Lexicon Falls As FDA Denies Approval To Type I Diabetes Drug

Shares of Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX) plunged almost 22% on Mar 22 following a complete response letter (“CRL”) to the new drug application (“NDA”) seeking approval of its lead pipeline candidate, Zynquista (sotagliflozin). Lexicon is developing the candidate in collaboration with Sanofi (NASDAQ:SNY) .

Zynquista is a dual SGLT1 and SGLT2 inhibitor evaluated in combination with insulin for the treatment of type I diabetes in adult patients.

Lexicon’s shares have decreased 6.6% so far this year against the industry’s rise of 9.4%.

We remind investors that in January, a FDA advisory committee was divided when it came to supporting the approval of Zynquista. There were concerns about whether the candidate’s overall benefits outweigh the risks. The issuance of a CRL signifies that the FDA cannot accept the NDA in its current form. Further evaluations or more detailed data may be required for considering the approval of the candidate. Lexicon and Sanofi plan to work with the FDA and determine the future path for development.

However, we note that the Committee for Medicinal Products for Human Use has recommended an approval for Zynquista in Europe. A decision from the European Medicines Agency is expected in the second quarter of 2019. The impact of the CRL on EMA’s decision remains to be seen.

Apart from Zynquista, Lexicon has a marketed drug, Xermelo. The drug was launched in 2017 for the treatment of carcinoid syndrome diarrhea in combination with somatostatin analog (“SSA”) therapy. The company is also evaluating the drug in a mid-stage study for the treatment of biliary tract cancer.

Xermelo performed impressively in 2018 with sales growing sequentially in every quarter of the year. In 2018, drug sales totaled $25 million in the United States, up 65.7% from 2017. The drug is marketed in Europe by Ipsen and Lexicon earns royalties on the sales.

Lexicon has two early-stage candidates – LX2761 and LX9211 – which are being developed for treating type I diabetes and neuropathic pain, respectively.

Zacks Rank

Lexicon currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include Celgene Corporation (NASDAQ:CELG) and Kamada Ltd. (NASDAQ:KMDA) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Celgene’s earnings estimates have been revised 3.5% upward for 2019 over the past 60 days. The stock has rallied 37.5% so far this year.

Kamada’s earnings estimates have been revised 34.3% upward for 2019 over the past 60 days. The stock has rallied 16.6% so far this year.

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