Dive Brief:

• Lexicon Pharmaceuticals is selling rights to its only marketed drug outside of the U.S. and Europe amid a restructuring and push to expand into Type 1 diabetes.
• Viatris has agreed to pay $25 million upfront for rights to sotagliflozin, Lexicon said Wednesday. Lexicon will also be eligible for royalties and payments for meeting certain regulatory and sales milestones. The milestone payments could add up to about $200 million, Jefferies analyst Andrew Tsai wrote in a note to clients.
• Lexicon currently sells the drug under the brand name Inpefa to reduce the risk of cardiovascular complications among patients with heart failure or Type 2 diabetes, chronic kidney disease and other risk factors. The drug brought in revenue of $1.6 million in the second quarter of this year.

Dive Insight:

The deal is a boost to Lexicon, because the company was unlikely to try to sell Inpefa outside of the U.S. on its own, according to Jefferies’ Tsai. Meanwhile, the drug fits into plans by Viatris to expand its presence in the cardiovascular market.

Lexicon is pinning its future hopes on broader use of the medicine. On Oct. 31, a Food and Drug Administration advisory panel will meet to review the drug’s use in improving glycemic control in patients with Type 1 diabetes and chronic kidney disease who are also taking insulin.

The FDA meeting follows a years-long battle by Lexicon to win approval in Type 1 diabetes. The FDA first rejected Lexicon’s application to sell sotagliflozin for Type 1 patients in March 2019 amid safety concerns and then denied the company’s bid to reverse the decision. Rejections for similar drugs vying to win approval for Type 1 patients followed, including in 2020 for Eli Lilly’s empagliflozin, sold as Jardiance.

Lexicon kept working with regulators and finally targeted a subset of Type 1 patients who also suffer from chronic kidney disease, a more difficult-to-treat population. The FDA will likely ask its advisory panel to focus on the threat of diabetic ketoacidosis, which has been associated with drugs in sotagliflozin’s class, Tsai said.

Approval for the new use would open up a U.S. market worth about $400 million for sotagliflozin, per Tsai. He expects the stock to move as much as 40% in either direction based on the outcome of the meeting and the FDA briefing documents released beforehand.

The struggles with sotagliflozin, which would be sold under the brand name Zynquista for diabetes, have played out in a larger restructuring of the company. In August, Lexicon said it was laying off staff as it readied for the potential launch of Zynquista. In September, the company lost its president and chief operating officer Jeff Wade, who had previously served as chief financial officer.