3 showed some positive results, Sanofi acknowledged, with the company reporting that the 400 mg dose of Zynquista showed a statistically significant reduction in HbA1c in the entire population of patients with moderate (stage 3) CKD, and in the subpopulation of patients with stage 3A CKD compared to placebo at 26 weeks.

Sanofi said the ongoing Phase III trials will continue with no immediate changes: “Sanofi remains committed to working and supporting the investigators and patients enrolled in the studies while next steps are discussed with Lexicon.”

Zynquista is approved in the European Union for use as an adjunct to insulin therapy to improve blood sugar (glycemic) control in adults with type 1 diabetes with a body mass index  ≥ 27 kg/m2, who have failed to achieve adequate glycemic control despite optimal insulin therapy.

“While we are disappointed in the position taken by Sanofi, we are confident in the strength of the data we have seen thus far in the type 2 diabetes program and are optimistic about achieving continued success in the balance of the core Phase III program, which we expect will be completed in the coming months,” added Lonnel Coats, Lexicon’s president and CEO.

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