XenoPort to Mail Letter to Stockholders

  XenoPort to Mail Letter to Stockholders

Urges Stockholders to Vote “FOR ALL” XenoPort Director Nominees on WHITE Card
                                    Today

Business Wire

SANTA CLARA, Calif. -- May 9, 2014

XenoPort, Inc. (Nasdaq:XNPT) today announced that it is mailing a letter to
stockholders in connection with the Company’s upcoming Annual Meeting, which
will be held on June 11, 2014.

Highlights of the letter include:

  *XenoPort’s Board of Directors and management team are executing a
    strategic plan that is working;
  *XenoPort has the right Board and team in place to execute its strategy and
    deliver long-term value;
  *Clinton’s thesis for XenoPort demonstrates a fundamental misunderstanding
    of the biotech industry and XenoPort’s assets; and
  *If implemented, Clinton’s agenda could negatively impact stockholder
    value.

The full text of the letter follows:

       VOTE “FOR ALL” OF THE XENOPORT NOMINEES ON THE WHITE CARD TODAY

May 9, 2014

Dear Fellow XenoPort Stockholder:

You have an important choice to make at the upcoming Annual Meeting of
Stockholders on June 11, 2014.

We believe that XenoPort has the right Board, the right leadership, and the
right strategy to realize the full potential of XenoPort’s assets and enhance
stockholder value.

Therefore, we believe the right choice is for stockholders to vote on the
WHITE proxy card “FOR ALL” of XenoPort’s director nominees: Ronald W. Barrett,
Ph.D., Jeryl L. Hilleman and Wendell Wierenga, Ph.D., “FOR” Proposals 2
through 4 and 9 through 14 and “AGAINST” Clinton Proposals 5 through 8.

Your vote is important. We encourage you to make your voice heard by voting
online, by telephone, or by signing and dating the enclosed WHITE proxy card
today.

We urge you not to return any gold proxy card – even as a sign of protest –
that is sent to you by Clinton Relational Opportunity Master Fund, L.P. and
its affiliates (“Clinton”).

  YOUR BOARD OF DIRECTORS AND MANAGEMENT TEAM ARE EXECUTING A STRATEGIC PLAN
                               THAT IS WORKING

Recent results demonstrate that we are continuing to execute successfully our
strategic plan. We remain on track to optimize XenoPort’s assets and while we
are disappointed in the performance of our stock price, we believe the actions
we are taking will lead to enhanced stockholder value.

We believe we continue to make meaningful progress on our commercialization
efforts for HORIZANT^® (gabapentin enacarbil) Extended-Release Tablets. As
depicted in the graph accompanying this press release, only 10 months after
re-introducing HORIZANT into selected markets, prescription trends have
surpassed the results of our previous partner with substantially fewer
resources.

Building on this momentum:

  *Under XenoPort’s commercialization efforts, the nationwide total of
    HORIZANT prescribed pills for the first quarter of 2014 increased by 15%
    over the fourth quarter of 2013 and increased by 25% compared to the first
    quarter of 2013. Total prescribed pills in territories where XenoPort is
    promoting HORIZANT increased by 20% for the first quarter of 2014 compared
    to the fourth quarter of 2013 and increased by 64% compared to the first
    quarter of 2013. Promotional efforts are driving results. In areas of the
    country where XenoPort is not promoting HORIZANT, total prescribed pills
    for the first quarter of 2014 increased by only 2% compared to the fourth
    quarter of 2013 and decreased by 30% over the first quarter of 2013.
  *Recently, we also presented new data for gabapentin enacarbil, the active
    ingredient in HORIZANT, at the Annual Scientific Meeting of the American
    Pain Society (APS) and, separately, at the Annual Meeting of the American
    Academy of Neurology (AAN). The data included new post-hoc analyses of
    results from the gabapentin enacarbil clinical trial program. The data
    included efficacy analysis in important sub-populations of patients, the
    duration of efficacy throughout the full day and head-to-head data
    comparing certain side effects for HORIZANT with another product of the
    same drug class.

Given the growth trends for HORIZANT, the new data analyses that support its
benefit/risk profile, the positive feedback we continue to receive from
physicians who prescribe HORIZANT and the digital direct-to-consumer campaign
that has now resulted in 1.5 million visits to the HORIZANT website, we
believe we are on the right track to realize the value of this asset for
XenoPort stockholders.

At the same time, your Board and management team are closely monitoring the
progress of our HORIZANT commercialization strategy. We continue to engage in
discussions with potential partners, and we will adjust our plans as
appropriate to ensure that we meet our goal of maximizing HORIZANT’s value and
its contribution to increasing stockholder value.

Recent data on XP23829 reinforces our belief in its potential. Your Board and
management team are focused on continuing to advance the development of
XP23829 as quickly as is appropriate and possible.

  *At the AAN meeting in April, we presented data including the results from
    a clinical trial evaluating the safety, tolerability and pharmacokinetics
    of XP23829. These data support the advancement of this product candidate
    into Phase 2 development in moderate-to-severe chronic plaque type
    psoriasis patients, a program that we believe will ultimately guide
    selection of doses for a potential Phase 3 program in moderate-to-severe
    chronic plaque type psoriasis and/or relapsing forms of multiple sclerosis
    (MS).
  *We also submitted an Investigational New Drug (IND) application to the
    U.S. Food and Drug Administration (FDA) Division of Dermatology and Dental
    Products for XP23829 as a potential treatment for moderate-to-severe
    chronic plaque type psoriasis. Assuming clearance of the IND, we plan to
    initiate a Phase 2 clinical trial of XP23829 for this indication by
    mid-2014. Previous XP23829 clinical studies were conducted under an active
    IND with the FDA Division of Neurology Products as a potential treatment
    for relapsing forms of MS.

In addition, we continue to engage in discussions with potential partners
regarding the development and commercialization of XP23829.

  XENOPORT HAS THE RIGHT BOARD AND TEAM IN PLACE TO EXECUTE ITS STRATEGY AND
                           DELIVER LONG-TERM VALUE

Your Board is comprised of nine highly-qualified and proven leaders, including
eight independent directors and XenoPort’s Chief Executive Officer, Ronald W.
Barrett, Ph.D. Your directors are active, engaged and focused on stockholder
value.

XenoPort’s directors have experience in:

  *Leading other biotechnology and pharmaceutical companies, with several
    independent members of your Board serving as Chief Executive Officer of
    other successful biopharmaceutical companies;
  *Biopharmaceutical operations, strategic planning and oversight, research
    and product development, manufacturing, regulatory, compliance, sales and
    marketing, risk oversight, and quality;
  *Investing in, partnering and growing healthcare companies;
  *Finance, auditing, accounting and investment banking in the life sciences
    and healthcare industries; and
  *Developing fund raising and capital allocation strategies, and in
    evaluating and setting compensation and corporate governance policies and
    practices.

As detailed in our previous letter to you, your Board’s broad-based and
relevant expertise is reflected in the Company’s nominees for election:

  *Dr. Barrett has more than 20 years of executive management experience in
    the pharmaceutical industry. As a founder and the Chief Executive Officer
    of the Company, Dr. Barrett’s leadership and strategic direction have led
    to XenoPort’s discovery and development of numerous novel product
    candidates, including XP23829, and have enabled XenoPort to evolve from a
    pure research-based company to an integrated pharmaceutical company with
    development and commercialization capabilities.
  *Ms. Hilleman, Chair of XenoPort’s Audit Committee, has over 30 years of
    finance, marketing and investment expertise and an impressive history of
    executive leadership with over 20 years of service as Chief Financial
    Officer of both private and public companies. As a result of this work, as
    well as her support on XenoPort’s ongoing accounting and financial
    compliance needs, Ms. Hilleman possesses important knowledge of XenoPort’s
    financials that we believe no replacement as Audit Chair could provide.
  *Dr. Wierenga brings over 40 years of successful leadership of
    pharmaceutical and biopharmaceutical companies, including executive
    leadership of pharmaceutical research, clinical development and regulatory
    functions for national and multi-national corporations, as well as past
    and current service on the Boards for several successful publicly-traded
    biopharmaceutical companies. As a member of XenoPort’s Board, he has
    substantial experience with the development of the Company’s long-term
    strategies that have led to the XP23829 development program as well as to
    the commercialization of HORIZANT.

 CLINTON’S THESIS FOR XENOPORT DEMONSTRATES A FUNDAMENTAL MISUNDERSTANDING OF
                  THE BIOTECH INDUSTRY AND XENOPORT’S ASSETS

  IF IMPLEMENTED, CLINTON’S AGENDA COULD NEGATIVELY IMPACT STOCKHOLDER VALUE

Clinton has made misleading and unsubstantiated claims regarding XP23829,
including wrongly touting that a simple increase in funding will accelerate
its development and regulatory approval. Drug development is a step-wise and
regulated process that requires much more than an ability to write a check.
The aggregate investment in product candidates is a function of the stage of
development of the product candidates.

More than simple investment, moving successfully through the drug development
and regulatory review process also requires experience and technical
expertise, and in this regard, your Board has a proven record of success. For
example:

  *Dr. Barrett was an instrumental contributor to the FDA approval of
    HORIZANT and directed the recent re-acquisition and commercial re-launch
    of this product.
  *Dr. Wierenga has participated in the submission of over 70 Investigational
    New Drug applications and in the filing of 16 New Drug
    Applications/Biologics License Applications, which have led to the launch
    of 16 FDA-approved drug products including LIPITOR, NEURONTIN and most
    recently UCERIS.

It is disingenuous for Clinton to assert that XenoPort has had no significant
commercial success since its initial public offering in 2005.

  *Clinical development is an inherently challenging and risky endeavor. The
    Dimasi study^1 reports that there is only a 13% likelihood that a small
    molecule drug candidate that enters clinical development will ever be
    approved.
  *XenoPort has received FDA approval for HORIZANT for two indications, and
    is achieving positive sales trends since the commercialization rights were
    reacquired just 10 months ago.

Clinton’s claim that HORIZANT has no proven differentiation in the market is
wrong and ignores FDA prescribing information, published studies and treatment
guidelines.

  *The low dose, dosing frequency, titration schedule and pharmacokinetics of
    HORIZANT are clearly different from other products in the same class. The
    prescribing information of HORIZANT clearly states that it is not
    interchangeable with other gabapentin products because of differing
    pharmacokinetic profiles.
  *There are two publications that report the results of clinical trials in
    patients who were switched from gabapentin to HORIZANT, and at the recent
    AAN meeting, clinical trial data was presented comparing certain side
    effects of HORIZANT with another product in the same class.
  *HORIZANT has been included in new treatment guidelines from well-respected
    organizations. These guidelines include analyses of level of evidence and
    make specific recommendations for the choice of drug therapy for patients.

We encourage you to review HORIZANT’s FDA approved prescribing information,
HORIZANT clinical trial publications and published treatment guidelines.
Clinton’s assertion that HORIZANT has no proven differentiation is not
supported by the information and facts in these sources.

Clinton’s agenda could negatively impact your company and stockholder value.
We believe that replacing your directors with Clinton’s nominees would remove
expertise and experience that is critical to the continued execution of the
Company’s strategic plans.

Based on Clinton’s public statements, we are also concerned that if Clinton’s
nominees are elected, they may pursue Clinton’s agenda of immediately
discontinuing the commercialization of HORIZANT. Particularly given the
progress we are seeing with the commercialization of HORIZANT, we believe
Clinton’s decision to stop these efforts would be contrary to the interests of
all XenoPort stockholders and may short circuit XenoPort’s ability to maximize
the overall potential of this asset.

          PROTECT YOUR INVESTMENT - VOTE THE WHITE PROXY CARD TODAY.

We are confident your Board has the skills and expertise necessary to oversee
the continued execution of XenoPort’s strategic plans, realize the full
potential of XenoPort’s assets, and enhance stockholder value.

We urge you to protect your investment by voting the enclosed WHITE proxy card
today “FOR ALL” of XenoPort’s nominees: Ronald W. Barrett, Ph.D., Jeryl L.
Hilleman and Wendell Wierenga, Ph.D., “FOR” Proposals 2 through 4 and 9
through 14 and “AGAINST” Clinton Proposals 5 through 8.

On behalf of your Board of Directors and management team, we thank you for
your continued support.

Sincerely,

/s/ Ronald W. Barrett     /s/ John G. Freund
                           
Ronald W. Barrett, Ph.D.   John G. Freund, M.D.
Chief Executive Officer    Lead Independent Director
                           

Forward-Looking Statements

This communication contains “forward-looking” statements, including, without
limitation, all statements related to the potential value of XenoPort’s assets
and XenoPort’s ability to achieve its goal of enhancing stockholder value
through the execution of its strategic plan, including all statements related
to the commercial and value opportunity for HORIZANT and the suitability of
XP23829 as a potential treatment for psoriasis or relapsing forms of MS;
XenoPort’s ability to build value in HORIZANT through, and the potential of,
its targeted educational efforts; XenoPort’s 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,
including XenoPort’s expectations with respect to a potential Phase 3
development program for XP23829; potential partnering efforts for XP23829
and/or HORIZANT; 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
“believe,” “could,” “hope,” “may,” “plan,” “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 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, including the risk
that FDA action, including with respect to the investigational new drug
application for XP23829, would delay or prevent the initiation of future
clinical trials of XP23829; XenoPort’s need for and the availability of
resources to develop XP23829 and to support XenoPort’s operations; XenoPort’s
dependence on future collaborative partners; the uncertain therapeutic and
commercial value of HORIZANT and XP23829; as well as risks related to future
opportunities and plans, including the uncertainty of future operating
results. These and other risk factors are discussed under the heading “Risk
Factors” in XenoPort’s Annual Report on Form 10-K for the year ended December
31, 2013, filed with the Securities and Exchange Commission on February 28,
2014 and its future filings and reports, including its Quarterly Report on
Form 10-Q for the quarter ended March 31, 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.

  If you have any questions, require assistance with voting your WHITE proxy
    card or need additional copies of the proxy materials, please contact:

                           MACKENZIE PARTNERS, INC.

                              105 Madison Avenue

                              New York, NY 10016

                         proxy@mackenziepartners.com

                        (212) 929-5500 (Call Collect)

                                      Or

                           TOLL-FREE (800) 322-2885

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 has
filed with the SEC and provided to its stockholders a definitive proxy
statement and a WHITE proxy card in connection with such solicitation.
XENOPORT STOCKHOLDERS ARE STRONGLY ENCOURAGED TO READ THE PROXY STATEMENT
(INCLUDING ANY AMENDMENTS AND SUPPLEMENTS) AND THE ACCOMPANYING WHITE PROXY
CARD, AND ANY OTHER RELEVANT DOCUMENTS WHEN THEY BECOME AVAILABLE, BECAUSE
THEY 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 definitive proxy statement for the 2014 Annual
Meeting of Stockholders, filed with the SEC on April 22, 2014, including
Appendix B thereto.

The definitive 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.

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 relapsing forms of MS. 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 Web site at www.XenoPort.com.

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

^1 Dimasi et al., Clinical Pharmacology & Therapeutics 87, 272-277 (March
2010)

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Contact:

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