Why XenoPort Shares Stumbled

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of XenoPort (NASDAQ: XNPT  ) , a biopharmaceutical company focused on treating neurological disorders, shed as much as 13% following the release of its fourth-quarter earnings results.

So what: For the quarter, XenoPort reported $0.5 million in total revenue compared to $5.1 million in the year-ago period. However, due to a non-cash gain resulting from resolved litigation with GlaxoSmithKline (NYSE: GSK  )  -- prior to this quarter, Glaxo and XenoPort had a collaboration agreement for the sale of Horizant extended-release tablets -- XenoPort turned in a $3 million profit, or $0.07 per share.

Now what: I believe a lot of today's pessimism revolves around investor concern over whether XenoPort can effectively commercialize Horizant without a large collaborative partner. Given that sales of the drug totaled just $2.1 million in the fourth quarter, according to Glaxo's recorded figures, I can't exactly say that things look all too promising. Furthermore, XenoPort announced that it plans to use $100 million to $110 million in cash just in 2013, and it only ended the year with $139 million in cash and cash equivalents. I sense a big dilutive offering potentially on the way either next year or in 2014.

Craving more input? Start by adding XenoPort to your free and personalized watchlist so you can keep up on the latest news with the company.

While you can certainly make huge gains in biotechs like XenoPort, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.


Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 13, 2013, at 9:57 AM, Wmjack50 wrote:

    the real value of xnpt is in it's pipeline and the likely hood that a buy out can happen as drug 829 proves itself better than BIIG's BG12

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2308191, ~/Articles/ArticleHandler.aspx, 11/28/2014 2:08:31 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement