Lexicon Pharmaceuticals has announced a $260m settlement with Sanofi over the termination of their alliance, which focused on the development and commercialisation of diabetes drug Zynquista (sotagliflozin).

Under the settlement, Sanofi will pay $208m upfront, as well as the remaining amount within 12 months. The company will also support Lexicon in transitioning Zynquista-related clinical trials and other activities.

The drug is being developed for the treatment of types 1 and 2 diabetes. It is an oral inhibitor of the sodium-dependent glucose co-transporter types 1 and 2 (SGLT1 and SGLT2) proteins involved in glucose regulation.

In the EU, Zynquista has approval alongside insulin therapy to improve blood sugar regulation in adult type 1 diabetes sufferers.

Sanofi and Lexicon partnered in November 2015 to develop and commercialise the drug.

The terms of the partnership provided Sanofi with an exclusive worldwide licence to the product. At the time, Lexicon was eligible for up to $1.4bn milestone payments.

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Sanofi terminated the alliance in July following the results of three Phase III clinical trials, SOTA-MET, SOTA-CKD3 and SOTA-CKD4.

The termination will provide Lexicon with all rights to the drug. The company will, therefore, be responsible for the global development and commercialisation in both diabetes indications.

Lexicon Pharmaceuticals president and CEO Lonnel Coats said: “Regaining worldwide rights allows us to advance our efforts to realise the full value of the Zynquista programme as we prepare for regulatory filings in the US and in Europe in type 2 diabetes, with data coming over the next few months from the remainder of the core Phase III studies and over the longer term from two outcomes studies with potential for demonstrating cardiovascular and renal benefits.”

Lexicon may seek other partners to develop the drug further, as well as improve its operational flexibility.

In a separate development, Sanofi signed an agreement to sell its manufacturing site in Ankleshwar, India to Zentiva Group.