After 22 Years Lexicon Has An Approved Drug

Lexicon Pharmaceuticals (NASDAQ:LXRX) has been through its share of makeovers. Still, no one who remembers its birth as a genetic engineering company before the 2000 biotech boom and bust could have predicted that it would end up a rare disease player.

Yet this is how things have turned out, with Xermelo yesterday getting the US green light for carcinoid syndrome diarrhoea. Unusually for a drug treating a rare disease Xermelo went through a relatively large development program, including three pivotal trials and over 600 patients, and its approval represents a triumph of dogged determination.

Whether long-suffering Lexicon investors share this view is another matter; the group was down 2% this morning, and while the stock has done well over the past couple of years its long-term performance is poor. It is a sad footnote that, since being founded in 1995, Lexicon has burned through some $1.2bn of investor cash.

Work on Xermelo, which contains the active small molecule telotristat ethyl, earlier coded LX1032, has been under way for at least 10 years. At one point Lexicon was developing it under a venture with Symphony Capital; this was later wound up, with Lexicon buying out its final obligations last October.

Carcinoid syndromes occur in some patients with rare carcinoid tumors, and the diarrhoea symptom is usually treated with somatostatin analogues. When these no longer work patients have few options, and it is here that Xermelo comes in as the first approved oral therapy.

The drug works by inhibiting tryptophan hydroxylase to reduce production of 5-HT, elevated levels of which are thought to be associated with carcinoid diarrhoea. It had been due an approval decision last November, but the FDA delayed the action date, resulting in final approval coinciding with yesterday's Rare Disease Day.

Telemedicine

Approval is based on the double-blind Telestar trial, in which patients on Xermelo plus somatostatin analogues had 1.5 to 2.1 fewer bowel movements a day after 12 weeks versus somatostatin analogues alone. The Telecast trial looked at less sick patients, and Lexicon reckons that these could also be treated given the breadth of Xermelo’s label.

Xermelo is approved in a 250mg dose; a third phase III study, Telepath, is exploring expanded treatment with Xermelo given at 250mg and 500mg three times daily.

EvaluatePharma sellside consensus sees Xermelo’s global revenue reaching $345m in 2022, though Lexicon reckons it will sell $350m in the US alone at peak; outside the US and Japan Xermelo is licensed to Ipsen, and it has been filed for EU approval.

While it might be Lexicon’s first approved drug, the company looks like it will not switch to rare diseases as a primary focus – its remaining pipeline assets are in diabetes and analgesia. Lexicon had earlier moved away from genetic engineering towards drug development, and then embarked on a protracted search for a licensing partner for its lead diabetes asset, sotagliflozin.

With Sanofi coming on board at last for sotagliflozin in 2015, cutting Lexicon a $300m cheque in the process, the group could afford to turn its immediate focus on Xermelo. After 22 years things are finally coming together for Lexicon.

Study

Enrolment

Status

Trial ID

Telestar

135

Completed

NCT01677910

Telecast

76

Completed

NCT02063659

Telepath

124

Completion in Jan 2018

NCT02026063

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