XenoPort Reports Fourth Quarter and Year-End 2013 Financial Results

  XenoPort Reports Fourth Quarter and Year-End 2013 Financial Results

Business Wire

SANTA CLARA, Calif. -- February 20, 2014

XenoPort, Inc. (Nasdaq:XNPT) announced today its financial results for the
fourth quarter and year ended December 31, 2013. Revenues for the fourth
quarter were $2.9 million, compared to $0.5 million for the same period in
2012. Net loss for the fourth quarter was $19.1 million compared to net income
of $3.0 million that resulted from a non-cash gain from XenoPort’s litigation
settlement with Glaxo Group Limited (GSK) in the fourth quarter of 2012. At
December 31, 2013, XenoPort had cash and cash equivalents and short-term
investments of $58.7 million.

XenoPort Business Updates

Since the beginning of the fourth quarter of 2013:

  *XenoPort completed a successful follow-on public offering of XenoPort
    common stock, raising net proceeds of approximately $67.3 million, after
    deducting underwriting discounts and commissions and other estimated
    offering expenses.
  *XenoPort reported that it received feedback from the U.S. Food and Drug
    Administration (FDA) Division of Neurology Products regarding potential
    development plans for XP23829 as a potential treatment for patients with
    relapsing forms of multiple sclerosis (MS). Based on the feedback,
    XenoPort believes that it could initiate Phase 3 clinical development
    using XP23829 doses that produce monomethyl fumarate (MMF) exposure
    similar to that produced by the approved dose of TECFIDERA (dimethyl
    fumarate). XenoPort also believes that the FDA will require additional
    information on XP23829 before determining the applicability of the Section
    505(b)(2) pathway for a potential New Drug Application (NDA) submission.
  *XenoPort indicated that it plans to submit an Investigational New Drug
    (IND) application to the FDA Division of Dermatology and Dental Products
    for XP23829 as a potential treatment for moderate-to-severe chronic plaque
    psoriasis and plans to initiate a Phase 2 clinical trial of XP23829 for
    this indication by mid-2014.
  *Net sales of HORIZANT^® (gabapentin enacarbil) Extended-Release Tablets in
    the United States in the fourth quarter grew 34% compared to the third
    quarter of 2013, which was the first full quarter of XenoPort’s
    commercialization of HORIZANT. The total number and the trajectory of
    growth of HORIZANT prescribed tablets achieved all-time highs. HORIZANT
    prescribed pill counts increased 27% nationwide for the fourth quarter
    ending December 31, 2013 compared to the third quarter of 2013. In
    territories where XenoPort is actively promoting HORIZANT, total
    prescribed pills for the fourth quarter ending December 31, 2013 increased
    by 39% compared to the third quarter of 2013. This compares to no growth
    in non-promoted territories.
  *XenoPort reported positive top-line results of a Phase 4 clinical trial
    that evaluated lower doses of gabapentin enacarbil for the treatment of
    moderate-to-severe primary restless legs syndrome (RLS) in adults. The
    study was conducted by XenoPort’s former commercial partner, GSK, as part
    of the post-marketing commitments imposed by the FDA in connection with
    its approval of HORIZANT for the treatment of adult patients with
    moderate-to-severe primary RLS. The most common adverse reactions in adult
    patients with moderate-to-severe primary RLS taking HORIZANT are
    somnolence/sedation, dizziness, headache, nausea and fatigue.

Ronald W. Barrett, Ph.D., chief executive officer of XenoPort, stated, “We are
currently focused on preparing to initiate Phase 2 development of our novel
fumarate product candidate, XP23829, later this year. Our Phase 1 clinical
trial results indicated that XP23829 can deliver relevant plasma
concentrations of MMF with a desired pharmacokinetic profile. While Phase 1
data in a small number of subjects must be viewed cautiously, we are intrigued
by the pharmacodynamic effects of XP23829 on immune cells in peripheral blood
of healthy subjects, particularly when XP23829 was dosed once a day. We hope
to establish optimal dosing of XP23829 in our planned Phase 2 psoriasis study
and use this information for dose selection for potential Phase 3 trials in
psoriasis and/or relapsing forms of MS.”

Dr. Barrett continued, “We also believe we have made progress in
commercializing HORIZANT. In only two full quarters of promotion, we believe
we have demonstrated the potential of our targeted educational efforts and we
continue to receive positive feedback from physicians who prescribe HORIZANT.
We will continue to closely monitor our progress in increasing the value of
HORIZANT through these commercialization efforts.”

XenoPort Fourth Quarter and Year-End 2013 Financial Results

Revenues for the fourth quarter and year ended December 31, 2013 were $2.9
million and $8.0 million, respectively, compared to $0.5 million and $21.6
million for the same periods in 2012. The increase in revenues in the fourth
quarter ended December 31, 2013 was principally due to HORIZANT net product
sales. HORIZANT net product sales totaled $6.4 million for the year ended
December 31, 2013. The decrease in total revenues for the year ended December
31, 2013 compared to 2012 was primarily due to the recognition in 2012 of a
$10.0 million contingent payment from GSK and a $10.0 million milestone
payment from Astellas Pharma Inc.

Research and development expenses for the fourth quarter of 2013 decreased to
$3.7 million from $10.6 million for the same period in 2012. The decrease in
research and development expenses for the fourth quarter of 2013 was
principally due to decreased net costs for arbaclofen placarbil (AP),
decreased personnel costs, which were primarily due to decreased headcount and
decreased non-cash stock-based compensation, and decreased net costs for
XP23829 development activities. Research and development expenses for the year
ended December 31, 2013 decreased to $33.3 million from $42.9 million for
2012. The decrease in research and development expenses for 2013 compared to
2012 was principally due to decreased net costs for AP and decreased personnel
costs, which were primarily due to decreased headcount and decreased non-cash
stock-based compensation, partially offset by increased net costs for XP23829
development activities.

Selling, general and administrative expenses were $17.6 million and $59.1
million for the fourth quarter and year ended December 31, 2013, respectively,
compared to $7.4 million and $30.2 million for the same periods in 2012,
respectively. The increase in selling, general and administrative expenses in
both periods of 2013 compared with 2012 was principally due to costs related
to the commercialization and promotion of HORIZANT, which included increased
professional fees, marketing costs and personnel costs.

Net loss for the fourth quarter of 2013 was $19.1 million, compared to net
income of $3.0 million for the same period in 2012. Net loss for 2013 was
$85.9 million, compared to a net loss of $30.8 million for 2012. Basic and
diluted net loss per share were $0.40 for the fourth quarter of 2013, compared
to basic and diluted net income per share of $0.07 for the same period in
2012. For the year ended 2013, basic and diluted net loss per share were
$1.81, compared to basic and diluted net loss per share of $0.78 for 2012.

Financial Guidance

XenoPort announced that it expects the net use of cash for 2014 to be in the
range of $60 million to $70 million (net use of cash is the difference between
the anticipated balances of cash and cash equivalents plus short-term
investments at 12/31/14 and the actual balances at 12/31/13, excluding net
proceeds from the January 2014 financing).

Other News

XenoPort also reported today that Clinton Relational Opportunity Master Fund,
L.P. (Clinton) has provided notice of its intent to nominate three candidates
to stand for election to XenoPort’s Board of Directors and to submit other
proposals for consideration at XenoPort’s 2014 Annual Meeting of Stockholders.

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 25925028.

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 25925028.

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
psoriasis and/or relapsing forms of multiple sclerosis. REGNITE^® (gabapentin
enacarbil) Extended-Release Tablets 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 website at
www.XenoPort.com.

Forward-Looking Statements

This press release contains “forward-looking” statements, including, without
limitation, all statements related to the commercial opportunity for HORIZANT;
our ability to build value in HORIZANT through, and the potential of, our
targeted educational efforts; our current strategy for advancing the XP23829
clinical development program, including the initiation or conduct of planned
or potential future clinical trials and the timing thereof; the potential
submissions of an IND and an NDA to the FDA for XP23829 and the timing
thereof; the potential applicability of the Section 505(b)(2) NDA pathway; the
suitability of XP23829 as a potential treatment for psoriasis or relapsing
forms of MS; XenoPort’s expected net cash usage for 2014; and other statements
that are not historical facts. 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 “anticipated,” “believe,” “could,” “expects,”
“hope,” “plans,” “potential,” “will” 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, including
XenoPort’s ability to maintain sales, marketing, distribution, supply chain
and other sufficient capabilities to sell HORIZANT; XenoPort’s dependence on
the success of its strategies for HORIZANT commercialization, promotion and
distribution, as well as its ability to successfully execute on these
activities and to comply with applicable laws, regulations and regulatory
requirements; the competitive environment for and the degree of market
acceptance of HORIZANT; obtaining appropriate pricing and reimbursement for
HORIZANT in an increasingly challenging environment; 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; XenoPort’s ability to successfully
advance XP23829 development and to conduct or initiate clinical trials in the
anticipated timeframes, or at all; the uncertainty of the FDA’s review process
and other regulatory requirements; XenoPort's need for and the availability of
resources to develop XP23829 and to support XenoPort's operations; the
uncertain therapeutic and commercial value of HORIZANT and XP23829; as well as
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
prospectus supplement filed with the Securities and Exchange Commission
(“SEC”) under Rule 424(b)(5) on January 24, 2014. 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.

Important Additional Information and Where to Find It

XenoPort, Inc., its directors and certain of its executive officers may be
deemed to be participants in the solicitation of proxies from stockholders in
connection with XenoPort’s 2014 Annual Meeting of Stockholders. XenoPort
intends to file with the SEC and provide to its stockholders a proxy statement
and a WHITE proxy card in connection with such solicitation. XENOPORT
STOCKHOLDERS ARE STRONGLY ENCOURAGED TO READ ANY SUCH PROXY STATEMENT
(INCLUDING ANY AMENDMENTS AND SUPPLEMENTS) AND ANY OTHER RELEVANT DOCUMENTS
WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.

Information regarding the names of XenoPort’s directors and executive officers
and their respective interests in XenoPort by security holdings or otherwise
is set forth in XenoPort’s proxy statement for the 2013 Annual Meeting of
Stockholders, filed with the SEC on April 12, 2013, in XenoPort’s annual
report on Form 10-K, filed with the SEC on March 14, 2013, and in XenoPort’s
press release dated January 29, 2014, which documents are available at
XenoPort’s investor relations website at
http://investor.xenoport.com/index.cfm. To the extent holdings of such
participants in XenoPort’s securities have changed since the amounts described
in the 2013 proxy statement, or if a particular participant’s holdings are not
set forth in the 2013 proxy statement, such holdings (or changes thereto) have
been reflected on Initial Statements of Beneficial Ownership on Form 3 or
Statements of Change in Ownership on Form 4 filed with the SEC. Information
regarding the special interests of such participants, if any, in the matters
to be voted on at XenoPort’s 2014 Annual Meeting of Stockholders will be
included in the proxy statement referred to above. You can obtain free copies
of these referenced documents as described below.

These documents, including any proxy statement (and amendments or supplements
thereto) and the accompanying WHITE proxy card, and any other relevant
documents and other material filed by XenoPort with the SEC, are or will be
available for no charge at the SEC's website at www.sec.gov and at XenoPort’s
investor relations website at http://investor.xenoport.com/index.cfm. Copies
may also be obtained free of charge by contacting XenoPort Investor Relations
by mail at 3410 Central Expressway, Santa Clara, California 95051 or by
telephone at (408) 616-7200.

XNPT2F

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


XENOPORT, INC.



BALANCE SHEETS

(Unaudited, in thousands)
                                                          
                                             December 31,     December 31,
                                             2013             2012
                                                              
Current assets:
Cash and cash equivalents                    $ 20,584         $ 36,134
Short-term investments                         38,074           102,868
Accounts receivable, net                       939              -
Right to the HORIZANT business                 -                13,557
Inventories                                    1,262            -
Prepaids and other current assets             2,826          2,529    
Total current assets                           63,685           155,088
Property and equipment, net                    2,552            1,528
Long-term inventories                          10,185           -
Restricted investments and other assets       2,119          2,432    
Total assets                                 $ 78,541        $ 159,048  
Liabilities:
Current liabilities                          $ 10,069         $ 13,771
Noncurrent liabilities                        14,779         15,067   
Total liabilities                             24,848         28,838   
Stockholders’ equity (deficit):
Common stock                                   48               47
Additional paid-in capital and other           591,128          581,763
Accumulated deficit                           (537,483 )      (451,600 )
Total stockholders’ equity                    53,693         130,210  
Total liabilities and stockholders’ equity   $ 78,541        $ 159,048  
                                                              
                                                              

XENOPORT, INC.



STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share amounts)
                                                           
                    Three Months                    Year
                    Ended December 31,              Ended December 31,
                                                                    
                    2013            2012            2013            2012
Revenues:
Product sales,      $ 2,737         $ -             $ 6,414         $ -
net
Collaboration         -               378             1,137           11,515
revenue
Royalty revenue       142             109             400             109
Net revenue
from
unconsolidated       -             -             -             10,000  
joint operating
activities
Total revenues        2,879           487             7,951           21,624
Operating
expenses
(gains):
Cost of product       616             -               1,170           -
sales
Research and          3,689           10,600          33,325          42,947
development*
Selling,
general and           17,633          7,422           59,084          30,244
administrative*
Gain on
litigation           -             (20,499 )      -             (20,499 )
settlement
Total operating
expenses             21,938        (2,477  )      93,579        52,692  
(gains)
Income (Loss)         (19,059 )       2,964           (85,628 )       (31,068 )
from operations
Net interest
income               (79     )      78            (255    )      254     
(expense)
Net income          $ (19,138 )     $ 3,042        $ (85,883 )     $ (30,814 )
(loss)
Basic and
diluted net         $ (0.40   )     $ 0.07         $ (1.81   )     $ (0.78   )
income (loss)
per share
Shares used to
compute basic
net income           47,768        45,296        47,545        39,434  
(loss) per
share
Shares used to
compute diluted
net income           47,768        46,501        47,545        39,434  
(loss) per
share
                                                                    
* Includes employee non-cash stock-based compensation as follows:
Research and        $ 536           $ 1,321         $ 3,059         $ 4,364
development
Selling,
general and          1,700         1,821         7,485         7,917   
administrative
Total               $ 2,236        $ 3,142        $ 10,544       $ 12,281  

Contact:

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