Shares of biopharmaceutical company XenoPort Inc. (XNPT) have recovered 42% from their 52-week low of $13.36, set last May, and currently trade around $18. The company, which is yet to market a drug, is awaiting a crucial FDA decision on XP13512, its lead product candidate to ease restless legs syndrome.
Restless legs syndrome, or RLS, is a neurological condition that is characterized by an irresistible urge to move the legs to relieve unpleasant feelings such as creeping, crawling, pulling, itching, tingling or burning sensations. An estimated 12 million Americans are affected by RLS, according to reports.
The regulatory agency is scheduled to make a decision on XP13512 by February 9, an extension of the Nov.9, 2009 decision date, as the FDA then sought more time to review the Risks Evaluation Management Strategy plans submitted for the drug.
XP13512 is a modified version of gabapentin, an epilepsy drug that has been sold by Pfizer Inc. (PFE) as Neurontin since 1993 and is currently sold as a generic drug by a number of companies. XenoPort has licensed rights to develop and commercialize XP13512 to Astellas Pharma Inc. in Japan and five Asian countries and to GlaxoSmithKline plc. (GSK) in the U.S. and all other regions of the world.
XenoPort inked the license agreement for XP13512 with Astellas in December 2005 and with GlaxoSmithKline in February 2007. XenoPort has received a total of $208 million to date as upfront and milestone payments from Astellas and GlaxoSmithKline. Under the terms of the collaboration agreements, XenoPort is eligible to receive an additional $227 million in clinical and regulatory milestones and $290 million in sales milestone payments.
The annual prescription for RLS medication is in excess of 5 million in the U.S. Dopamine agonists, which are the most common form of medication to treat restless legs syndrome, account for more than 90% share of the prescription, while gabapentin account for less than 5% share.
However, dopamine agonists are associated with some side effects including nausea, dizziness, compulsive behavior and augmentation, which results in worsening of the symptoms. GlaxoSmithKline's Requip, a dopamine agonist, was the first FDA approved drug for RLS. Requip's patent lapsed in May of 2008. Last November, following the FDA's request, GlaxoSmithKline - XenoPort's partner submitted a proposed REMS for XP13512.
Speaking at JPMorgan Healthcare Conference on January 14, Ronald Barrett, CEO of XenoPort, said that there is significant market opportunity for XP13512 in the RLS indication, given the increased attention to limitations of dopamine agonists. XP13512 has proven to be highly efficacious in clinical trials, according to the company and the most common side effects associated with the drug include somnolence and dizziness.
XP13512 is also under regulatory review for the RLS indication in Japan. XenoPort and its partner Astellas filed for approval of the drug in Japan, last November. The company expects a decision on XP13512 for RLS in Japan by the end of this year.
In addition to restless legs syndrome, XP13512 is also being evaluated as a potential treatment for post-herpetic neuralgia, or PHN, painful diabetic neuropathy, or PDN and migraine prophylaxis by GlaxoSmithKline in the U.S. XP13512 is under phase II development for those indications.
Astellas, which holds rights to XP13512 in Japan and five Asian countries, terminated a phase II trial of XP13512 in patients with painful diabetic neuropathy in November 2008 after an interim analysis showed that the trial was not likely to demonstrate statistical significance.
XenoPort's other investigational drugs in pipeline include:
- XP19986, which is in phase II clinical development for the treatment of gastroesophageal reflux disease, or GERD. The company expects results of a phase IIb trial of XP19986 as an adjunctive therapy in GERD patients by this year end. According to reports, over $10 billion is spent worldwide each year on GERD and heartburn medications, and approximately 7% of the global population experiences GERD symptoms daily.
- XP21279, which is in phase I clinical development as a potential treatment for Parkinson's disease. XP21279, a patented new chemical entity discovered by XenoPort, is a Transported Prodrug of levodopa, or L-Dopa, the gold standard for treating Parkinson's disease. According to the American Parkinson Disease Association, close to 2 million Americans are affected with Parkinson disease, with about 70,000 new cases diagnosed each year. It is estimated that global sales of Parkinson's disease therapeutics exceed $3 billion.
- XP21510, a preclinical product candidate. It is a Transported Prodrug of tranexamic acid, a man-made derivative of the naturally occurring amino acid known as lysine. Tranexamic acid is approved in many countries in Europe and Asia for the treatment of women with menorrhagia, or heavy menstrual bleeding.
In October 2007, XenoPort licensed rights to develop and commercialize XP21510 in the United States to Xanodyne Pharmaceuticals Inc. and received non-refundable cash payment of $13 million. However, in July 2009, the collaboration agreement with Xanodyne was terminated and all XP21510 product rights were reverted to XenoPort.
As mentioned earlier, XenoPort has not generated any product revenue and as of September 30, 2009, had an accumulated deficit of about $286.6 million and cash balance of about $157 million.
XenoPort, which went public in June 2005, offering its shares at $10.50 each, was trading over $60 during its heyday in January 2008.
With the stock now trading around $18, there is a good probability of an upside move IF XP13512 is approved. However, as with all biotech stocks, there are risks to be aware of, particularly the regulatory risk as the FDA decision draws near. Stay tuned...
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