Please ensure Javascript is enabled for purposes of website accessibility

Why XenoPort Is Losing A Quarter Of Its Value Today

By Todd Campbell - Sep 15, 2015 at 2:28PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Questions remain to be answered for XenoPort's psoriasis drug XP23829

What: After reporting mid stage trial results for its psoriasis drug XP23829, shares in XenoPort (NASDAQ: XNPT) tumbled by 25% earlier today

So what: Initially, investors applauded news that XP23829 outperformed placebo in both psoriasis area and severity, but a closer look at XenoPort's data may indicate that XP23829 isn't as good as investors had hoped.

The two doses that pass muster in achieving statistically significant better outcomes versus placebo were a single 800 mg dose and a twice daily 400 mg dose. A 400 mg dose once-daily didn't meet the primary endpoint of the trial, suggesting that the company will no longer attempt to develop it.

Unfortunately, relying on the higher dose cohorts for a phase 3 trial raises some questions over safety. Diarrhea was common, occurring in up to 40% of patients. Other adverse events include vomiting and nausea, and two patients developed serious conditions that may have been associated with the drug. One had acute cholecystitis and the other enterocolitis; however, both patients recovered.

Because investors were thinking that XP23829 would be easier on a patient's GI than similar competing therapies, but this study has shown evidence to the contrary, investors are ratcheting down expectations.

Now what: XP23829 is a fumaric acid ester compound that converts into monomethyl fumarate after it's taken. Fumarates have been used for decades in the treatment of psoriasis and multiple sclerosis, and if XP23829 can overcome obstacles and succeed in phase 3 trials, then it could serve as a welcome alternative therapy.

However, a lot of work remains to be done before investors get clarity into whether or not XP23829 is a clinical success and is commercially viable; therefore, investors ought to approach XenoPort carefully.

XenoPort only markets one drug currently, and sales of that drug, Horizant, are tracking south of the company's quarterly expenses, so losses are likely to mount as XP23829 moves into more expensive phase 3 trials. XenoPort expects Horizant sales to eclipse $39 million this year; however, the company spent $25.6 million on selling, general, and administrative expenses and $6.2 million on R&D in the second quarter alone. Given a crowded marketplace and uncertainty tied to the upcoming phase 3 trial, I'll be staying on the sidelines on this one. 


Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.