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XenoPort Reports Fourth Quarter and Year-End 2012 Financial Results

  XenoPort Reports Fourth Quarter and Year-End 2012 Financial Results

Business Wire

SANTA CLARA, Calif. -- March 11, 2013

XenoPort, Inc. (Nasdaq: XNPT) announced today its financial results for the
fourth quarter and year ended December 31, 2012. Revenues for the quarter were
$0.5 million, compared to $5.4 million for the same period in 2011. Net income
for the fourth quarter was $3.0 million, which resulted from a non-cash gain
on XenoPort’s litigation settlement with Glaxo Group Limited (GSK), compared
to a net loss of $16.9 million for the same period in 2011. At December 31,
2012, XenoPort had cash and cash equivalents and short-term investments of
$139.0 million.

XenoPort Business Updates

Since the beginning of the fourth quarter of 2012:

  *XenoPort and GSK announced that they had terminated their collaboration
    agreement concerning Horizant® (gabapentin enacarbil) Extended-Release
    Tablets under which GSK held commercialization rights and certain
    development rights in the United States. The termination and transition
    agreement also released all claims and resolved all pending litigation
    between the parties. During a transition period that will end on April 30,
    2013, GSK will continue to exclusively commercialize, promote, manufacture
    and distribute Horizant in the United States.  Following the transition
    period, XenoPort will assume all responsibilities for the further
    development, manufacturing and commercialization of Horizant in the United
    States.
  *As part of the termination and settlement, GSK purchased $40.0 million of
    common stock of XenoPort, or 4,031,212 shares at an average price of
    $9.923 per share. Such shares were purchased in two tranches at a 12.5%
    premium to the average of the closing price of XenoPort common stock
    during a ten-trading-day period prior to each tranche.
  *XenoPort completed enrollment in its Phase 3 pivotal trial of arbaclofen
    placarbil (AP) as a potential treatment for spasticity in patients with
    multiple sclerosis (MS).
  *XenoPort announced favorable preliminary results from a Phase 1 clinical
    trial in healthy adults designed to assess the pharmacokinetics (PK),
    safety and tolerability of single doses of four different oral
    formulations of XP23829, a novel fumaric acid ester compound that is a
    prodrug of monomethyl fumarate (MMF). The trial demonstrated that
    administration of XP23829 resulted in the expected levels of MMF in the
    blood. XP23829 was generally well-tolerated in the trial.
  *XenoPort initiated a Phase 1, multiple ascending dose clinical trial of
    XP23829 designed to determine the safety and steady-state PK profile of
    XP23829 in once-per-day and twice-per-day formulations.
  *XenoPort also initiated a Phase 1 radiolabeled XP23829 clinical trial in
    healthy subjects designed to establish the metabolism and disposition of
    XP23829.

Ronald W. Barrett, Ph.D., chief executive officer of XenoPort, stated, “The
reacquisition of Horizant represents an exciting opportunity for XenoPort and
will mark the transition of the company into a commercial entity. We look
forward to educating key stakeholders about the benefits and risks of Horizant
starting May 1. We are working to finalize a focused commercial plan intended
to grow the Horizant business in a cost efficient manner while maintaining
flexibility to potentially expand our commercial efforts. Meanwhile, we are
awaiting our Phase 3 AP clinical trial results in the second quarter. Assuming
positive results, we would target the submission of a New Drug Application
(NDA) in the United States for AP for the treatment of spasticity for patients
with MS or spinal cord injury by the end of this year.”

Dr. Barrett continued, “We are equally excited about our progress on XP23829.
Our first clinical trial provided the type of positive results we expected,
and we are looking forward to receiving the results of two additional Phase 1
trials and of 13-week toxicology studies by mid-year. With these data in hand,
we hope to speak to regulatory authorities about potential development paths
in several indications, including relapsing-remitting multiple sclerosis
(RRMS) and psoriasis. We are looking forward to reporting our progress later
in 2013.”

XenoPort Fourth Quarter and Year-End 2012 Financial Results

Revenues for the fourth quarter and year ended December 31, 2012 were $0.5
million and $21.6 million, respectively, compared to $5.4 million and $43.5
million for the same periods in 2011. The decrease in revenues for the fourth
quarter and year ended December 31, 2012 compared to the same periods in 2011
were primarily due to the receipt and recognition of a $5.0 million milestone
payment associated with the acceptance of the supplemental NDA for the
management of PHN in the fourth quarter of 2011 and a $30.0 million contingent
payment associated with the first commercial sale of Horizant in the United
States in the second quarter of 2011, partially offset by the receipt and
recognition of a $10.0 million milestone payment for the approval of Regnite®
(gabapentin enacarbil) Extended-Release Tablets for RLS in Japan in the first
quarter of 2012 and a $10.0 million contingent payment associated with the
approval of Horizant for the management of PHN in the second quarter of 2012.
Net sales for Horizant for the fourth quarter and year ended 2012 as recorded
by GSK were $2.1 million and $6.5 million, respectively.

Research and development expenses for the fourth quarter of 2012 were $10.6
million, compared to $12.5 million for the same period in 2011. The decrease
in research and development expenses for the fourth quarter of 2012 was
primarily due to decreased personnel costs resulting primarily from decreased
headcount and decreased development activities for XP21279. Research and
development expenses for 2012 were $42.9 million, compared to $43.8 million
for 2011. The decrease in research and development expenses for 2012 compared
to 2011 was principally due to decreased net costs for XP21279, partially
offset by increased net costs for AP and XP23829 development activities.

Selling, general and administrative expenses were relatively constant at $7.4
million for the fourth quarter of 2012, compared to $6.9 million for the same
period in 2011. Selling, general and administrative expenses were $30.2
million for 2012, compared to $30.4 million for 2011.

As a result of the termination and transition agreement with GSK that resolved
all pending litigation between the parties, XenoPort recorded a non-cash gain
on litigation settlement of $20.5 million in the fourth quarter of 2012, which
resulted in a profitable quarter.

Net income for the fourth quarter of 2012 was $3.0 million, compared to a net
loss of $16.9 million for the same period in 2011. Net income per basic and
diluted share was $0.07 for the fourth quarter of 2012, compared to a net loss
per basic and diluted share of $0.48 for the same period in 2011. Net loss for
2012 was $30.8 million, compared to a net loss of $33.4 million in 2011. Net
loss per basic and diluted share was $0.78 for 2012, compared to a net loss
per basic and diluted share of $0.94 for 2011.

Financial Guidance

XenoPort announced that it expects the net use of cash for 2013 to be in the
range of $100 million to $110 million (net use of cash is the difference
between the anticipated balances of cash and cash equivalents plus short-term
investments at 12/31/13 and the actual balances at 12/31/12).

Conference Call

XenoPort will host a conference call at 5:00 p.m. Eastern Time today to
discuss its financial results and provide an update on XenoPort’s business. To
access the conference call via the Internet, go to www.XenoPort.com. To access
the live conference call via phone, dial 1-888-275-3514. International callers
may access the live call by dialing 706-679-1417. The reference number to
enter the call is 19426152.

The replay of the conference call may be accessed that same day after 8:00
p.m. Eastern Time, via the Internet, at www.XenoPort.com, or via phone at
1-855-859-2056 for domestic callers, or 404-537-3406 for international
callers. The reference number to enter the replay of the call is 19426152.

About XenoPort

XenoPort is a biopharmaceutical company focused on developing and
commercializing a portfolio of internally discovered product candidates for
the potential treatment of neurological disorders. Horizant is our first
approved product in the United States. GSK holds commercialization rights for
Horizant in the United States during a transition period ending on April 30,
2013, following which XenoPort will be responsible for the further
development, manufacturing and commercialization of Horizant. Regnite is
approved and is being marketed in Japan. Astellas Pharma Inc. holds all
development and commercialization rights for Regnite in Japan and five other
Asian countries. XenoPort holds all other world-wide rights to gabapentin
enacarbil. XenoPort's pipeline of product candidates includes potential
treatments for patients with spasticity, Parkinson's disease and RRMS.

To learn more about XenoPort, please visit the company Website at
www.XenoPort.com.

Forward-Looking Statements

This press release contains “forward-looking” statements, including, without
limitation, all statements related to GSK’s future activities during the
transition period with respect to Horizant; XenoPort’s future development,
manufacturing and commercialization activities with respect to Horizant
following such transition period; growing the Horizant business in a
cost-efficient manner and potentially expanding XenoPort’s commercial efforts;
the release of AP clinical data and the timing and results thereof; the
potential submission of an NDA for AP for the treatment of spasticity and the
timing thereof; XenoPort’s future clinical development programs for XP23829,
including potential indications for development; the therapeutic and
commercial potential of XenoPort’s product candidates; the suitability of AP
as a treatment of spasticity; the suitability of XP23829 as a treatment for
RRMS, psoriasis or other potential indications; and XenoPort’s expected net
cash usage for 2013. Any statements contained in this press release that are
not statements of historical fact may be deemed to be forward-looking
statements. Words such as “assume,” “expects,” “hope,” “intends,” “potential,”
“will,” “would” and similar expressions are intended to identify
forward-looking statements. These forward-looking statements are based upon
XenoPort's current expectations. Forward-looking statements involve risks and
uncertainties. XenoPort's actual results and the timing of events could differ
materially from those anticipated in such forward-looking statements as a
result of these risks and uncertainties, which include, without limitation,
risks related to XenoPort’s lack of commercialization experience and its
ability to establish, or contract with third parties to establish, sales,
marketing, distribution, supply chain and other sufficient capabilities to
assume responsibility for and to market and sell Horizant following the
transition period with respect to Horizant; XenoPort’s ability to successfully
market and sell Horizant following the transition period, including its
ability to obtain appropriate pricing and reimbursement for Horizant in an
increasingly challenging environment, and whether any such sales will be
sufficient to outweigh the costs of establishing and maintaining sales,
marketing, distribution, supply chain and other capabilities;  XenoPort’s
ability to comply with applicable regulatory guidelines and requirements with
respect to the marketing and manufacturing of Horizant or with Horizant
post-marketing commitments or requirements mandated by the FDA;  XenoPort’s
need for additional funding and the risk that XenoPort could utilize its
available capital resources sooner than it expects; the uncertainty of the FDA
approval process and other regulatory requirements; the uncertain results and
timing of clinical trials; XenoPort’s ability to successfully conduct clinical
trials in the anticipated timeframes, or at all; the uncertain therapeutic and
commercial value of XenoPort’s product candidates; and risks related to future
opportunities and plans, including the uncertainty of expected future
financial performance and results. These and other risk factors are discussed
under the heading “Risk Factors” in XenoPort’s Quarterly Report on Form 10-Q
for the quarter ended September 30, 2012, filed with the Securities and
Exchange Commission on October 25, 2012, and in future filings and reports by
XenoPort, including its Annual Report on Form 10-K for the year ended December
31, 2012. XenoPort expressly disclaims any obligation or undertaking to
release publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in the company's expectations with
regard thereto or any change in events, conditions or circumstances on which
any such statements are based.

XNPT2F

Horizant, Regnite and XENOPORT are registered trademarks of XenoPort, Inc.


XENOPORT, INC.

BALANCE SHEETS

(Unaudited, in thousands)
                                                         
                                             December 31,   December 31,
                                              2012         2011     
                                                            
Current assets:
Cash and cash equivalents                    $ 36,134       $ 25,386
Short-term investments                         102,868        69,056
Right to the Horizant business                 13,557         -
Prepaids and other current assets             2,529        3,010    
Total current assets                           155,088        97,452
Property and equipment, net                    1,528          3,921
Restricted investments and other assets       2,432        2,663    
Total assets                                 $ 159,048     $ 104,036  
Liabilities:
Current liabilities                          $ 13,771       $ 13,530
Noncurrent liabilities                        15,067       15,371   
Total liabilities                             28,838       28,901   
Stockholders’ equity (deficit):
Common stock                                   47             35
Additional paid-in capital and other           581,763        495,886
Accumulated deficit                           (451,600 )    (420,786 )
Total stockholders’ equity                    130,210      75,135   
Total liabilities and stockholders’ equity   $ 159,048     $ 104,036  
                                                                       

XENOPORT, INC.

STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share amounts)
                                                  
                         Three Months                Year
                         Ended December 31,          Ended December 31,
                         2012         2011          2012         2011
Revenues:
Net revenue from
unconsolidated joint     $ -           $ 5,000       $ 10,000      $ 35,000
operating activities
Collaboration revenue      378           378           11,515      8,515
Royalty revenue           109         -           109        -         
Total revenues             487           5,378         21,624      43,515
Operating expenses
(gains):
Research and               10,600        12,512        42,947      43,788
development*
Selling, general and       7,422         6,888         30,244      30,427
administrative*
Gain on litigation         (20,499 )     -             (20,499 )   -
settlement
Restructuring charges     -           2,923       -          2,923     
Total operating           (2,477  )    22,323      52,692     77,138    
expenses (gains)
Income (Loss) from         2,964         (16,945 )     (31,068 )   (33,623   )
operations
Interest and other        78          59          254        243       
income
Net income (loss)        $ 3,042      $ (16,886 )   $ (30,814 )   $ (33,380 )
Basic and diluted net
income (loss) per        $ 0.07       $ (0.48   )   $ (0.78   )   $ (0.94   )
share
Shares used to compute
basic net income          45,296      35,482      39,434     35,400    
(loss) per share
Shares used to compute
diluted net income        46,501      35,482      39,434     35,400    
(loss) per share
                                                                             
*  Includes employee non-cash stock-based compensation as follows:
Research and             $ 1,321       $ 1,199       $ 4,364       $  5,208
development
Selling, general and      1,821       2,219      7,917          9,180  
administrative
Total                    $ 3,142      $ 3,418      $ 12,281     $  14,388 

Contact:

XenoPort, Inc.
Jackie Cossmon, 408-616-7220
ir@XenoPort.com