GlaxoSmithKline plc ( GSK - Analyst Report ) and XenoPort, Inc. ( XNPT - Snapshot Report ) recently announced that their drug, Horizant, has been approved by the US Food and Drug Administration (FDA) for the management of postherpetic neuralgia (PHN) in adults.

PHN is a nerve pain that follows herpes zoster (shingles). According to Glaxo and XenoPort, approximately 100,000 patients develop PHN in the US annually.

Glaxo had submitted a supplemental New Drug Application (sNDA) to the FDA in August 2011. The approval was based on data from a 12-week principal efficacy trial and two supportive studies. A total of 574 PHN patients above 18 years were enrolled in these three studies. All three studies met their primary endpoints.

Horizant is already approved in the US for the treatment of moderate-to-severe primary restless legs syndrome (RLS) in adults. However, the product is not recommended for use in patients who are required to sleep during the day and remain awake at night.

Glaxo and XenoPort have co-development and co-promotion rights in the US for Horizant. Astellas Pharma Inc. has exclusive rights to the drug in Japan and five other countries in Asia. Astellas markets the drug in Japan under the trade name Regnite for the treatment of RLS. Xenoport has rights to Horizant in the rest of the world. The first commercial sale of the product, following the PHN approval, will result in a $10 million milestone payment from Glaxo to XenoPort.

Our Recommendation

We currently have a Neutral recommendation on both Glaxo and XenoPort. Both stocks carry a Zacks #3 Rank (‘Hold’ rating) in the short run.