The biotech resurrection continues

One of the benefits of biotech being a risky sector is that the highs are sometimes bigger than the lows – think Vanda or Amarin’s phoenix-like rises from the dead. Yesterday Lexicon and DBV Technologies joined Trillium in reminding investors that you should never write any biotech company off completely.

Unlike Trillium, however, which climbed 278% in 2020 on lots of sentiment and a small investment from Pfizer, Lexicon and DBV revealed positive regulatory updates on lead assets, Zynquista and Viaskin Peanut respectively. The markets had largely given up on both projects, which might now have a future after all.

Zynquista, a beleaguered SGLT1/2 inhibitor, was approved for type 1 diabetes in 2019, but only in the EU, where as of late last year it had remarkably still not been launched. The US FDA had rejected its filing over risks of diabetic ketoacidosis, prompting Sanofi to walk away from a licensing deal.

Yesterday, however, Lexicon revealed feedback from the US agency suggesting that results of two pivotal trials, Soloist and Scored, could support a US filing – for type 2 diabetics with worsening heart failure or additional risk factors, with a potential label including reduction of risk of cardiovascular death.

The two trials’ positive results were presented at last year’s AHA meeting, but the data’s relevance was clouded by the fact that the studies had been cut short prematurely because of loss of funding, which Lexicon had blamed partly on Covid-19 (AHA 2020 – sotagliflozin wins come too late for Lexicon, November 17, 2020).

Lexicon stock closed up 105%, putting the group’s market cap over $1bn, a level it had not seen since before the FDA rejection. Sellside consensus, as computed by EvaluatePharma, shows Zynquista posting 2026 revenues of just $75m, entirely in type 1 disease, suggesting what an unexpected fillip a type 2 label might give.

Peanuts

Meanwhile, DBV emerged as another apparent beneficiary of the FDA’s regulatory generosity. After yesterday’s market close the French group said the US agency had provided a path forward for its peanut allergy project Viaskin Peanut.

Like Zynquista this lead asset had a tortuous development path, and was hit with a complete response letter demanding a human factor study to clear up concerns of patch-site adhesion on efficacy, and supplementary clinical data to support a modified patch.

Some had assumed that such a stumbling block would see Viaskin Peanut discontinued. But DBV said the agency had told it that the latter point could now be addressed by additional chemistry data. With the assumption that two short trials will suffice, rather than a new pivotal programme, DBV stock traded up 45% this morning.

Of course, full FDA communication is confidential, so investors only have companies’ word for this. A better test than a corporate press release is whether such developments lead to deal-making, and for Lexicon a partner is surely needed to address a primary care market like type 2 diabetes.

And a Zynquista partner might also want to see whether the drug’s label includes heart failure with preserved ejection fraction (HFpEF), an elusive use. A benefit in HFpEF patients was an important finding of the Soloist study, though at the time analysts did not see a path in type 2 disease.

Either way, time is of the essence for Lexicon: HFpEF studies of two marketed SGLT2 inhibitors, Lilly/Boehringer Ingelheim’s Jardiance and Astrazeneca’s Farxiga, read out this year.