Lexicon sells Viatris rights to cardio drug outside U.S., Europe

Lexicon Pharmaceuticals has announced a deal to sell the international rights to its only marketed drug, outside the U.S. and Europe, as part of a strategic restructuring and expansion focused on Type 1 diabetes. Viatris will pay $25 million upfront for the rights to sotagliflozin, with Lexicon also qualifying for royalties and milestone payments that could total around $200 million, according to Jefferies analyst Andrew Tsai.

Sotagliflozin, marketed under the brand name Inpefa, is currently used to lower the risk of cardiovascular issues in patients with heart failure, Type 2 diabetes, chronic kidney disease, and other risk factors. The drug generated $1.6 million in revenue in the second quarter of this year.

This transaction is beneficial for Lexicon, as the company was not expected to market Inpefa outside the U.S. independently, Tsai noted. On the other hand, Viatris aims to strengthen its cardiovascular portfolio through this acquisition. Lexicon's immediate strategic focus is on expanding the use of the drug. An FDA advisory panel is scheduled to review the drug's application for improving glycemic control in Type 1 diabetes patients with chronic kidney disease who are on insulin on October 31.

This panel meeting comes after Lexicon's prolonged effort to secure approval for Type 1 diabetes. The FDA initially rejected their application for sotagliflozin in March 2019 due to safety concerns, and subsequent attempts to reverse this decision were also unsuccessful. Similar rejections followed for other drugs in this category, including Eli Lilly's empagliflozin, known as Jardiance, in 2020.

Nevertheless, Lexicon persisted, targeting a subset of Type 1 patients with chronic kidney disease, a particularly challenging group to treat. Tsai indicated that the FDA advisory panel would likely focus on the risk of diabetic ketoacidosis, a known issue with sotagliflozin and drugs in its class.

If approved for the new use, the U.S. market for sotagliflozin could be worth approximately $400 million, according to Tsai. He projected a potential 40% fluctuation in Lexicon's stock value depending on the meeting's outcome and the preceding release of FDA briefing documents.

The journey with sotagliflozin, which would be branded as Zynquista for diabetes, is part of a broader organizational restructuring at Lexicon. In August, the company announced layoffs in preparation for Zynquista's potential launch. In September, Lexicon faced another challenge with the departure of its president and chief operating officer, Jeff Wade, who had a prior role as the company's chief financial officer.