Some things that may have gotten lost
While Sanofi (NYSE: SNY) was announcing their results yesterday one of their partners Lexicon Pharmaceuticals (NASDAQ: LXRX) was also making news. Per a company issued press release;
“Lexicon Pharmaceuticals, Inc. (Nasdaq: LXRX), today announced that it has exercised its option under its collaboration and license agreement with Sanofi to co-promote sotagliflozin, an investigational oral dual inhibitor of sodium-glucose cotransporters 1 and 2 (SGLT-1 and SGLT-2), for the treatment of type 1 diabetes in the U.S. The opt-in decision was based on positive data from three Phase 3 studies, inTandem1, inTandem2, and inTandem3 and is aligned to a planned regulatory filing in the U.S.”
The release goes onto state;
“Under the collaboration, Lexicon granted Sanofi an exclusive worldwide (excluding Japan) license to develop, manufacture and commercialize sotagliflozin. Lexicon is responsible for all clinical development activities relating to type 1 diabetes. Sanofi is responsible for all clinical development and commercialization activities of sotagliflozin for the treatment of type 2 diabetes worldwide and is solely responsible for the commercialization of sotagliflozin for the treatment of type 1 diabetes outside the U.S. Lexicon will share in the funding of a portion of the planned type 2 diabetes development costs over the next three years, up to an aggregate of $100 million.”
Now just as a refresher just in case anyone has forgotten the Type 2 market is where the money is and while it is ultra-competitive it is also looking for new therapies. Secondarily while Lexicon will not have complete control over the commercialization they will have some say which given Sanofi’s track record for diabetes products not named Lantus is a very smart move. It’s still way too early to predict how sotagliflozin will do in the market, assuming it gets there, but this move by Lexicon says two things; they think they have a hit on their hands and they understand who their partner is.
Turning our attention back to our friends in San Diego the folks at Tandem (NASDAQ: TNDM) must also have lots of faith or they have been drinking heavily. Thanks to a very astute reader, someone who actually reads prospectuses in detail, comes this little tidbit – as everyone knows the company is attempting to raise $15 million with an ATM. Well check out this section from the prospectuses;
“Under our Term Loan Agreement, we are required to complete one or more financings in which our aggregate gross proceeds from the sale of equity securities is at least $30.0 million, no later than January 15, 2018. In March 2017, we completed a public offering of our common stock with gross proceeds of $23,125,000. However, we are required to sell additional equity securities sufficient to raise a minimum of an additional $6,875,000 of gross proceeds in order to satisfy the covenant under the Term Loan Agreement. While we are undertaking this offering for the purpose of satisfying the covenant, there can be no assurance that we will be successful in raising sufficient gross proceeds from this offering, or from any future offering, to meet our obligations under the covenant.”
Yesterday shares closed at 0.48 giving the company a market cap of just over $24 million. According to this astute reader the company would need to sell approximately 25% of their daily volume to satisfy this obligation, something the reader and we believe is a long shot. We thought we should share this little tidbit with the class.
What we find amazing is the company continues to insist that everything is just fine. That there is no need to cut to costs. They continue to insist that have all this great stuff coming yet seem clueless as how they will pay for all this great stuff.
Just to illustrate how out of touch this team is consider they are spending $20 million annually on facilities and most of this space isn’t being used. Now we are not experts in the San Diego area commercial real estate market but one would suspect the company could offset this cost by subletting the space until it is needed. But not Tandem who seems to think nothing is better than something.
Now just in case anyone wonders why we insist that any idiot can build an insulin pump but it takes real talent to run a commercially viable insulin pump company take a good look at what Tandem is doing.