Little Lexicon posts positive diabetes data as rival pharma giants race ahead

The newly downsized Texas-based Lexicon Pharmaceuticals says it nailed promising data on its experimental diabetes drug, positioning it for a late-stage study that could leave it poised to compete with a full lineup of rival treatments already brought to the market by a group of pharma giants.

Back in January Lexicon ($LXRX) axed close to half of its staff, laying off 115 as the biotech circled its wagons around an SGLT1/2 inhibitor. On Monday the biotech reported that the drug scored a success in Phase II, reducing the amount of insulin Type 1 diabetes patients were taking by 32% compared to a reduction of only 6% in the placebo arm.

Investigators for the company added that the drug significantly improved "glycemic control with a mean HbA1c reduction of 0.55% in the LX4211-treated group compared to a reduction of only 0.06% with placebo."

The company's stock spiked on the success.

The results also set off a discussion about the company's prospects for Phase III. Some analysts believe that Lexicon will have to sign up a major league partner if it hopes to get through late-stage development, which can easily cost hundreds of millions of dollars. Others have expressed the opinion that Lexicon can get through a Phase III study on the smaller Type 1 market on its own, leaving the mass Type 2 market for a later day.

Diabetes is the kind of mass market that leaves regulators on high alert for any potential safety issues. As a result, any company looking to get a drug approved has to clear a very high bar, leaving this field dominated by giants like Sanofi ($SNY), Eli Lilly ($LLY), Johnson & Johnson's ($JNJ) and others carving up blockbuster markets.

SGLT2 in particular has proven a tempting--but tough--target. The FDA recently rejected empagliflozin, which still represents Lilly's best shot at competing with SGLT2 pioneers like J&J's Invokana and Farxiga (dapagliflozin) from AstraZeneca ($AZN) and Bristol-Myers Squibb ($BMY), which was finally approved by the FDA in January after a long delay. Lilly presented the FDA with data from 10 multinational clinical trials and more than 13,000 people with Type 2 diabetes for its drug but was stiff-armed on an approval until its partner, Boehringer Ingelheim, resolves an FDA challenge on its manufacturing site.

Lexicon CEO Arthur Sands

CEO Arthur Sands, though, is staying upbeat about the challenge.

"The results from this study provide a clear demonstration of proof-of-concept of LX4211 as an oral, investigational new drug for type 1 diabetes complementing insulin therapy," said Sands in a prepared statement. "The magnitude of improved glycemic control by several measures, including HbA1c in only four weeks, and lower insulin requirements are highly encouraging and support the progression of LX4211 into late-stage development for type 1 diabetes."

- here's the release