Lexicon's Sotagliflozin: New Approach To Safety May Make Approval Easier

Summary

• Sotagliflozin was rejected by the FDA in 2019 citing diabetic ketoacidosis in type 1 diabetes patients.
• This time, the company has a new approach and some strong CV benefits data that may change the FDA's viewpoint.
• The stock has had a marathon run in the last 3-4 months.
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Lexicon Pharma (NASDAQ:LXRX) has had a wonderful couple of months, trading at $1 in December to $9 today at the end of February. The spike came after the success of sotagliflozin, an oral dual inhibitor of two proteins accountable for glucose regulation, which met the primary endpoint in two phase 3 trials, SOLOIST and SCORED, showing statistically significant reductions in cardiovascular deaths, hospitalizations for heart failure and urgent heart failure visits in patients treated with sotagliflozin as compared with placebo.

Their pipeline looks like this:

Source

Sotagliflozin was approved for Type 1 diabetes in the European Union way back in 2017, under the trade name of Zynquista. Developed in partnership with Sanofi, it was refused approval in the US on an 8-8 split advisory committee vote in 2019. The molecule has now made a complete turnaround, and is mainly responsible for the current spike in the share price. The single key reason for this is that the trial showed a CV benefit for the molecule, which is nowadays a gold standard for cardiometabolic drugs.

XERMELO is/was Lexicon's only US-approved drug. XERMELO is a prescription pill, used along with somatostatin analog (SSA) therapy, for Carcinoid Syndrome diarrhea in adults who are not adequately controlled by SSA therapy. In the third quarter, the drug made $6.5mn in net sales in the US, just prior to it being sold out to TerSera Therapeutics LLC for “$160.4 million in cash and up to $65 million in additional milestone payments for the development and commercialization of XERMELO in patients with biliary tract cancer and mid-teens royalties on net sales of XERMELO in biliary tract cancer.”

Now, after the successful trial outcomes, Sotagliflozin will apply for an NDA with the FDA. On January 14, the company announced that it received regulatory feedback that “clears a key hurdle

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.