Lexicon Pharmaceuticals has entered into an exclusive licensing agreement with Viatris, granting Viatris the rights to sotagliflozin in all markets outside of the U.S. and Europe. This strategic move allows Lexicon to focus on expanding the drug's applications within the U.S., particularly for Type 1 diabetes patients with chronic kidney disease, while Viatris gains a valuable asset to bolster its cardiovascular drug offerings.
Financial Terms and Strategic Rationale
Viatris will pay Lexicon $25 million upfront for the rights to sotagliflozin. Lexicon is also eligible to receive potential regulatory and sales milestone payments, which could total up to $200 million. According to Jefferies analyst Andrew Tsai, this deal is advantageous for Lexicon, as it was unlikely to independently pursue commercialization of Inpefa outside the U.S. The agreement aligns with Viatris's strategy to enhance its presence in the cardiovascular therapeutic area.
Sotagliflozin's Current and Potential Uses
Currently, Lexicon markets sotagliflozin under the brand name Inpefa to reduce the risk of cardiovascular complications in adults with heart failure, Type 2 diabetes, and chronic kidney disease. In the second quarter of this year, Inpefa generated $1.6 million in revenue. Lexicon is now focusing on securing FDA approval for sotagliflozin (potentially branded as Zynquista) to improve glycemic control in Type 1 diabetes patients who also have chronic kidney disease.
FDA Advisory Committee Review
An FDA advisory panel is scheduled to meet on October 31 to review sotagliflozin's use in Type 1 diabetes patients with chronic kidney disease. The FDA's decision will significantly impact Lexicon's future, with potential stock price movements of up to 40% anticipated based on the meeting's outcome and the FDA briefing documents. A key concern for the panel will be the risk of diabetic ketoacidosis, a known issue associated with drugs in the SGLT inhibitor class to which sotagliflozin belongs.
Background and Market Context
Lexicon's pursuit of approval for sotagliflozin in Type 1 diabetes has faced challenges. The FDA previously rejected the drug for this indication in 2019 due to safety concerns. If approved for the new indication, sotagliflozin could tap into a U.S. market estimated at $400 million. This potential approval is crucial for Lexicon, which has undergone restructuring, including layoffs, to prepare for the possible launch of Zynquista. The company also recently experienced leadership changes, including the departure of its President and COO.
