Sanofi dumps Zynquista collab following phase 3 failures, but Lexicon claps back

Sanofi has moved to end a collaboration with Lexicon on Zynquista. (Sanofi)

Sanofi could use a boost from new launches, but it apparently doesn't think it'll get what it needs from diabetes hopeful Zynquista. It's calling it quits on the drug, which the FDA rejected for Type 1 diabetes in March, after reporting Type 2 results analysts called "equivocal."

Friday, Sanofi said it would end a development partnership on the med with Lexicon Pharmaceuticals after the phase 3 results in Type 2 diabetes. In two phase 3 tests, the med missed its primary endpoint. In another study, it demonstrated a statistically significant reduction in HbA1C, a commonly used measure of blood glucose, compared with placebo in patients on metformin.

At one time, some analysts, including Jefferies' Peter Welford, predicted Zynquista could reach $1 billion in global sales. Zynquista is already approved in Europe, but U.S. regulators rejected the drug in Type 1 diabetes earlier this year. The "equivocal" Type 2 showing did little to did little to inspire confidence in the blockbuster prediction.

Lexicon isn't letting Sanofi walk away without a fight, though. The Texas-based company said it considers Sanofi's notice “invalid” and believes Sanofi is breaching the partners' contract. Under their deal, Sanofi has a responsibility to fund ongoing trials, Lexicon argued. 

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

For its part, Sanofi said it’s willing to cooperate with Lexicon “to ensure a smooth transition of the studies” and is "committed to working and supporting the investigators and patients enrolled in the studies while next steps are discussed with Lexicon,” the drugmaker said in a statement. 

If Sanofi is able to end the collaboration, Lexicon CEO Lonnel Coats said his company is eager to regain rights to the drug.

The R&D miss marks a setback Sanofi at a time when it could badly use revenue from a new launch. Sanofi’s diabetes business has been struggling for years under payer pressure, and while it's recently been positioning itself to rely more on rare diseases, it was still one of a few top drugmakers to post a sales decline last year.