Leading Independent Proxy Advisory Firm ISS Recommends XenoPort Stockholders Vote FOR ALL XenoPort Director Nominees

  Leading Independent Proxy Advisory Firm ISS Recommends XenoPort Stockholders
  Vote FOR ALL XenoPort Director Nominees

    Recommends Stockholders “Do Not Vote” For Any of the Clinton Nominees

Business Wire

SANTA CLARA, Calif. -- May 30, 2014

XenoPort, Inc. (Nasdaq: XNPT) today announced that Institutional Shareholder
Services (ISS), a leading independent proxy advisory firm, has recommended
that XenoPort stockholders vote “FOR ALL” of XenoPort’s director nominees on
the WHITE proxy card at the Company’s Annual Meeting of Stockholders to be
held on June 11, 2014. In supporting XenoPort’s entire slate of director
nominees, ISS recommends that stockholders “do not vote” for any of the three
nominees proposed by Clinton Relational Opportunity Master Fund, L.P. and its
affiliates (Clinton). ISS also recommends XenoPort stockholders vote “FOR” the
approval of XenoPort, Inc. 2014 Equity Incentive Plan, vote “FOR” the
approval, on an advisory basis, the compensation of XenoPort’s named executive
officers, and vote “FOR” the ratification of the selection by the audit
committee of the board of directors of Ernst & Young LLP as XenoPort’s
independent registered public accounting firm for the fiscal year ending
December 31, 2014.

In its May 29, 2014 report^1, ISS stated:

  *“The dissident has not made a compelling case for the need for change at
    the board level.”

ISS recognized the Company’s commercialization strategy for
HORIZANT^®(gabapentin enacarbil) Extended-Release Tablets, stating:

  *“the company's strategy to measure the uptake on a marketing program which
    truly promoted the product appears justified. Moreover, the company's
    decision to leverage $40 million and 50 metric tons of active ingredient
    acquired as part of settlement, implement state-of-the-art promotional
    tools, personally promote and focus marketing efforts in 40 territories,
    appears to be gaining traction. Using just 40 sales reps - compared to
    GSK's 300 reps - that called on 10% of the potential market the company
    has achieved the following results: a 24% increase in national prescribed
    tablets, a 64% increase in XP territories prescribed tablets, and a 630%
    increase in tablets prescribed per sales rep.”
  *“the board's reasons for terminating the licensing agreement with GSK,
    reacquiring the rights to Horizant, and re-launching the drug in a
    measured manner, to verify its potential appear justified by the early
    results of that re-launch. Given the company is less than a year into the
    re-launch, it appears too early to conclude a value maximizing decision
    would not include the steps being currently undertaken at the company.”
  *“management's contention that ‘now may be the worst time to abandon
    Horizant commercialization’ – given that the heavy lifting of the initial
    investment in the commercial operation has been completed, the investments
    in marketing initiatives and programs are largely committed, and the
    positive trajectory of actual sales will likely enhance the value of a
    potential partnership or future divestiture of Horizant – appears to have
    merit. So too do the facts that Horizant could generate meaningful revenue
    to fund further XP23829 development, and that diverting funding from
    Horizant to XP23829 will not accelerate XP829's development.”

ISS also recognized the steps XenoPort is taking to develop XP23829, a
potential treatment for psoriasis and/or relapsing forms of multiple sclerosis
(MS):

  *“we find no evidence to support the dissident claim that XP829's
    development is being neglected, capital starved, or that company's efforts
    to maximize the value of Horizant have come at the expense of the
    development of XP829. To the contrary, the strategy management has chosen
    to move forward in psoriasis appears the quickest pathway towards value
    creation for this asset and is echoed in analyst comments.”

Commenting on the ISS report, XenoPort issued the following statement:

  *We are pleased that ISS supports the election of ALL of XenoPort’s highly
    qualified and experienced director nominees and all of XenoPort’s
    proposals. The recommendation of this leading, independent proxy advisory
    firm reinforces our belief that XenoPort has the right Board and the right
    strategy to maximize the value of XenoPort’s assets and build stockholder
    value.

To follow the ISS recommendation, XenoPort’s stockholders should vote on the
WHITE proxy card “FOR ALL” of XenoPort’s nominees: Ronald W. Barrett, Ph.D.,
Jeryl L. Hilleman and Wendell Wierenga, Ph.D. The XenoPort Board of Directors
also urges stockholders to vote “FOR” Proposals 2 through 4 and 9 through 14
and “AGAINST” Clinton Proposals 5 through 8.

XenoPort stockholders are reminded that their vote is important, no matter how
many or how few shares  they own.

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 build stockholder value, including all statements
related to the commercial, revenue and value opportunity for HORIZANT and the
suitability of XP23829 as a potential treatment for psoriasis or relapsing
forms of MS; XenoPort’s current strategy for advancing the XP23829 clinical
development program; 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 “belief,” “could,” “plan,”
“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, 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 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 Quarterly Report on Form 10-Q for the
quarter ended March 31, 2014, filed with the Securities and Exchange
Commission on May 9, 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.

XNPT2G

^1 Permission to use quotations from the ISS report was neither sought nor
obtained.

Contact:

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