Why XenoPort Shares Stumbled

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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 specializing in therapies for neurological disorders, tumbled as much as 25% after reporting disappointing late-stage results for Arbaclofen Placarbil.

So what: Arbaclofen Placarbil, or AP for short, was targeted by XenoPort at treating spasticity in patients with multiple sclerosis. The top-line data released today in its late-stage trial demonstrated that AP was "unsuccessful in providing a statistically significant improvement relative to the placebo in the co-primary endpoints of the study." XenoPort's CEO, Ronald Barrett, noted his disappointment with the results, stated that XenoPort would cease all AP research from here on out, and said he remains focused on commercializing Horizant and building out the rest of the company's pipeline.

Now what: Although today's results are certainly disappointing, the pessimism in XenoPort appears to be abating fast with the stock now down "only" 10% following today's news. Sales projections for Horizant to treat restless leg syndrome are all over the place; but even at the low end of forecasts (around $90 million in peak sales), XenoPort is valued at about three times peak sales, giving shareholders some hope that if this drug performs well out of the gate, their stock could be undervalued. As for me, I'd still advocate a wait-and-see approach with XenoPort.

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.


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Sean Williams

A Fool since 2010, and a graduate from UC San Diego with a B.A. in Economics, Sean specializes in the healthcare sector and investment planning. You'll often find him writing about Obamacare, marijuana, drug and device development, Social Security, taxes, retirement issues and general macroeconomic topics of interest.

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Related Tickers

5/24/2016 4:00 PM
XNPT $6.99 Up +0.11 +1.60%
XenoPort, Inc. CAPS Rating: ***