XenoPort third quarter net loss decreases to $19.9 million

XenoPort, Inc. (Nasdaq:XNPT) announced today financial results for the third quarter and nine months ended September 30, 2010. Revenues for the third quarter were $0.4 million, compared to $0.4 million for the same period in 2009. Net loss for the third quarter was $19.9 million, compared to a net loss of $24.4 million for the same period in 2009. At September 30, 2010, XenoPort had cash, cash equivalents and short-term investments of $91.0 million.

XenoPort Business Updates

Since the start of the third quarter, XenoPort's business updates include:

• Announced that the U.S. Food and Drug Administration (FDA) has accepted for review the GlaxoSmithKline (GSK) response to the FDA Complete Response letter for Horizant™ (gabapentin enacarbil) Extended-Release Tablets (also known as XP13512). Horizant is under review for the treatment of moderate-to-severe primary restless legs syndrome (RLS). The FDA has designated the new drug application (NDA) resubmission as a Class 2 response and set a new Prescription Drug User Fee Act (PDUFA) date of April 6, 2011.
• Completed enrollment in a Phase 2b randomized, double-blind, placebo-controlled, clinical trial of arbaclofen placarbil (AP) in patients with gastroesophageal reflux disease (GERD) that experience symptoms in spite of treatment with a proton pump inhibitor (PPI). XenoPort anticipates reporting top-line results of this clinical trial in the first quarter of 2011.
• Announced plans to initiate Phase 3 development of AP as a potential treatment of spasticity in multiple sclerosis (MS) patients.
• Initiated a Phase 2 randomized, double-blind, crossover clinical trial in patients with Parkinson's disease that will evaluate safety, efficacy and pharmacokinetics of XenoPort's new bi-layer formulation of XP21279 versus Sinemet.
• Presented new data from XenoPort's first clinical trial of XP21279 in Parkinson's disease patients at the World Parkinson Congress meeting in Glasgow, Scotland.
• Presented preclinical data on a new product candidate, a novel prodrug of acamprosate, at the National Fragile X Foundation's 12th International Fragile X Conference in Detroit, Michigan.
• Presented preclinical data on XP23829, a new product candidate that is a novel prodrug of methylhydrogenfumarate, at the 26th Congress of the European Committee for Treatment and Research in Multiple Sclerosis meeting in Gothenburg, Sweden.
• Was awarded $0.5 million to further fund the development of AP and XP21279 through the Qualifying Therapeutic Discovery Project program under section 48D of the Internal Revenue Code, which was enacted as part of the Patient Protection and Affordable Care Act of 2010.

Other News - GSK Collaboration

XenoPort also announced today that it has entered into an amended and restated development and commercialization agreement with GSK with respect to Horizant/XP13512. GSK remains responsible for seeking approval of the NDA for RLS in the United States and for further development and regulatory matters with respect to Horizant for the potential treatment of post-herpetic neuralgia (PHN). Subject to the terms and conditions of the amended agreement, XenoPort has the right to pursue development of Horizant for: (1) the potential treatment of diabetic peripheral neuropathy; (2) the potential treatment of PHN to the extent that a product label would reflect a superiority claim over a currently approved drug; and (3) any additional indications in the United States. GSK remains responsible for commercialization of Horizant in the United States for all indications. In addition, XenoPort has reacquired all rights to XP13512 outside of the United States that were previously granted to GSK (which excludes the Astellas territory). As part of the amended agreement, financial terms, including potential clinical, regulatory and sales milestone payments and profit split/royalty rates, have been modified to reflect the changes in development responsibilities and the reversion of ex-U.S. rights to XenoPort.

Ronald W. Barrett, Ph.D., chief executive officer of XenoPort, stated, "XenoPort has made significant progress in advancing our product candidates in the last quarter. With respect to Horizant, we worked closely with GSK on the NDA resubmission and are pleased that the FDA has accepted it for review and set an April 6, 2011 PDUFA date. We have also been working with Astellas to address questions raised by the Pharmaceuticals and Medical Device Agency (PMDA) as they review the NDA for XP13512 as a potential treatment of restless legs syndrome in Japan. We also completed enrollment in our clinical trial of AP in GERD patients who remain symptomatic despite PPI therapy, gained agreement with the FDA to advance into Phase 3 development for AP as a potential treatment of spasticity in MS patients, initiated a clinical trial in patients with Parkinson's disease with the new bi-layer formulation of XP21279 and announced preclinical results on two new product candidates."

Dr. Barrett continued, "I am happy to report today that we have modified our collaboration agreement with GSK in a way that we believe could enhance the development of, and potential patient access to, XP13512 for approved indications in the future, both within and outside the U.S., as well as create more value for XenoPort stockholders."

XenoPort Third Quarter and Nine-Month Financial Results

Revenues for the third quarter were $0.4 million, compared to $0.4 million for the same period in 2009. Revenues for both periods primarily reflected the amortization of revenue recognized from an up-front license payment related to the company's agreement with Astellas Pharma Inc.

Revenues for the nine months ended September 30, 2010 were $1.0 million, compared to $28.5 million for the same period in 2009. The decrease in revenue was primarily due to a decrease in revenue recognized from up-front license and milestone payments from Astellas and GSK.

Research and development expenses for the third quarter of 2010 were $13.8 million, compared to $17.0 million for the same period in 2009. Research and development expenses for the nine months ended September 30, 2010 were $41.7 million, compared to $54.0 million for the same period in 2009. The decrease in research and development expenses in the three months ended September 30, 2010 compared to the same period in 2009 was principally due to decreased personnel costs primarily related to decreased headcount and decreased non-cash stock-based compensation, partially offset by increased AP clinical development costs. The decrease in research and development expenses in the nine months ended September 30, 2010 compared to the same period in 2009 was principally due to decreased Horizant/XP13512 costs primarily due to decreased manufacturing and clinical activities, decreased XP21279 costs related to decreased toxicology and clinical costs, and decreased personnel costs primarily due to decreased headcount and decreased non-cash stock-based compensation, partially offset by a credit in 2009 from Astellas for manufacturing costs under the supply arrangement.

Selling, general and administrative expenses were $6.6 million for the third quarter of 2010, compared to $8.1 million for the same period in 2009. Selling, general and administrative expenses were $21.9 million for the nine months ended September 30, 2010, compared to $23.7 million for the same period in 2009. The decrease in selling, general and administrative expenses in the three and nine months ended September 30, 2010 compared to the same periods in 2009 was primarily due to decreased personnel costs as a result of decreased headcount.

Net loss for the third quarter of 2010 was $19.9 million, compared to a net loss of $24.4 million for the same period in 2009. Net loss for the nine months ended September 30, 2010 was $67.6 million, compared to a net loss of $48.0 million for the same period in 2009. Net loss per basic and diluted share was $0.65 in the third quarter of 2010 versus net loss per basic and diluted share of $0.81 for the same period in the prior year. For the nine-month period ended September 30, 2010, net loss per basic and diluted share was $2.22 versus net loss per basic and diluted share of $1.70 for the same period in 2009.