xnpt from Rodman and Renshaw
Xenoport
XNPT: Price: $9.05; Market Cap (MM): $274.6
Market Perform;
Boris Peaker, Ph.D. - Senior Associate Analyst (212-430-1778)
Elemer Piros, Ph.D. - Senior Biotechnology Analyst (212-430-1754)
XenoPort Reports 2009 Financial Results
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Key Points
XenoPort believes the current cash balance is adequate through 2H11
The company did not disclose additional details from the complete response letter beyond those announced on February 17th, 2010, but did provide additional data on rat studies
The rat carcinogenecity data shows a dose-dependent increase in adenomas and carcinomas, but does not appear to be any worse than prior results with gabapentin
We estimate that the FDA was not aware of the rat carcinogenicity data at the time of the end-of-Phase 2 meeting
We maintain our Market Perform rating without a price target on XenoPort shares
Rat Data Shows A Dose-Dependent Increase In Carcinomas and Adenomas
Following the Complete Response letter to its NDA for Horizant in RLS, which sited concerns about pancreatic carcinogenicity observed in rats, XenoPort presented additional details on its preclinical findings. The company conducted a two year carcinogenicity study in rats, which included four arms (control, 500mg/kg/day, 1000mg/kg/day, and 2000mg/kg/day). Horizant or control were administered via gavage, which is a feeding tube directly to the stomach. Each arm of the trial included 60 males and 60 female rats. Adenomas were observed in 2/120 (1.7%) of rats in the placebo arm (both males), 4/120 (3.3%) in the 500mg/kg/day arm (all males), 4/120 (3.3%) in the 2000mg/kg/day arm (all males), and 13/120 (11%) in the 5000mg/kg/day arm (8 males, 3 females). Carcinomas were less frequent, with only 1 case (0.8%) in a male rat at the 2000mg/kg/day arm, and two cases (1.6%, one male and a female) in the 5000mg/kg/day arm. One rat died prematurely (male, carcinoma in the 2000mg/kg/day arm), and no alternative cause of death was identified.
For comparison, Sigler et. al. (Toxicology 98(1995); 73-82) conducted a two year carcinogenicity study of orally-administered gabapentin in rats. The results showed a carcinogenicity rate of 4/50 (8%) at the 250mg/kg dose, 3/50 (6%) at the 1000mg/kg dose, and 8/50 (16%) at the 2000mg/kg dose. While comparing results across trials may introduce errors resulting from difference in protocols, Siglers data appears to show a higher carcinoma frequency than what was observed by XenoPort. One notable distinction is that XenoPort observed carcinomas and adenomas in male and female rats, while only male rats developed carcinomas in Sigler's experiment.
Timeline Suggests Rat Data Came After End-Of-Phase 2 Meeting
The general drug development process includes a meeting with the FDA following the completion of the Phase 2 studies to discuss available human and pre-clinical data, Phase 3 trial design, data and safety analysis, and many other topics related to the individual drug in development. In March 2006 XenoPort announced the commencement of its first Phase 3 study. While the press release does not specify the timing of the Phase 2 meeting, we suspect the meeting occurred in early 2006 or late 2005. However, management noted the completion of the rat carcinogenicity study May 2007. Therefore, while we do not know the exact timing of the end-of-phase 2 meeting and the time of submission of the rat carcinogenicity data, we believe that the agency was not in possession of this data during the negotiations of Phase 3 program design.
Maintain Our Market Perform Rating Pending Update From The FDA
While we are unaware of data suggesting that the observed pancreatic carcinogenicity signal in rats translate to human carcinogenicity risk, it is not clear if and how this finding may be viewed by the FDA. Additionally, even if the agency agrees to a plan towards approval, we remain concerned about GSKs commitment to the program and the investment required to launch a new product for the treatment of Restless Legs Syndrome. We believe that a restrictive label (black box warning and/or patient registry) may substantially limit the commercial potential of Horizant given the availability of approved agents in RLS, generic gabapentin, lyrica, and lack of head-to-head studies of Horizant vs. other agents.
