Sanofi to pay $260M to exit Lexicon diabetes pact

Sanofi will in fact be saying an expensive au revoir to Lexicon (Sanofi)

Sanofi is set to pay Lexicon Pharmaceuticals $260 million (€236 million) to get out of a diabetes pact. The dissolution of the alliance follows the generation of mixed clinical data on Zynquista in Type 1 diabetics that failed to persuade the FDA to approve the dual SGLT1-SGLT2 inhibitor.

The FDA issued a complete response letter for Zynquista, also known as sotagliflozin, to Sanofi in March. Months later, Sanofi revealed the drug had failed to live up to its expectations in chronic kidney disease patients, leading it to decide to terminate its collaboration with Lexicon. That decision will cost Sanofi financially.

This week, Lexicon revealed Sanofi will pay $260 million to exit the alliance. Sanofi will pay 80% of the exit fee upfront, with the remaining 20% split between two installments payable within six and 12 months of the settlement.

Having settled the financial side of the separation, Sanofi is now working to transfer responsibility for ongoing studies to Lexicon. Sanofi will transfer responsibility for studies deemed to be core to the program immediately. The transfer of non-core studies, including a phase 3 cardiovascular outcomes trial, will take 120 days. Sanofi and Lexicon will largely bear their own costs in relation to the transfer.

The agreement marks the end of a relationship that fell well short of expectations. Sanofi paid $300 million upfront and committed to up to $1.4 billion in milestones to obtain a worldwide license for Zynquista in 2015. The deal gave Sanofi the option to terminate the deal in the event of a clinical fail.

Sanofi felt the data it reported in July were weak enough to enable it to terminate the deal. Lexicon disagreed, stating its belief that Sanofi’s termination request was invalid in a regulatory filing in which it laid into its partner for bypassing the joint steering committee and failing to follow the R&D plan.