Lexicon Pharmaceuticals, Inc.
- Company Name
- Lexicon Pharmaceuticals, Inc.
- Stock Symbol
- Class Period
- March 11, 2016 to January 17, 2019
- Motion Deadline
- March 30, 2019
- Southern District of Texas
The complaint charges Lexicon and certain of its officers with violations of the Securities Exchange Act of 1934. Lexicon is a biopharmaceutical company that focuses on the development and commercialization of pharmaceutical products for the treatment of human diseases. “Sotagliflozin” is the scientific name of one of Lexicon’s orally-delivered small molecule drug candidates under development. Sotagliflozin is in Phase 3 clinical trials for the treatment of type 1 and type 2 diabetes.
In November 2015, Lexicon entered into a collaboration and license agreement with Sanofi S.A. (“Sanofi”), a French multinational pharmaceutical company. Under the collaboration and license agreement, Lexicon granted Sanofi an exclusive worldwide royalty-bearing right and license to develop, manufacture and commercialize sotagliflozin. Lexicon is responsible for all clinical development activities relating to type 1 diabetes and retains an exclusive option to co-promote and have a significant role, in collaboration with Sanofi, in the commercialization of sotagliflozin for the treatment of type 1 diabetes in the United States. Sanofi is responsible for all clinical development and commercialization of sotagliflozin for the treatment of type 2 diabetes worldwide and is solely responsible for the commercialization of sotagliflozin for the treatment of type 1 diabetes outside the United States.
On May 22, 2018, Sanofi filed a New Drug Application (“NDA”) for “Zynquista” (the trademarked, commercialized name of sotagliflozin) with the U.S. Food and Drug Administration (“FDA”). The NDA for Zynquista was based on data from the inTandem clinical trial program that included three Phase 3 clinical trials assessing the safety and efficacy of Zynquista in approximately 3,000 adults with inadequately controlled type 1 diabetes. According to Jorge Insuasty, Sanofi’s Senior-Vice President, Global Head of Development, “[i]f approved, Zynquista would be the first oral antidiabetic drug approved in the U.S. for use by adults with type 1 diabetes, in combination with insulin.”
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse information regarding the prospects for sotagliflozin. Specifically, defendants failed to disclose that the data from Lexicon’s Phase 3 clinical trials assessing the safety and efficacy of sotagliflozin in treating type 1 diabetes were not as positive as Lexicon represented and the health risks posed by sotagliflozin were severe enough to threaten approval of the drug by the FDA. As a result of this information being concealed from the market during the Class Period, Lexicon securities traded at artificially inflated prices, with its stock price reaching a high of more than $19 per share.
Then on January 17, 2019, Lexicon announced that the Endocrinologic and Metabolic Drugs Advisory Committee of the FDA had “voted eight to eight on the question of whether the overall benefits of [Lexicon’s product] Zynquista (sotagliflozin) outweighed the risks to support approval.” On news of the Advisory Committee’s stalemate, Lexicon’s stock price fell $1.74 per share, or more than 22%, to close at $5.96 per share on January 18, 2019.