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Xenoport, Inc. (XNPT - Snapshot Report) reported fourth quarter 2012 loss of 38 cents per share, narrower than the Zacks Consensus Estimate of a loss of 42 cents per share and the year-ago loss of 56 cents per share.

Quarterly revenues were $0.5 million as against $5.4 million in the year-ago period, narrower than the Zacks Consensus Estimate of $1 million. Quarterly revenues decreased due to the receipt of a milestone payment of $5 million in the fourth quarter of 2011, while no such payment was received this quarter. This was partially offset by Regnite royalty revenue of $0.1 million in the reported quarter.

Research and development expenses decreased 15.3% to $10.6 million. Reduction in personnel costs and less investment on XP21279 reflected the decrease. The candidate is being developed for the treatment of patients suffering from advanced idiopathic Parkinson’s disease.

Selling, general and administrative expenses increased 7.8% to $7.4 million.

On Nov 8, 2012, Xenoport and GlaxoSmithKline plc (GSK - Analyst Report) terminated the collaboration agreement on Horizant (gabapentin enacarbil). Glaxo had development and commercial rights of Horizant in the US. The termination led to the settlement of all litigations between the two companies. We note that in Apr, 2011, Horizant received approval from the US Food and Drug Administration (FDA) for the treatment of restless legs syndrome in adults.

Once the transition is complete Xenoport will reacquire the rights to develop, manufacture and commercialize Horizant in the US. However, till the transition is complete, GlaxoSmith will be responsible for the commercialization, promotion and distribution of Horizant in the US. The transition period is expected to end on Apr 30, 2013.

As per the termination and settlement, Glaxo bought shares of Xenoport worth $40 million, at $9.9 per share.

We remind investors that in Feb 2007, Xenoport inked an agreement with Glaxo for the development and commercialization of Horizant worldwide excepting territories covered by Astellas Pharma, Inc (ALPMY). In Dec 2005, Xenoport gave Astellas the right to commercialize and develop the drug under the trade name Regnite in Japan, Korea, the Philippines, Indonesia, Thailand and Taiwan.

As per Glaxo, Horizant reported revenues worth $2.1 million in the quarter as against $0.8 million in the year-ago quarter.

For the full year, Xenoport incurred a loss of $1.30 per share wider than the year-ago loss of $1.03 per share. The Zacks Consensus Estimate reported a loss of $1.34 per share. Full year revenues decreased 50.3% to $21.6 million narrowly missing the Zacks Consensus Estimate of $22 million.

Pipeline Update

Apart from releasing financial results, the company also provided an update on its pipeline. During the fourth quarter of 2012, Xenoport completed enrollment of a phase III pivotal trial on arbaclofen placarbil (AP). We note that Xenoport is developing arbaclofen placarbil for the treatment of spasticity in patients suffering from multiple sclerosis (MS).  A total of 228 patients were enrolled for the trial.

The company expects topline data from the study in the second quarter of 2013. Xenoport plans to submit a new drug application (NDA) by the end of 2013 if the results are positive.

Xenoport, a biopharmaceutical company, carries a Zacks Rank #4 (Sell). Meanwhile, other biopharma stocks like Array BioPharma, Inc. (ARRY - Snapshot Report) look more favorable carrying a Zacks Rank #2 (Buy).

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