Hey at least they are consistent

Hey at least they are consistent

“Sanofi (EURONEXT: SAN and NYSE: SNY) and Lexicon Pharmaceuticals, Inc. (NASDAQ: LXRX) announced today that they have entered into a collaboration and license agreement for the development and commercialization of sotagliflozin, an investigational new oral dual inhibitor of sodium-glucose cotransporters 1 and 2 (SGLT-1 and SGLT-2), which could be a potential treatment option for people with diabetes.” – Lexicon press release November 5, 2015

“In an 8-8 vote on Thursday, an FDA advisory panel was divided on whether to recommend approval of Sanofi and Lexicon Pharmaceutical’s investigational diabetes drug Zynquista (sotagliflozin). “ FirstWord Pharma January 18, 2019

Now we don’t want to say we’re not surprised but honestly, we aren’t. Frankly the FDA panel did Sanofi a favor as now they won’t suffer another commercial failure in diabetes. The reality is even if the panel voted overwhelmingly to approve the drug it had a limited commercial potential. See Zynquista was targeted as an add on therapy for Type 1 patients, a drug they would use in addition to insulin.

Here is where we need to separate the treatment of Type 1 diabetes with the business of Type 1 diabetes. The ADA estimates there are 1.25 million patients with Type 1 diabetes or about 5% of the total diabetes population. Given the known issues with Zynquista, DKA being the biggest, it’s unlikely even if approved it would have captured more than 10% of this market. Simply put Sanofi who’s in desperate need of a billion-dollar drug was targeting a market that at best would have generated a few million in sales.

This is so Sanofi a company that has no problem spending billions to make millions. Or as we’re fond of saying what’s the surest way to make a small fortune, start with a big one. But Zynquista isn’t the first and only example of this. Sanofi has a long and distinguished history of throwing good money into bad bets. Their deal with MannKind is the first that comes to mind their troubled partnership with Verily which so far has cost them $250 million is also on this list.

Let’s focus on this second deal just for a moment as rumors have been swirling for months that all is not kibbles and bits with Verily and Sanofi. Even with its recent victories OnDuo seems lost in the diabetes wilderness. They sign a deal with Walgreens who then turns around and signs another deal with Microsoft which seems to be targeted at the same patient population as the OnDuo deal. Yes, we know this is confusing but hey it is the wacky world so just run with it.

Anyway, these two “partners” each unhappy with the relationship are searching for a way out. Like many unhappy couples who do their best to project a happy home these disagreements are starting to bubble up to the surface for all to see. As we have noted previously Verily would like nothing better for Sanofi to file for divorce, collect the $1 billion break-up fee and move on. Frustrated and desperate Sanofi just might be dumb enough to pony up the billion and then run OnDuo into the ground all by themselves.

We’d call Sanofi the gang that can’t shot straight but honestly that’s an insult to the gang. We cannot think of too many companies in our wacky world that has achieved this level of ineptitude. Roche is likely the closet as they spent over a billion to buy insulin pump maker Disetronic only to see it sink into the abyss and have nothing to show for the billion spent. Then again Miles White Abbott’s CEO who’s enjoying tremendous success with the Libre has the distinction of running not one but two BGM companies into the ground. Might as well throw JNJ into the mix as after spending nearly $600 million to buy Animas and another few hundred million to run the company they gave it away for nothing.

Yet even with these failures, which as we can all see are common in our wacky world, Sanofi has achieved a special level of stupidity. We’d say that if Sanofi was a football team, they’d be the Cleveland Browns but heck the Browns did pretty well this year and OMG are considered a playoff contender next year. So perhaps there is hope for Sanofi after all.

Yet unlike the Browns they don’t have an exciting new quarterback or new head coach, Sanofi to paraphrase the late great Dennis Green in perhaps the greatest football rant ever – is who we thought they are – dumb and dumber.