XenoPort Near Attractive Levels

XenoPort, Inc.’s (XNPT - Analyst Report) lead candidate is Solzira (XP-13512), a Transported Prodrug of gabapentin. XenoPort is partnered with GlaxoSmithKline (GSK - Analyst Report) for development and commercialization in the U.S. and select countries outside the U.S. The drug has completed late-stage trials for the treatment of Restless Legs Syndrome. The data has been highly encouraging. XP-13512 could launch in the third quarter of 2009.

XenoPort currently trades with a market capitalization of around $1.25 billion. We think the market is coming to grips with the power XenoPort’s Transported Prodrug technology. We believe there are potentially hundreds of currently approved molecules that have failed to achieve peak penetration because of deficiencies in the oral absorption or metabolism. This creates an enormous opportunity for the company to form alliances and partner with larger companies such as the deal with GlaxoSmithKline.

Our current rating is Hold with a $52 target. We think the company can earn $1.46 in 2011 and potentially $2.63 in EPS in 2012. We feel that $52, a market capitalization of $1.3 billion, is a fair value for the current fundamentals. We would be buyers of the stock on additional weakness.

Read the full analyst report on XNPT

Read the full analyst report on GSK