The U.S. FDA smacked Lexicon Pharmaceuticals Inc. with a complete response letter regarding the NDA for Zynquista (sotagliflozin) as an adjunct to insulin therapy for glycemic control in adults with type 1 diabetes (T1D) and chronic kidney disease.

Hardly anyone, including The Woodlands, Texas-based Lexicon, was surprised by the CRL, which follows two negative opinions from the FDA’s Endocrinologic and Metabolic Drugs Advisory Committee, most recently at the end of October. Only three members of the panel said the available data demonstrated that the benefits of the drug outweigh the risks in a population of T1D patients with an eGFR of at least 45 to less than 60 mL/min/1.73 m2 or eGFR of at least 60 mL/min/1.73 m2 and UACR greater than 30 mg/g. A few of the 11 members voting no said they could support the benefit-risk profile in a subgroup of patients with eGFR greater than 60 to less than 90, but many concluded that the data aren’t supportive of the drug in any patient group. The first committee meeting was held in 2019.

Lexicon said in a press release that the CRL “aligns with the company’s previously disclosed strategic decision to discontinue launch preparations for Zynquista and focus solely on its clinical development pipeline.” Specifically, the firm got rid of commercial operations, with about a 60% workforce reduction, which means about $100 million in 2025 cost savings, additional to the previously disclosed $40 million. Leerink analyst Roanna Ruiz said in a Nov. 22 report that “while the strategic repositioning could take some time, we view this as a pragmatic approach to preserve cash/resources and refocus on larger pipeline opportunities,” especially LX-9211 for diabetic peripheral neuropathic pain (DPNP), expected to yield phase II data in the first quarter of next year.

“With accelerated enrollment suggesting strong investigator interest” and fast-track designation in hand for LX-9211, Ruiz said, plus “a track record of positive communications with the FDA, management believes success in their phase IIb study could lead to rapid advancement into two parallel phase III studies (about 1,200 patients total, 600 per study).” Beyond DPNP, Lexicon envisions broader potential for LX-9211 across various neuropathic pain indications and spasticity and intends to unveil the specifics of expansion opportunities in early 2025. “We commend Lexicon for acting swiftly” when the handwriting was on the wall, she added, a move that “is not always common for biotechs.” She lowered her price target from $4 to $2 on Lexicon shares (NASDAQ:LXRX), which have reached a 52-week high of $3.73 and a low of 62 cents. They were trading after hours at 64 cents, down 7 cents, or 10%.