Any other company …..

Any other company …..

Shares of Lexicon Pharmaceuticals (NASDAQ: LXRX) got off to a rousing start today up nearly 50% but have since leveled up some 18%. The reason for this major move upwards is the company released results from a late phase 3 trial for Sotagliflozin. Sotagliflozin is an oral dual inhibitor of two proteins responsible for glucose regulation known as sodium-glucose co-transporter types 1 and 2 (SGLT1 and SGLT2). SGLT1 is responsible for glucose absorption in the gastrointestinal tract, and SGLT2 is responsible for glucose reabsorption by the kidney.

According to a company issued press release;

“Top-line results from the Phase 3 study showed that patients treated with sotagliflozin had a mean A1C reduction from baseline of 0.43% on 200mg once daily sotagliflozin dose (p<0.001) and a reduction of 0.49% on 400mg once daily sotagliflozin dose (p<0.001) as compared to a reduction of 0.08% on placebo after 24 weeks of treatment, meeting the study’s primary endpoint. This statistically significant and clinically meaningful improvement in A1C for both doses of sotagliflozin was achieved without an increase in severe hypoglycemia, one of the most prevalent serious health challenges in type 1 diabetes, which was seen less frequently in both treatment arms than placebo.”

Although initially targeted at patients with Type 1 diabetes, the company is collaborating with Sanofi (NYSE: SNY) to bring this drug to the much larger Type 2 market. According to a story posted on the Investor’s Business Daily web site;

“We think its dual mechanism of action as an SGLT-1/SGLT-2 inhibitor could differentiate it from marketed SGLT-2 inhibitors in Type 2 diabetes, and we assume peak sales could exceed $2 billion in this indication,” wrote Morningstar analyst Karen Andersen in a research note last November. “While Lexicon will now see smaller realized sales in Type 1 diabetes, in the form of double-digit royalties from Sanofi, this deal also opens up significant potential in Type 2 diabetes.”

Now we don’t know Ms. Andersen but we do know Sanofi and their history for diabetes drugs not named Lantus. Since we have covered this history extensively there is no need to repeat ourselves.

Yet, this reaction to shares of Lexicon while understandable is over-blown. Even if the company wasn’t burdened with Sanofi. Yes, the results were good but not good enough to change the dynamics of the diabetes drug market. Keep in mind that this drug will compete with Invokana and Jardiance, one from Johnson and Johnson (NYSE: JNJ) the other Lilly (NYSE: LLY) two companies that actually know what they are doing. It will also compete with the oral version of semaglutide from Novo Nordisk (NYSE: NVO) another company that knows what they are doing.

Listen if Lexicon is relying on Sanofi’s “expertise” to get this drug through the FDA and then onto formularies, all we can say is good luck. If they think Sanofi will come up with a cohesive strategy to sell this drug, we want whatever they are smoking. Should they be foolish enough to believe that Sanofi is actually a good partner we suggest they contact the folks at Medtronic (NYSE: MDT), MannKind (NASDAQ: MNKD), AgaMatrix or Verily.

This news would really good if they had any other partner but Sanofi. Yet, this one fact alone based on how well our wine drinking friends have performed in the past should give everyone a reason to pause. We would conclude with something Momma Kliff used to say but she’s too busy shaking her head in disbelief. That anyone would believe that Sanofi could help any diabetes drug not named Lantus become a hit.