* Analysts surprised by FDA decision
* At least 4 brokerages downgrade stock
* Drug development for neuropathic pain may be delayed: Co
* XenoPort shrs plunge 67 pct, Depomed shrs fall 21 pct
(Recasts; adds details from conference call; updates share
By Jennifer Robin Raj
BANGALORE, Feb 18 Shares of XenoPort Inc
XNPT.O plunged 67 percent to a lifetime-low Thursday, a day
after the company's drug Horizant for restless leg syndrome
(RLS) was denied approval, surprising Wall Street.
The U.S. Food and Drug Administration issued a complete
response letter for the drug because of a potential link to
cancer found in rats. [ID:nN17134046]
The drug is a long-lasting version of gabapentin, which is
approved for refractory epilepsy. The FDA acknowledged that
similar findings were known for gabapentin at the time of its
approval but said the relative seriousness of that condition
justified the potential risks.
XenoPort's Chief Executive Ronald Barrett said in a
conference call that the company had not been aware of the
agency's concerns regarding potential cancer risk until it
received the complete response letter on Wednesday.
"It certainly did surprise us," he said, adding that the
company was unable to provide specific information on its next
XenoPort has licensed the rights to develop and
commercialize the drug to Astellas Pharma Inc (4503.T) in Japan
and five Asian countries and to GSK in all other regions of the
XenoPort's Barrett said the company has not had a detailed
discussion yet with Astellas, which recently filed a marketing
application for Horizant in Japan.
Wedbush PacGrow LifeSciences analyst Gregory Wade said he
did not see any impact on Astellas' application from the FDA's
Horizant is also being studied as a treatment for
neuropathic pain, painful diabetic neuropathy and migraine
"Nothing in the FDA letter precludes the further
development of Horizant for migraine prophylaxis or any other
indication," XenoPort's Barrett said.
However, he said that, "until such time that GSK and we
determine the path forward with the FDA on this preclinical
issue, I think it is fair to say the complete response letter
will delay any future development of Horizant for neuropathic
Analysts saw a low probability for approval of Horizant in
RLS and said the FDA's concerns hurt the drug's chances in
other indications as well.
At Sept. 30, 2009, XenoPort had cash and equivalents of
"Without commercialization of Horizant, we believe it will
be difficult for XenoPort to become profitable," Lazard Capital
analyst William Tanner said.
Shares of rival Depomed Inc (DEPO.O), which is also
developing a formulation of gabapentin for neuropathic pain,
fell as much as 21 percent.
Depomed and its partner Belgian drugmaker Solvay (SOLB.BR),
are expected to submit the marketing application for their drug
to the FDA by the end of first quarter.
Investors are looking for some clarification from Depomed
whether they are at risk as well, Roth Capital Partners analyst
Scott Henry said.
Depomed was not available for comment.
Shares of XenoPort were down more than 65 percent at $6.75
in morning trade. They had touched a low of $6.43 earlier in
(Reporting by Jennifer Robin Raj in Bangalore; Additional
reporting by Anand Basu; Editing by Aradhana Aravindan)