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XenoPort, Inc. (XNPT - Snapshot Report) has signed a master manufacturing and supply agreement with Patheon Pharmaceuticals. As per the agreement, Patheon will provide commercial supplies of Horizant to XenoPort.

During the term of the agreement, XenoPort will provide Patheon with its non-binding tentative long-term requirement for the product, and will provide Patheon periodically with binding firm purchase orders for supply of the product.

The agreement stipulates that Patheon is not permitted to manufacture gabapentin enacarbil, which is the active ingredient in Horizant, or any product containing gabapentin enacarbil for any other entity except XenoPort, XenoPort’s designee or any authorized licensee of XenoPort, during the term of the agreement.

Dec 31, 2025, is the agreed upon expiry date of the agreement, with automatic one-year renewal periods if either party does not provide a prior notice of non-interest to renew.

Patheon is currently approved by the U.S. Food and Drug Administration (FDA) for manufacturing and supplying Horizant. Patheon was a supplier of the product to XenoPort’s erstwhile partner, GlaxoSmithKline (GSK - Analyst Report) on a contractual basis.

We remind investors that Glaxo and XenoPort had a collaboration agreement for Horizant that was terminated in Nov 2012. Glaxo had commercialization rights to the drug through the transition period, which ended on Apr 30, 2013. On May 1, 2013, XenoPort re-acquired all commercialization rights to Horizant. Glaxo, however, is expected to supply Horizant to XenoPort until Oct 30, 2013.

We note that Horizant is approved in the U.S. for the treatment of moderate-to-severe primary restless legs syndrome (RLS) as well as the management of postherpetic neuralgia (PHN) in adults.

In May 2013, XenoPort resumed the supply and shipment of Horizant. The company was also successful in resolving manufacturing issues and expects to fill in orders from wholesalers. We note that Glaxo faced manufacturing delays for Horizant in the U.S., leading to product shortage.

XenoPort carries a Zacks Rank #3 (Hold). Currently, companies which look attractive include Actelion Ltd. (ALIOF) and Jazz Pharmaceuticals Public Limited Company (JAZZ - Analyst Report) with a Zacks Rank #1 (Strong Buy) and a Zacks Rank #2 (Buy), respectively.

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