FDA stiff-arms Sanofi and Lexicon's Type 1 diabetes hopeful Zynquista

The FDA turned away Sanofi's Type 1 diabetes candidate Zynquista on Friday. (Sanofi)

The FDA stiff-armed Sanofi and Lexicon's diabetes drug Zynquista on Friday, darkening the companies' hopes of launching the drug for Type 1 diabetes this year.

It's not a complete surprise, because an FDA advisory panel was split right down the middle on whether to approve the SGLT1/2 drug. But the FDA could have chosen the positive side of that 8-8 vote, and in Europe, a key regulatory committee recommended it for approval at the end of February.

The two companies announced Friday afternoon that they'd received a complete response letter denying approval but didn't say much more than that. Lexicon shares fell 17% on Friday.

On a hastily convened conference call with analysts, Lexicon CEO Lonnel Coats said he couldn't characterize the issues raised by the FDA because Lexicon had not yet seen the CRL itself. Sanofi is taking the lead with regulators, he said.

In their statements, the partners said they'd “work closely with the FDA to determine the appropriate next steps."

The companies applied for approval to treat type 1 diabetes patients in combination with insulin. In a note to clients, analysts with ODDO BHF wrote that the indication didn’t carry high expectations at Sanofi. Alternatively, Sanofi has full rights in type 2 diabetes, which would be a “much more significant” approval, the analysts wrote. The drug is currently in phase 3 testing in those patients.

Looking ahead, the analysts wrote that they have “very little detail” about the drug’s new regulatory timeline.

RELATED: FDA panel split on Sanofi's Type 1 diabetes hopeful Zynquista 

The decision follows a tie vote in January by independent experts over whether the drug’s benefits outweigh its risks. At the time, Sanofi Global Vice President and Head of Diabetes Medical Affairs Rachele Berria, M.D., Ph.D., said in a statement that the company believes “in the overall benefit-risk profile of sotagliflozin for adults with Type 1 diabetes who lack adequate glycemic control using insulin alone.” 

Pablo Lapuerta, M.D., chief medical officer of Lexicon, added at the time that the drug in combo with insulin “significantly improved glycemic control without increasing hypoglycemia” in clinical trials. 

The results couldn’t “be achieved with insulin alone,” he added. 

The FDA’s decision marks a setback for Sanofi, as the company could badly use revenue from a new launch. The company was one of a few top drugmakers to post a sales decline last year. Jefferies analysts had predicted that the drug would generate peak annual sales of $1 billion. 

Sanofi's shares were down about 2.5% on Friday afternoon.

Editor's note: This story was updated with comments from ODDO BHF analysts.