XenoPort Reports Third Quarter Financial Results

  XenoPort Reports Third Quarter Financial Results

Announces Encouraging Pharmacodynamic Data from Previous XP23829 Phase 1 Trial

Business Wire

SANTA CLARA, Calif. -- November 7, 2013

XenoPort, Inc. (Nasdaq: XNPT) announced today financial results for the third
quarter and nine months ended September 30, 2013. Revenues for the third
quarter were $2.5 million, compared to $0.4 million for the same period in
2012. Net loss for the third quarter was $18.8 million, compared to a net loss
of $16.8 million for the same period in 2012. At September 30, 2013, XenoPort
had cash, cash equivalents and short-term investments of $74.3 million.

XenoPort Third Quarter Events

Since the start of the third quarter:

  *XenoPort reported favorable preliminary results from two Phase 1 clinical
    trials and three 13-week toxicology studies of XP23829, a novel fumaric
    acid ester compound that is a prodrug of monomethyl fumarate (MMF). The
    first healthy-subject Phase 1 study assessed the pharmacokinetics, safety
    and tolerability of multiple doses of two different oral formulations of
    XP23829, as well as the approved dose of TECFIDERA^® (dimethyl fumarate;
    DMF). The second Phase 1 study examined the metabolism and distribution of
    radiolabeled XP23829 in healthy subjects. The toxicology studies, each of
    which included a DMF control arm, were conducted in three different animal
    species. XP23829 is being developed for the potential treatment of
    relapsing forms of multiple sclerosis and/or psoriasis.
  *XenoPort announced the inclusion of gabapentin enacarbil in treatment
    guidelines published by the International Restless Legs Syndrome Study
    Group and the Willis-Ekbom Disease (WED) Foundation.

Additional Results from Previous Phase 1 Trial of XP23829

XenoPort also announced today encouraging pharmacodynamic data from its
previous Phase 1, randomized, double-blind, placebo-controlled, multiple
ascending dose study of two formulations of XP23829 in healthy adult subjects
dosed for up to 12 days. Compared to pre-dosing baseline, XP23829 dosed once
or twice a day selectively reduced blood lymphocytes and increased blood
eosinophils when assessed after 12 days of dosing. Individual subject
end-of-treatment lymphocyte and eosinophil counts were within normal limits
with few exceptions. There were no subjects with post-treatment lymphocyte
counts below 500 per microliter. Lymphocyte counts returned to near baseline
levels when assessed eight to ten days after the last dose. These effects were
not observed in placebo-dosed subjects, and there was no effect of XP23829 on
other monitored blood cell populations.

Ronald W. Barrett, Ph.D., chief executive officer of XenoPort, stated, “The
mechanism of action of fumaric acid esters is complex, but generally believed
to involve modulation of the immune system. Studies in psoriasis and multiple
sclerosis patients indicate that FUMADERM ^ (dimethyl fumarate and monoethyl
fumarate salts) and TECFIDERA reduce blood lymphocytes, with the maximal
effect occurring after many months of dosing. Both products are also known to
cause transient minor increases in blood eosinophils. Though our previous
study of XP23829 was small, necessitating caution in interpreting results, we
are intrigued by certain aspects of the data – the rapid onset and
reversibility of the XP23829 effect on lymphocytes observed in the study and
the observation that once-a-day dosing had similar effects as twice-a-day
dosing on modulation of these two biomarkers. These results suggest that
future studies of XP23829 should include examination of once-a-day dosing as
well as lower doses that may be well-tolerated and effective as a consequence
of the potential rapid onset of immune modulation.”

Dr. Barrett continued, “In the last quarter, we believe that we made
considerable progress in our core value-driving activities – advancing the
development of XP23829 and executing on our focused plan to commercialize
HORIZANT and demonstrate its value to patients and our stockholders. Though we
have only completed the first full quarter of our launch of HORIZANT after the
drug supply stock-out of our previous partner, we believe we have already seen
several encouraging signs that our efforts are impacting sales in the regions
where we are promoting HORIZANT.”

XenoPort Third Quarter and Nine-Month Financial Results

Revenues for the third quarter and nine months ended September 30, 2013 were
$2.5 million and $5.1 million, respectively, compared to $0.4 million and
$21.1 million for the same periods in 2012. Revenues in the third quarter and
nine months ended September 30, 2013 were principally due to XenoPort’s
acquisition of the HORIZANT business on May 1, 2013, which resulted in the
company’s first commercial sales of HORIZANT during the second quarter of
2013. HORIZANT net product sales for the third quarter and nine months ended
September 30, 2013 were $2.0 million and $3.7 million, respectively. The
decline in revenues for the nine months ended September 30, 2013 compared to
the same period in 2012 was primarily due to the recognition of a $10.0
million milestone payment from Astellas Pharma Inc. in connection with the
approval of REGNITE^® (gabapentin enacarbil) Extended-Release Tablets in Japan
in 2012 and the recognition of a $10.0 million contingent payment from
GlaxoSmithKline (GSK) in connection with the first commercial sale of HORIZANT
by GSK for the management of postherpetic neuralgia in adults in 2012.

Research and development expenses for the third quarter of 2013 were $6.0
million, compared to $9.4 million for the same period in 2012. The decrease in
research and development expenses in the three months ended September 30, 2013
compared to the same period in 2012 was principally due to decreased net costs
for arbaclofen placarbil (AP) development and manufacturing and decreased
personnel costs primarily related to decreased headcount and decreased
non-cash stock-based compensation. Research and development expenses for the
nine months ended September 30, 2013 were $29.6 million, compared to $32.3
million for the same period in 2012. The decrease in research and development
expenses in the nine months ended September 30, 2013 compared to the same
period in 2012 was principally due to decreased net costs for AP development
and decreased personnel costs primarily related to decreased headcount and
decreased non-cash stock-based compensation, partially offset by increased net
costs for XP23829, primarily related to clinical, manufacturing and consulting
costs.

Selling, general and administrative expenses for the third quarter and nine
months ended September 30, 2013 were $14.9 million and $41.5 million,
respectively, compared to $7.8 million and $22.8 million for the same periods
in 2012. The increase in selling, general and administrative expenses in the
third quarter and nine months ended September 30, 2013 compared to the same
periods in 2012 was principally due to costs related to the commercialization
and promotion of HORIZANT, specifically increased professional fees, which
included contract sales force costs and marketing costs, as well as increased
personnel costs.

Net loss for the third quarter of 2013 was $18.8 million, compared to a net
loss of $16.8 million for the same period in 2012. Net loss for the nine
months ended September 30, 2013 was $66.7 million, compared to a net loss of
$33.9 million for the same period in 2012. Basic and diluted net loss per
share were both $0.39 in the third quarter of 2013 versus basic and diluted
net loss per share of $0.41 for the same period in the prior year. For the
nine-month period ended September 30, 2013, basic and diluted net loss per
share were both $1.41 versus basic and diluted net loss per share of $0.90 for
the same period in 2012.

Conference Call

XenoPort will host a conference call at 5:00 p.m. Eastern Time today to
discuss its financial results and provide general business updates, and to
review additional clinical data and program developments for XP23829. 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 77314561.

The replay of the conference call may be accessed after 8:00 p.m. Eastern Time
today 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 77314561. Dial-in access to the
replay of the call will be available for approximately one week, and the
Internet replay of the call will be available for approximately one month
following the live call.

HORIZANT IMPORTANT SAFETY INFORMATION

INDICATION: HORIZANT^® (gabapentin enacarbil) Extended-Release Tablets are
indicated for the treatment of moderate-to-severe primary Restless Legs
Syndrome (RLS) in adults.

Effects on Driving

HORIZANT may cause significant driving impairment. Patients should not drive
until they have enough experience on HORIZANT to know if it impairs their
driving. Patients’ ability to assess their driving competence and degree of
somnolence caused by HORIZANT can be imperfect.

Somnolence/Sedation and Dizziness

HORIZANT causes somnolence/sedation and dizziness. Patients should not drive
or operate other complex machinery until they have enough experience on
HORIZANT to know if it impairs their ability to perform these tasks.

Lack of Interchangeability with Gabapentin

HORIZANT is not interchangeable with other gabapentin products because of
differing pharmacokinetic profiles. The same dose of HORIZANT results in
different plasma concentrations of gabapentin relative to other gabapentin
products. The safety and effectiveness of HORIZANT in patients with epilepsy
have not been studied.

Suicidal Behavior and Ideation

HORIZANT is a prodrug of gabapentin, an antiepileptic drug (AED). AEDs
increase the risk of suicidal thoughts or behavior in patients taking these
drugs for any indication. As a prodrug of gabapentin, HORIZANT also increases
this risk. Patients treated with any AED for any indication should be
monitored for new or worsening depression, suicidal thoughts or behavior,
and/or any unusual changes in mood or behavior. Anyone considering prescribing
HORIZANT must balance the risk of suicidal thoughts or behavior with the risk
of untreated illness.

Patients, caregivers, and families should be informed that HORIZANT increases
the risk of suicidal thoughts and behavior and should be advised of the need
to be alert for new or worsening signs of and symptoms of depression, any
unusual changes in mood or behavior, or the emergence of suicidal thoughts,
behavior, or thoughts of self-harm. Behaviors of concern should be reported
immediately to healthcare providers.

Drug Reaction With Eosinophilia and Systemic Symptoms (DRESS)/Multiorgan
Hypersensitivity

Drug Reaction with Eosinophilia and Systemic Symptoms (DRESS), also known as
multiorgan hypersensitivity, has been reported in patients taking
antiepileptic drugs, including gabapentin. HORIZANT is a prodrug of
gabapentin. Some of these events have been fatal or life-threatening. DRESS
typically, although not exclusively, presents with fever, rash, and/or
lymphadenopathy, in association with other organ system involvement, such as
hepatitis, nephritis, hematological abnormalities, myocarditis, or myositis
sometimes resembling an acute viral infection. Eosinophilia is often present.
Because this disorder is variable in its expression, other organ systems not
noted here may be involved.

It is important to note that early manifestations of hypersensitivity, such as
fever or lymphadenopathy, may be present even though rash is not evident. If
such signs or symptoms are present, the patient should be evaluated
immediately. HORIZANT should be discontinued if an alternative etiology for
the signs or symptoms cannot be established.

Discontinuation of HORIZANT

When discontinuing HORIZANT, patients with RLS receiving 600 mg or less once
daily can discontinue the drug without tapering. If the recommended dose is
exceeded, the dose should be reduced to 600 mg daily for 1 week prior to
discontinuation to minimize the potential of withdrawal seizure.

Tumorigenic Potential

In an oral carcinogenicity study, gabapentin enacarbil increased the incidence
of pancreatic acinar cell adenoma and carcinoma in male and female rats. The
clinical significance of this finding is unknown.

ADVERSE REACTIONS

The most common adverse reactions for patients with RLS receiving HORIZANT 600
mg, 1,200 mg, and placebo, respectively, were somnolence/sedation (20%, 27%,
and 6%), dizziness (13%, 22%, and 4%), headache (12%, 15%, and 11%), nausea
(6%, 7%, and 5%), and fatigue (6%, 7%, and 4%). A daily dose of 1,200 mg
provided no additional benefit compared with the 600-mg dose, but caused an
increase in adverse reactions.

DRUG INTERACTIONS

Gabapentin enacarbil is released faster from HORIZANT Extended-Release tablets
in the presence of alcohol. Consumption of alcohol is not recommended when
taking HORIZANT. HORIZANT taken in conjunction with morphine causes increased
somnolence/sedation, dizziness, and nausea.

USE IN SPECIAL POPULATIONS

Pregnancy and Lactation

Based on animal data, HORIZANT may cause fetal harm. There are no adequate and
well-controlled studies of HORIZANT in pregnant women. HORIZANT should be used
during pregnancy only if potential benefit justifies potential risk to fetus.
HORIZANT is converted to gabapentin, which is secreted into human milk.
Discontinue nursing or discontinue HORIZANT, taking into account the
importance of HORIZANT to the mother, due to potential for adverse reactions
in nursing infants.

Renal Impairment

In patients with RLS who have compromised renal function, HORIZANT should be
dosed based upon creatinine clearance (CrCl): 30 to 59 mL/min, start with 300
mg per day and increase to 600 mg as needed; 15 to 29 mL/min, use 300 mg per
day; <15 mL/min, use 300 mg every other day. HORIZANT is not recommended for
use in patients receiving hemodialysis.

For HORIZANT Prescribing Information/Medical Guide, please see the following
Websites:
http://www.HORIZANT.com/docs/HORIZANT_PrescribingInformation.pdf
http://www.HORIZANT.com/docs/HORIZANT_MedGuide.pdf

About XenoPort

XenoPort, Inc. is a biopharmaceutical company focused on developing and
commercializing a portfolio of internally discovered product candidates for
the potential treatment of neurological disorders. XenoPort is currently
commercializing HORIZANT in the United States and developing its novel fumaric
acid ester product candidate, XP23829, as a potential treatment for relapsing
forms of multiple sclerosis and/or psoriasis. REGNITE is being marketed in
Japan by Astellas Pharma Inc. XenoPort's pipeline of product candidates also
includes potential treatments for patients with spasticity related to spinal
cord injury and Parkinson's disease.

To learn more about XenoPort, please visit the Web site at www.XenoPort.com.

Forward-Looking Statements

This press release contains “forward-looking” statements, including, without
limitation, all statements related to the XP23829 clinical development
program, including conducting future clinical trials; XP23829’s mechanism of
action and potential modulation of the immune system; the commercial
opportunity and value proposition for HORZIANT; the potential suitability of
XP23829 as a treatment for relapsing forms multiple sclerosis and/or
psoriasis; and the therapeutic and commercial potential of XenoPort's product
candidates. 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 “believe,” “may,” “plan,” “potential,” “suggest” 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 successfully market
and sell HORIZANT; the difficulty and uncertainty of pharmaceutical product
development and the uncertain results and timing of clinical trials and other
studies, including the risk that success in preclinical testing and early
clinical trials does not ensure that later clinical trials will be successful,
and that the results of clinical trials by other parties may not be indicative
of the results in trials that XenoPort may conduct; XenoPort’s ability to
successfully advance XP23829 development and to conduct clinical trials in the
anticipated timeframes, or at all; the uncertainty of the U.S. Food and Drug
Administration’s review process and other regulatory requirements; XenoPort’s
dependence on future collaborative partners; XenoPort’s need for and the
availability of resources to develop XenoPort’s product candidates and support
XenoPort’s operations; and the uncertain therapeutic and commercial value of
XenoPort’s product candidates. 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 June 30, 2013, filed with the Securities and Exchange
Commission on August 7, 2013. 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.

HORIZANT, REGNITE and XENOPORT are registered trademarks of XenoPort, Inc.

XNPT2F


XENOPORT, INC.



BALANCE SHEETS

(In thousands)
                                                          
                                             September 30,   December 31,
                                                2013           2012
                                             (Unaudited)     
                                                             
Current assets:
Cash and cash equivalents                    $  13,517       $ 36,134
Short-term investments                          60,785         102,868
Accounts receivable, net                        867            —
Right to the HORIZANT business                  —              13,557
Inventories                                     1,944          —
Prepaids and other current assets              4,172        2,529    
Total current assets                            81,285         155,088
Property and equipment, net                     2,896          1,528
Long-term inventories                           10,341         —
Restricted investments and other assets        1,960        2,432    
Total assets                                 $  96,482      $ 159,048  
Liabilities:
Current liabilities                          $  11,865       $ 13,771
Noncurrent liabilities                         14,288       15,067   
Total liabilities                              26,153       28,838   
Stockholders’ equity :
Common stock                                    48             47
Additional paid-in capital and other            588,626        581,763
Accumulated deficit                            (518,345 )    (451,600 )
Total stockholders’ equity                     70,329       130,210  
Total liabilities and stockholders’ equity   $  96,482      $ 159,048  
                                                             

XENOPORT, INC.



STATEMENTS OF OPERATIONS

(Unaudited)

                        Three Months               Nine Months
                                                     Ended September 30,
                         Ended September 30,
                         2013       2012        2013       2012    
                         (In thousands, except per share amounts)
Revenues:
Product sales, net       $ 2,037       $ —           $ 3,677       $ —
Collaboration revenue      379           379           1,137         11,137
Royalty revenue            111           —             258           —
Net revenue from
unconsolidated joint      —           —           —           10,000  
operating activities
Total revenues            2,527       379         5,072       21,137  
Operating expenses:
Cost of product sales      305           —             554           —
Research and               6,047         9,365         29,636        32,347
development*
Selling, general and      14,928      7,833       41,451      22,822  
administrative*
Total operating           21,280      17,198      71,641      55,169  
expenses
Loss from operations       (18,753 )     (16,819 )     (66,569 )     (34,032 )
Interest income            43            66            182           176
Interest expense          (106    )    —           (358    )    —       
Net loss                 $ (18,816 )   $ (16,753 )   $ (66,745 )   $ (33,856 )
Basic and diluted net    $ (0.39   )   $ (0.41   )   $ (1.41   )   $ (0.90   )
loss per share
Shares used to compute
basic and diluted net     47,691      41,016      47,471      37,480  
loss per share
                                                                   
* Includes employee non-cash stock-based compensation as follows:
Research and             $ 618         $ 935         $ 2,523       $ 3,043
development
Selling, general and      1,851       1,881       5,785       6,096   
administrative
Total non-cash
stock-based              $ 2,469      $ 2,816      $ 8,308      $ 9,139   
compensation expense

Contact:

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