What happened

Shares of Lexicon Pharmaceuticals (NASDAQ:LXRX) were up 18% at 3:39 p.m. EDT on Monday in anticipation of the biotech presenting data on its diabetes drug Zynquista at the European Association for the Study of Diabetes (EASD) annual meeting tomorrow.

So what

Zynquista is an SGLT inhibitor designed to increase the removal of sugar from diabetic patients through their urine via the kidneys. It's a multibillion-dollar drug class in type 2 diabetes, but the class has had trouble breaking into type 1 diabetes.

The Food and Drug Administration turned down an application to approve the drug as a treatment for type 1 diabetes in March. But European regulators approved the drug -- and a competing one from AstraZeneca -- in overweight type 1 diabetics. Not surprisingly, reducing sugar in the bloodstream not only helps improve diabetes symptoms but can also help patients lose weigh.

Lexicon's two presentations at EASD on Tuesday will focus on the effects of Zynquista on body weight. The hope is that the data could help persuade regulators at the FDA to change their minds or, at the very least, help the European launch of Zynquista.

Hands using a glucose meter

Image source: Getty Images.

Now what

Lexicon will either need to launch Zynquista on its own or find a partner, because its former partner Sanofi (NASDAQ:SNY) recently backed out of their deal. Fortunately, Lexicon got $260 million in the breakup, so it has a bit of a cushion to get back on its feet.

The EASD presentations could be a good start. Just keep in mind: When investing in biotechs, data releases are often sell-the-news events, so buying at today's inflated price ahead of the data might not be the best short-term move.

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