Zacks_Analysts' Blog : Pipeline Setback for Glaxo - Analyst Blog

GlaxoSmithKline (GSK) recently received a pipeline setback when the US Food and Drug Administration (FDA) issued a Complete Response letter (CRL) regarding the company’s New Drug Application (NDA) for Horizant (gabapentin enacarbil) for the treatment of moderate-to-severe primary Restless Legs Syndrome (RLS).

The FDA did not grant approval based on concerns regarding a preclinical finding of pancreatic acinar cell tumors in rats. Horizant, which has been developed by XenoPort, Inc. (XNPT), is a Transported Prodrug of Pfizer’s (PFE) gabapentin.

This is not the first time that Horizant’s approval has been delayed. Earlier, in November 2009, the FDA had pushed back the approval date for Horizant by 90 days stating that a risk evaluation and mitigation strategy (REMS) would be needed for approval.

Glaxo and XenoPort are currently evaluating the CRL and intend to communicate with the FDA to determine the next course of action. The FDA’s decision is a major setback for both the companies, especially XenoPort as Horizant is its lead pipeline candidate.

Horizant is also being studied for other indications including neuropathic pain and migraine prophylaxis. However, given the FDA’s response letter, there is now limited visibility on the future development and regulatory path for Horizant. We believe the FDA is likely to ask the companies to conduct extensive additional studies in order to gain approval.

The delay in Horizant’s approval is a disappointment for Glaxo. Several of Glaxo’s products are facing patent challenges and the company’s pipeline needs to deliver in order to make up for lost revenues.

We currently have an Underperform recommendation on Glaxo. With several products expected to lose exclusivity and the swine flu opportunity likely to miss expectations, we expect Glaxo’s top-line to remain under pressure in the coming quarters.