Xenoport shocked the biotech world late last night by winning FDA approval of a new drug for restless legs syndrome that was turned down in February 2010. Now the Santa Clara, CA-based company and its partner GlaxoSmithKline are onto the next critical assignment: making this thing sell.
At least today, Xenoport (NASDAQ: [[ticker:XNPT]]) and its shareholders can celebrate. The application for gabapentin enacarbil (Horizant) was filed in September 2008, and things looked grim a year ago. Shares of Xenoport rebounded big-time today, climbing 65 percent to $10.60 a share in early trading, before coming down a bit later in the morning.
“Drug development is a tough business,” said Xenoport CEO Ron Barrett on a conference call with analysts this morning. “I consider this approval to be a great achievement for Xenoport.”
Here are some of the basics of the opportunity Xenoport sees. Estimates are that 1.5 percent to 2.7 percent of the U.S. adult population has restless legs syndrome, a neurological condition in which people have uncomfortable involuntary leg movements, often while they sleep. About 5.5 million people have self-reported symptoms of the condition, and 3.5 million haven’t received treatment, the company said. About 80 percent of patients who do get treatment today use generic drugs known as dopamine agonists—which aren’t actively promoted by any drug company. An estimated 60,000 to 70,000 physicians—a group composed of primary care and specialty neurologists—write about 80 percent of the prescriptions for this condition, the company said.
Xenoport has the right to co-promote the drug along with its partner, GlaxoSmithKline, although Xenoport isn’t planning to field its own sales force in 2011, the company said today. GlaxoSmithKline plans to deploy 500 sales reps from its specialty and primary care sales forces. Although Xenoport didn’t discuss price of the drug, it’s clear that critical decision will depend on how much insurers will be willing to pay for a brand-name drug for a condition that some doctors and patients don’t consider very serious. Xenoport, clearly anticipating this line of argument, is attempting to head it off by pointing to studies that suggest it is linked to more serious conditions like high blood pressure and heart disease.
Without a hard figure on the drug’s price, Michael Yee, an analyst with RBC Capital Markets, told Bloomberg yesterday that the drug could bring in at least $100 million in U.S. sales.
While companies are sometimes immediately primed upon FDA approval to start selling a drug, that isn’t the case here with Glaxo and Xenoport. The market introduction is being aimed for July 1, Barrett says. “We want to have a successful launch with a well-trained sales force,” he said.
In connection with the FDA approval, Xenoport is entitled to a $30 million milestone payment from Glaxo, plus another $7 million from Japan-based Astellas Pharma, which has the right to promote the drug in Asia. Xenoport’s share of the profits and losses will be determined on a sliding scale of between 20 and 50 percent of the drug’s finances, depending on its level of contribution to the partnership with Glaxo. Xenoport has three years to decide if it wants to build its own sales force to supplement the work of Glaxo’s team, said Bill Harris, the company’s chief financial officer. If Xenoport goes ahead with that plan, it would build a group of about 50 to 100 sales reps, said Vincent Angotti, the company’s chief commercial officer.
Barrett didn’t have much to say about how the companies resolved the issue that tripped up the drug application before at the FDA. Barrett said the FDA-cleared prescribing information includes language on how high doses—between 10 and 75 times the recommended human dose—appeared to be associated with the development of cancer in male and female rats.
“We’re obviously happy to have this issue resolved sufficiently,” to win FDA clearance, Barrett said.
