Lexicon Pharmaceuticals Inc.’s (NASDAQ: LXRX) shares made a huge gain on Wednesday after the announcement that its alliance with Sanofi (NASDAQ: SNY) was terminated. The partnership was centered around the development and commercialization of Zynquista (sotagliflozin).

Under the terms of the settlement, Sanofi will pay Lexicon $260 million, of which $208 million is payable upfront and the remainder is payable within 12 months, and coordinate with Lexicon in the transition of responsibility for ongoing clinical studies and other activities.

Note that prior to shares moving on Wednesday, Lexicon had a market of roughly $179 million.

In connection with the termination, Lexicon will regain all rights to Zynquista and assume full responsibility for the worldwide development and commercialization of Zynquista in both type 1 and type 2 diabetes.

The four-year partnership was terminated by Sanofi in July after the results of three late-stage studies of Zynquista.

Lonnel Coats, president and CEO of Lexicon, commented:

Our four-year alliance with Sanofi has been a productive one, with Zynquista receiving marketing approval in Europe in type 1 diabetes and advancing into late-stage studies in type 2 diabetes. Regaining worldwide rights allows us to advance our efforts to realize the full value of the Zynquista program as we prepare for regulatory filings in the U.S. and in Europe in type 2 diabetes, with data coming over the next few months from the remainder of the core Phase 3 studies and over the longer term from two outcomes studies with potential for demonstrating cardiovascular and renal benefits. We believe that this potential, along with a European approval in type 1 diabetes, offer an attractive opportunity for potential collaborators as we work to maximize the global potential for Zynquista and to achieve greater operational flexibility.

Lexicon has a few other irons in the fire in terms of its pipeline. Telotristat is in Phase 2 for the treatment of biliary tract cancer, LX2761 is in Phase 1 for the treatment of diabetes and LX9211 is also in Phase 1 for the treatment of neuropathic pain.

Shares of Lexicon Pharma traded up about 31% to $2.26 on Wednesday, in a 52-week range of $1.13 to $11.51. The consensus price target is $8.00.

Sanofi traded relatively flat at $43.54 a share, in a 52-week range of $40.00 to $45.62. The consensus price target is $52.00.

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