Zacks_Analysts' Blog : Pipeline Setback for XenoPort - Analyst Blog

Recently, XenoPort, Inc. (XNPT) faced a setback when its pipeline candidate arbaclofen placarbil  fared disappointingly in a mid-stage study.

Arbaclofen placarbil was being evaluated as an adjunctive therapy in patients suffering from gastroesophageal reflux disease (GERD) who are not completely cured when treated with proton pump inhibitors such as Astra Zeneca’s (AZN) Nexium. Heartburn is the most common symptom associated with GERD.

Data from the randomized, double-blind, placebo-controlled, six-week, study revealed that arbaclofen placarbil was not more effective than placebo in GERD patients. Following the disappointing results, XenoPorthas decided to halt the development of arbaclofen placarbil for the indication. The study was conducted in 58 sites across Canada and the US.

The study evaluated the efficacy of one of the four doses of arbaclofen placarbil in combination with a PPI versus the combination of a PPI and placebo. Superiority of XenoPort’s candidate over placebo was not revealed at any of doses. Even though, the company will no longer develop arbaclofen placarbil for GERD, the candidate continues to be evaluated in another indication, spasticity.

The setback comes a few days prior to a decision by the US Food and Drug Administration (FDA) for Xenoport’s Horizant extended-release tablets for treating patients suffering from moderate-to-severe primary restless legs syndrome. The US agency is due to give its decision on the candidate on April 6, 2011. The approval of the candidate would be a big positive for XenoPort and should boost its top line.

Our Recommendation

We prefer to remain on the sidelines till further visibility is obtained regarding the pipeline development at XenoPort and the fate of Horizant. Consequently, we have a ‘Neutral’ stance on the stock in the long-run which is supported by the Zacks #3 Rank carried by XenoPort in the short run (‘Hold’ rating).