XenoPort's Most Recent Data Points to Larger Opportunity

XenoPort (XNPT) received a big boost yesterday from positive data on its lead drug, GSK1838262/XP13512 (gabapentin enacarbil), in a neuropathic pain trial, the second attempt by the company and its partner GlaxoSmithKline (GSK) to prove that this product has much larger potential than currently forecast.

The results were from a trial in neuropathic pain associated with post-herpetic neuralgia (PHN); a previous trial in diabetic neuropathic pain failed to establish efficacy (Xenoport's bubble has burst but there is hope on the horizon, May 5, 2009). Whereas the first trip up caused the stock to drop to a two year low of $14, today’s results prompted the stock to surge almost 30% in early trade, to a seven-month high of $25.23. Should Glaxo chose to move into phase III in this indication, XenoPort shares should be able to at least maintain this level.

Drug effect

XP13512 is a prodrug of gabapentin, the former Pfizer (PFE) blockbuster Neurontin, which is now available generically. XenoPort has improved the pharmacokinetics of the drug, which it believes should boost effectiveness.

The 14-week study enrolled 376 patients who had been experiencing PHN for at least three months after recovering from a herpes zoster skin rash, also known as shingles. Three doses of GSK1838262 were tested, and all demonstrated significant improvements over placebo. The most common side effects were dizziness and somnolence, which increased with the dose, but most were mild to moderate in intensity.

The previous trial in diabetic patients was a big disappointment, but the outcome was blamed on a high placebo effect and the presence of an active drug arm, Pfizer’s Lyrica, which could have caused patients to believe they were receiving a proven medicine, the company believes.

The results announced yesterday, however, more convincingly point to a drug effect, although further results from the phase II programme will be watched with interest, to see if this will be replicated. Data are due from a trial in patients failed on gabapentin, if this succeeds the news will also be received very positively. A phase II study in migraine is also due to report fairly soon.

Brighter horizon

XenoPort and partner GlaxoSmithKline are waiting for news on approval in the US in the first indication, restless leg syndrome, by the PDUFA date of November 9. To be branded Solzira in this indication, analysts covering GlaxoSmithKline have pencilled in sales of $11m this year, climbing to $349m by 2014, according to consensus data from EvaluatePharma.

For XenoPort, consensus has alliance revenues of $218m by 2014, suggesting more optimistic biotechnology analysts may already be forecasting revenues from the neuropathic pain indications.

Glaxo still has to decide whether to push this drug into large, expensive neuropathic pain studies; until then a more cautious approach to the drug is probably wise. The regulator’s viewpoint on the Solzira data will be of interest, particularly the side effect profile, where events were similar to those seen in this PHN trial.

If the FDA baulks in the much more niche indication of RLS, Glaxo may decide pursuing trials in a much larger patient population is too much trouble.

However, compared to earlier this year when GSK1838262 looked like being a niche drug for niche indication, for XenoPort the situation is looking much brighter.