XenoPort Reports Second Quarter Financial Results

XenoPort Reports Second Quarter Financial Results

<0> XenoPortJackie Cossmon, 408-616-7220 </0>

XenoPort, Inc. (Nasdaq: XNPT) announced today financial results for the second quarter and six months ended June 30, 2012. Revenues for the second quarter were $10.4 million, compared to $37.4 million for the same period in 2011. Net loss for the second quarter was $8.0 million, compared to net income of $19.5 million for the same period in 2011. At June 30, 2012, XenoPort had cash, cash equivalents and short-term investments of $81.7 million.

The following key events occurred since the beginning of the second quarter of 2012:

Ronald W. Barrett, Ph.D., chief executive officer of XenoPort, stated, “We have made significant progress on a number of our programs since the start of the second quarter. I am especially pleased that we have been able to rapidly move XP23829 into its first human trial since we selected the compound for development in May 2011. We are also excited about our grant from MJFF to evaluate XP23829 in a preclinical model with the ultimate goal of providing a potential treatment to slow the progression of Parkinson’s disease.”

Dr. Barrett continued, “I am also encouraged by our meeting with the FDA regarding the possible future development of XP21279. The potential use of the 505(b)(2) regulatory pathway could expedite the development of XP21279 as a potential treatment for the symptoms of advanced idiopathic Parkinson’s disease. Finally, we are excited that Astellas has now launched in Japan, and we look forward to receiving our first revenues based on product sales later this year.”

Net revenue from unconsolidated joint operating activities was $10.0 million for both the second quarter and six months ended June 30, 2012, compared to $30.0 million for both the second quarter and six months ended June 30, 2011. The decrease in net revenue from unconsolidated joint operating activities in both the second quarter and six months ended June 30, 2012 compared to the same periods in 2011 was due to the receipt and recognition of a $10.0 million payment from GSK under our collaboration agreement in connection with the approval of for the management of PHN in adults in the second quarter of 2012, compared with a $30.0 million payment from GSK under our collaboration agreement in connection with the approval of for RLS in the same period of the prior year. Pursuant to the terms of our collaboration agreement with GSK, XenoPort’s share of losses from the joint profit and loss (P&L) statement will be forgiven up to a maximum of $10.0 million. XenoPort’s share of joint P&L losses totaled approximately $8.3 million as of June 30, 2012. Net sales of for the second quarter and six months ended June 30, 2012, as recorded by GSK, were $1.6 million and $2.9 million, respectively.

Collaboration revenues were $0.4 million and $10.8 million for the second quarter and six months ended June 30, 2012, respectively, compared to $7.4 million and $7.8 million, respectively, for the same periods in 2011. The decrease in collaboration revenues for the second quarter of 2012 compared to the same period in 2011 was due to the receipt and recognition of a $7.0 million milestone payment from Astellas related to the FDA’s U.S. approval of in 2011. The increase in collaboration revenues for the six months ended June 30, 2012 compared to the same period in 2011 was due to the receipt and recognition of a $10.0 million milestone payment from Astellas in connection with the approval of in Japan in 2012 compared to the recognition of the $7.0 million milestone payment from Astellas related to the FDA’s U.S. approval of in 2011.

Research and development expenses for the second quarter and six months ended June 30, 2012 were $10.8 million and $23.0 million, respectively, compared to $9.9 million and $19.8 million, respectively, for the same periods in 2011. The increase in research and development expenses for the second quarter of 2012 compared to the same period in 2011 was primarily due to increased net costs for the arbaclofen placarbil (AP) development program as well as increased personnel costs due to severance benefits charges, partially offset by decreased net costs for XP21279. The increase in research and development expenses for the six months ended June 30, 2012 compared to the same period in 2011 was primarily due to increased net costs for the AP and XP23829 development programs as well as increased personnel costs due to severance benefits charges, partially offset by decreased net costs for XP21279.

Selling, general and administrative expenses remained relatively constant for the second quarter and six months ended June 30, 2012, and were $7.6 million and $15.0 million, respectively, compared to $8.1 million and $15.8 million, respectively, for the same periods in 2011.

Net loss for the second quarter of 2012 was $8.0 million, compared to a net income of $19.5 million for the same period in 2011. Net loss for the six months ended June 30, 2012 was $17.1 million, compared to net income of $2.3 million for the same period in 2011. Basic and diluted net loss per share were both $0.22 in the second quarter of 2012 versus basic and diluted net income per share of $0.55 for the same period in the prior year. For the six-month period ended June 30, 2012, basic and diluted net loss per share were both $0.48 versus basic net income per share of $0.07 and diluted net income per share of $0.06 for the same period in 2011.

XenoPort will host a conference call at 5:00 p.m. Eastern Time today to discuss its financial results and provide an update of XenoPort’s business. To access the conference call via the Internet, go to . To access the live conference call via phone, dial 1-888-275-3514. International callers may access the live call by dialing 706-679-1417. The reference number to enter the call is 15718592.

The replay of the conference call will be available for one week and may be accessed after 8:00 p.m. Eastern Time today via the Internet, at , or via phone at 1-800-642-1687 for domestic callers, or 706-645-9291 for international callers. The reference number to enter the replay of the call is 15718592.

XenoPort is a biopharmaceutical company focused on developing and commercializing a portfolio of internally discovered product candidates for the potential treatment of neurological disorders. is approved in the United States for the treatment of RLS in adults and for the management of PHN in adults. GSK holds commercialization rights and certain development rights for in the United States. is approved for the treatment of RLS in adults in Japan. Astellas holds all development and commercialization rights for in Japan and five other Asian countries. XenoPort holds all other world-wide rights and has co-promotion and certain development rights to gabapentin enacarbil in the United States. XenoPort’s pipeline of product candidates includes potential treatments for patients with spasticity, Parkinson’s disease and relapsing-remitting multiple sclerosis.

To learn more about XenoPort, please visit the company Website at .

This press release contains “forward-looking” statements, including, without limitation, all statements related to Astellas’ expected commercialization and marketing efforts regarding ; XenoPort’s XP21279 clinical development program and the timing and results thereof; XenoPort’s future pre-clinical studies and clinical trials and the timing thereof; FDA discussions, the regulatory process and the timing and outcome of regulatory actions; the potential for the filing of an NDA for XP21279 with the FDA under Section 505(b)(2); the suitability of XP21279 as a treatment for Parkinson’s disease; XenoPort’s XP23829 clinical development program and the timing and results thereof; the potential suitability of XP23829 as a treatment for relapsing-remitting MS and/or psoriasis; the potential of XP23829 to protect against neurodegeneration in preclinical models of Parkinson’s disease; the expectations of revenues based on product sales and the timing thereof; and the therapeutic and commercial potential of XenoPort’s preclinical and clinical product candidates. Any statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Words such as “believe,” “could,” “expect,” “future,” “goal,” “may,” “plans,” “possible,” “potential,” “proposed,” “will,” “would” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based upon XenoPort's current expectations. Forward-looking statements involve risks and uncertainties. XenoPort's actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks related to XenoPort’s dependence on Astellas to commercialize and GSK to commercialize ; the uncertain results and timing of clinical trials and other studies; XenoPort’s ability to successfully conduct clinical trials in the anticipated timeframes, or at all; the uncertainty of the FDA’s review process and other regulatory requirements, including uncertainty as to whether the FDA would approve an NDA filed under Section 505(b)(2) and as to the requirements for acceptance and approval of any such filings; XenoPort’s dependence on its current and additional collaborative partners; the availability of resources to develop XenoPort’s product candidates; and the uncertain therapeutic and commercial value of XenoPort’s product candidates. These and other risk factors are discussed under the heading "Risk Factors" in XenoPort's Prospectus Supplement dated July 25, 2012 and filed with the Securities and Exchange Commission under Rule 424(b)(5) on July 26, 2012. XenoPort expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

XENOPORT and are registered trademarks of XenoPort, Inc.is a registered trademark of GlaxoSmithKline.

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