Lexicon bids farewell to top seller Xermelo in reorganization toward R&D pipeline
Three years ago, Lexicon Pharmaceuticals was flying high following the FDA approval and commercial launch of its Xermelo drug, which treats carcinoid syndrome diarrhea.
But now the company is saying goodbye to its top seller as it pares down debt and reorganizes to focus on its R&D pipeline. In what CEO Lonnel Coats described as a “bittersweet” moment, Lexicon announced Thursday the sale of Xermelo to TerSera for $155 million in upfront payments and $4 million in existing inventory. Lexicon can receive an additional $65 million in milestone payments relating to biliary tract cancer and royalties on future Xermelo sales.
“The sale of our commercial product, Xermelo, to TerSera provides a home for an important treatment for patients with cancer,” Coats said in a statement.
TerSera will also assume an ongoing Phase II trial of Xermelo in biliary tract cancer patients and can hire 20 employees from Lexicon who work on the drug.
Coats outlined the reorganization in a conference call with investors early Thursday morning detailing the company’s second quarter financials. Though Xermelo sales were up 21 percent to $9 million in the quarter compared with 2019 Q2, Lexicon ended the three-month period at a net loss of $69.1 million.
The company initiated the sell-off to pay back all $150 million of an existing loan and will now focus on its LX9211 candidate for the treatment of diabetic peripheral neuropathic pain. Thanks to the sale, LX9211 will enter Phase II and Lexicon will have enough runway to operate such trials through the end of 2021.
Though Xermelo had been a boon for Lexicon, Thursday’s sale is the latest in a long line of setbacks. The Texas-based company had partnered with Sanofi for $300 million upfront to develop a diabetes drug, the SGLT1/2 inhibitor sotagliflozin. But the FDA rejected the drug in March 2019, and after multiple Phase III failures in type 2 diabetes, Sanofi exited the deal, paying another $260 million and causing Lexicon stock to drop as much as 70 percent. US regulators rejected sotagliflozin for a second time last December and Lexicon has filed an appeal.
At issue was the high risk of diabetic ketoacidosis in type 1 diabetes, which caused the FDA to split its vote 8-8 in the first rejection incident. It’s a condition that can be hard to spot, raising the chances of hospitalization for patients who are unaware that they urgently need to take insulin. Other SGLT inhibitors, such as AstraZeneca’s Farxiga, ran into similar trouble.
LX9211 itself is a small molecule inhibitor of adaptor associated kinase 1 (AAK1) and Lexicon is exploring multiple treatments for neuropathic pain with the candidate. Taken orally, LX9211 showed a favorable safety profile in Phase I studies, Lexicon said, and the company is planning further Phase II studies.