April 27, 2009 / 3:17 PM / 10 years ago

UPDATE 2-XenoPort's diabetic pain drug fails in mid-stage trial

* Says diabetic pain drug XP13512 fails to meet main goal

* Says drug was well tolerated in the study

* Shares tank 21 pct to a 3-year low (Adds analysts’ comments, details, updates stock movement)

By Anand Basu

BANGALORE, April 27 (Reuters) - XenoPort Inc’s XNPT.O experimental drug to treat diabetic neuropathic pain failed to meet the main goal of a mid-stage study, knocking the company’s shares down 21 percent to a three-year low.

The company has licensed the rights to develop and commercialize the drug XP13512 to GlaxoSmithKline Plc (GSK.L) for the treatment of painful diabetic neuropathy (PDN), restless leg syndrome (RLS) and migraine prophylaxis in all regions of the world, except in Japan and five Asian countries.

XenoPort’s Asian partner, Astellas Pharma Inc (4503.T), is also studying the drug in two separate mid-stage trials in Japan for the treatment of PDN and RLS.

“We continue to have great confidence in the drug’s activity, both in the setting in which it’s before the Food and Drug Administration and in its potential in migraine prophylaxis and the treatment of neuropathic pain,” Wedbush PacGrow LifeSciences analyst Gregory Wade said.

Wade, who has a “strong buy” rating on the stock, said it is more likely that GlaxoSmithKline would choose to do a larger study with a different design for PDN as the drug shows promise.

The drug, also known as GSK1838262, did not demonstrate a statistically significant improvement on the primary endpoint when compared to a dummy drug, based on the change from baseline to end of treatment on the pain intensity-numerical rating scale, the companies said in a joint statement.

However, the drug was generally well tolerated throughout the study, the companies added.

Diabetic neuropathic pain, which manifests itself primarily in the feet, is a chronic condition resulting from damage to peripheral nerves.

“The recent setbacks to the XP13512 development program in neuropathic pain will weigh heavily on XNPT shares over the near term,” Lazard Capital Markets analyst Gene Mack wrote in a note to clients.

Mack, who downgraded the stock of XenoPort to “hold” from “buy,” expects the drug to get an approval for RLS.

Shares of XenoPort fell more than 10 percent to $15.56 in afternoon trade on Nasdaq. They earlier touched a low of $13.79.

For the alerts, double-click [ID:nWEN7893] . (Editing by Himani Sarkar and Deepak Kannan)

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