FDA Approves Horizant For Restless Legs Syndrome, Bringing Relief To XenoPort, Revenues To GSK

The California biotech likely to get a lifeline, while GSK will benefit from incremental revenues, but the market, including payers, has to yet to be educated.

XenoPort Inc. and its partner GlaxoSmithKline plc have received FDA approval for Horizant (gabapentin enacarbil) to treat restless legs syndrome, paving the way for the drug to reach the market in July.

The approval, which FDA announced late evening on April 6, comes as good news for Santa Clara-based Xenoport, following an agonizing year. In February 2010, FDA issued a Complete Response Letter for the drug, requiring additional trial data. The same compound failed to show efficacy over placebo in treating migraines last summer. And in March 2011, the company waved the white flag on another drug, arbaclofen placarbil, for acid reflux. Over the course of the year, XenoPort has downsized its staff while slowing other projects (Also see "Battered XenoPort Holds On For April PDUFA Date For Horizant" - Pink Sheet, 28 Mar, 2011.).

Now, the company has an opportunity to address a market in which peak sales of Horizant could reach $1.3 billion by 2019, estimates Noble Financial analyst Nathan Cali. But to get there, the partners will have to work hard to educate payers about a syndrome that is not well understood and is currently treated off label with inexpensive generics.

GSK is responsible for reaching payers and setting prices, which the companies said they will disclose shortly. The Big Pharma holds U.S. commercialization rights to Horizant, but, under a deal signed in 2007 and renegotiated last fall, Xenoport has co-promotion rights in the U.S. and full commercial rights outside of the U.S. The exception is some parts of Asia, where Astellas Pharma Inc., still holds rights, based on a deal signed in 2005.

Xenoport has already received money from both partners, including a $75 million upfront from GSK in February 2007 for worldwide rights to the drug, excluding the Asian markets which were pledged to Astellas for $25 million upfront..

Both partners now owe a milestone payment as a result of the approval. GSK will pay XenoPort $30 million, while Astellas is obligated to pay $7 million. Between the two partnerships, XenoPort says it has received $245 million to date, and could receive $517.5 million more if more regulatory and sales milestones are met.

XenoPort CEO Ron Barrett said the company has a launch goal of July 1, giving the sponsors time to build supply, hold conversations with payers, train a sales team and solicit feedback from the FDA concerning the marketing plan and Medication Guide. GSK and Xenoport have a co-promotion agreement in the U.S. for the drug, but XenoPort will not build a sales force of its own for Horizant during 2011, instead allowing GSK to take the lead.

Meanwhile, XenoPort is readying a supplemental New Drug Application for Horizant in post-herpetic neuralgia, a form of nerve pain that follows an outbreak of shingles. Horizant is also pending approval for RLS in Japan, where Astellas will sell the drug.

A Prodrug That Could Replace Dopamine Agonists

RLS is characterized by unpleasant sensations in the limbs coupled with an irresistible urge to move them, and often affects people while they sleep. Horizant is the first drug in its class approved in the U.S. to treat moderate to severe primary RLS. The drug is a modified form of gabapentin, an anti-convulsant long marketed by Pfizer Inc. as Neurontin to treat epilepsy as well as neuropathic pain and depression.

Most frequently, RLS is treated with dopamine agonists, including GSK's Requip (ropinirole) and Boehringer Ingelheim's Mirapex (pramipexole), approved in 2005 and 2006 respectively, which each have uncomfortable side effects that limit their uptake. XenoPort says more than half of the 5.5 million RLS sufferers in the U.S. do not receive prescription treatment.

Horizant, the company's lead candidate, is a prodrug form of gabapentin, intended to provide a more constant level of efficacy than the original version. Since RLS is often a nighttime nuisance to sufferers, the ability to take a drug in the late afternoon for overnight effect could prove preferential. XenoPort specializes in improving on existing compounds by using the body's natural nutrient transport mechanisms to deliver them more efficiently or effectively, enhancing their performance; Horizant essentially is transformed into gabapentin after being taken orally.

The setback of last February's FDA decision came as some surprise to both XenoPort officials and some analysts. The company maintained that Horizant's toxicity profile was very similar to that of gabapentin, whose history was well-known since the mid-1990s. Nonetheless, regulators saw a pancreatic tumor signal in rat studies, and called for a complete response (Also see "Prospects For GSK/XenoPort's Horizant Sink After Rejection By FDA" - Pink Sheet, 1 Feb, 2010.).

Based on the approval, however, the toxicology concern now seems like a false alarm. XenoPort officials maintain that the drug would have to be administered at much higher doses to pose any significant cancer risk. Deutsche Bank analyst David M. Steinberg agreed in an April 7 research note, which said the original FDA decision was "seemingly based on groundless safety concerns."

The Horizant label will still advise users to familiarize themselves with the drug's effects before driving or operating certain machinery, and notes that some users could experience somnolence, sedation or dizziness, while outlining the carcinogenicity study. The approval requires GSK and Xenoport to market the drug with a Medication Guide, but it does not require a REMS.

Good News After A Rough Year

The approval is a long-awaited bit of good news for a company whose hopes - and stock price - have been humbled since early 2010. XenoPort lost well over half its market value after the FDA's February 2010 Complete Response Letter, and despite a couple of rallies, the company has never regained what it lost, suffering repeated setbacks along the way.

Since its other drug, AP, failed to show efficacy over placebo in treating gastroesophageal reflux disease, XenoPort became even more reliant on Horizant to turn its fortunes around. The company still has some hope for AP as an anti-spasmodic treatment for patients with spinal cord injury or multiple sclerosis, but expectations for the compound have diminished significantly (Also see "XenoPort Gives Up On Reflux Drug After It Fails To Beat Placebo" - Pink Sheet, 21 Mar, 2011.).

The company also has other modified drugs in is pipeline, including a Phase II reformulation of L-dopa for Parkinson's Disease and a prodrug of transexamic acid for heavy menstrual bleeding.

The approval of Horizant sent shares in XenoPort up $3.58, or 56%, to $9.96 in trading April 7. GSK stock was up 24 cents, or 0.6%, to $39.96.

- Paul Bonanos ( [email protected] )