Xenoport Hurt by Solzira NDA Withdrawal

November 11, 2008 Xenoport hurt by Solzira NDA withdrawal

Evaluate Vantage

News that Xenoport and partner GlaxoSmithKline’s recent application for restless legs syndrome (RLS) drug Solzira will have to be withdrawn, with the FDA requesting that data from a single trial be re-formatted, caused Xenoport’s shares to fall 13% yesterday to a new 18-month low of $34.44.

With a potential 4-6 month delay to approval and the postponement of a $23m milestone that Xenoport was due to receive from Glaxo on the FDA’s acceptance of Solzira’s NDA, senior executives at the specialty US company could be forgiven for feeling somewhat aggrieved with Glaxo for this apparent oversight, given the pharma giant’s supposed experience and expertise in regulatory filings. The setback to Solzira and resulting slump in Xenoport’s share price suggests that shareholders who have not fled the stock will be even more desperate for positive phase IIb data for GERD treatment, XP19986 (Event - XenoPort looking for end of year trial lift, October 10, 2008).

Formatting issues

Avoiding these kinds of regulatory pitfalls, after all the cost and hard work involved in taking a drug through clinical development, is becoming an increasingly important factor behind a company’s decision to sign up a big pharma partner in today’s tougher regulatory environment. Both companies were naturally keen to stress that the NDA withdrawal has nothing to do with the content of the filing, which probably makes the rejection on a technicality all the more frustrating for Xenoport.

Whilst the FDA requested the data from one particular study to be re-formatted, Glaxo has decided to review the formatting of other data sets in the application, presumably to ensure there can be no further grounds for rejection.

Vital to Xenoport

On one hand the slump in share price is overdone, on the basis there is nothing fundamentally wrong with the filing and with a healthy cash balance of $125m at the end of September there is no immediate threat that Xenoport will have to seek further financing. This view has been supported by multiple analysts who have reiterated their “buy” recommendations on Xenoport stock.

On the other hand, shareholders could be forgiven for feeling a little nervous over any setbacks for the drug, given Solzira’s importance to the company. On the basis that Xenoport will receive double-digit royalties and US co-promotion fees from Glaxo, analysts are currently forecasting Solzira revenues of $459m by 2014, meaning the drug could be worth $1.1bn according to EvaluatePharma’s NPV Analyzer.

With Solzira representing 88% of Xenoport’s total product NPV of $1.2bn and valued significantly higher than the company’s enterprise value of $745m, Xenoport’s future is massively dependent on the drug’s commercial success.

Clearer runway for Neupro

The delays to Solzira could play nicely into the hands of UCB, given that the Belgian company is expected to shortly receive a final decision from the FDA regarding its application for Neupro to treat RLS.

Neupro, already approved to treat Parkinson’s disease, was withdrawn from the US and European markets earlier this year due to manufacturing complications for the transdermal patch, but a supplementary filing for RLS was made in December 2007 and remains ongoing.

Although any approval for RLS is likely to be contingent on resolution of the manufacturing issues, with UCB expecting to enter discussions with the FDA about a re-launch of Neupro in the first half of 2009, the delay to Solzira means that Neupro could still be first to market with some breathing space in which to carve out a decent market share.

Solzira and Neupro are expected to provide alternative treatment options for the estimated 12 million RLS patients in the US and challenge the only approved drugs for RLS, Boehringer Ingelheim’s Mirapex and Glaxo’s Requip.

Restless legs syndrome product portfolio (sales are aggregated across ALL INDICATIONS)

Launch Market Generic Pharmacological Indication WW for Product Company status Name Class Summary RLS indication

Parkinson's disease Boehringer Dopamine D3 [Marketed]; Marketed Sifrol/Mirapex pramipexole 07/04/2006 Ingelheim agonist Restless legs syndrome [Marketed]

Parkinson's disease ropinirole Dopamine D2 [Marketed]; Requip GlaxoSmithKline 30/09/2004 hydrochloride agonist Restless legs syndrome [Marketed]

Parkinson's disease [Marketed]; Dopamine D2 Restless legs Filed Neupro rotigotine UCB 31/12/2008 & D3 agonist syndrome [Filed]; Fibromyalgia [Phase II]

Restless legs syndrome [Filed]; Post- herpetic neuralgia [Phase II]; gabapentin Calcium channel Diabetic Solzira GlaxoSmithKline 31/12/2009 enacarbil modulator neuropathy [Phase II]; Migraine [Phase II]; Pain, neuropathic [Phase II]

Pain, neuropathic [Marketed]; Diabetic neuropathy [Marketed]; Epilepsy [Marketed]; Generalised Alpha 2 delta Phase II Lyrica pregabalin Pfizer anxiety - ligand [Marketed]; Fibromyalgia [Marketed]; Pain, post- operative operative [Phase III]; Restless legs syndrome [Phase II]

Restless legs ropinirole Jazz JZP-7 Dopamine agonist syndrome 31/12/2011 hydrochloride Pharmaceuticals [Phase II]

Parkinson's disease [Phase III]; Restless legs Newron Dopamine Safinamide safinamide syndrome 31/12/2011 Pharmaceuticals reuptake inhibitor [Phase II]; Alzheimer's disease [Phase II]

Parkinson's disease Dopamine D2 [Phase II]; Aplindore aplindore Neurogen - agonist Restless legs syndrome [Phase II]