XenoPort Experiences Restless Investor Syndrome

File this one under Regulatory Setback Syndrome. The FDA decision to issue a complete response letter to XenoPort and GlaxoSmithKline for their Horizant drug to treat Restless Leg Syndrome appears to have stunned the drugmakers. In a conference call this morning with analysts, XenoPort chief executive Ron Barrett confessed he didn't see it coming until the FDA missive arrived yesterday.

"It certainly did surprise us," he told the listeners, insisting the issue was never raised in any discussions with the agency during the entire pre-approval processs. "Many of the activities that you would expect to happen going into a PDUFA date had and were happening, including the REMS, and this one came out of left field."

What went wrong? The FDA bounced the drug because a trial showed a cancer risk in rats, specifically a prevalence of pancreatic acinar cell tumors in male rats. Interestingly, a similar finding showed up in Pfizer's Neurontin (gabapentin), which is approved to treat refractory epilepsy, and Barrett said the strength of the signal was no worse than what was seen with the Pfizer drug.

The FDA acknowledged that findings in lab animals don't necessarily translate into risk in humans, Barrett continued, adding that the agency "noted that gabapentin products have been available for over 15 years, and they do not appear to be associated with a clinical signal for pancreatic cancer based on analysis of spontaneous reports in the adverse event reporting system."

The issue for the FDA, though, is that treating epilepsy is a more serious matter than Restless Leg Syndrome, a line of thinking that may bolster those who have criticized the marketing surrounding the condition, even though it is deemed to be kosher by the National Institute of Neurological Disorders and Stroke (take a look).

For now, the implications for XenoPort are more immediate and severe than any marketing debate. Glaxo already announced plans to exit research into pain, and Barrett concedes their deal for the drug may be up in the air, possibly threatening further development of Horizant to treat neurothropic pain, where a Phase II trial failed last year, and migraines. Barrett, however, refused to offer any definitive insights on this particular topic. "The question of risk-benefit is something that is going to have to be probed for each indication."

In response to a question about Glaxo's ability to end the deal based on development setbacks, Bennett offered this sobering reply: "I think it's fair to say that any license agreement of this type is going to have termination provisions. And without speaking to language that might be redacted, I think it is reasonable to expect that this agreement is no different than that GSK would have the ability to terminate for reasons that include what you have articulated, among others. So I think people should understand that a termination by GSK is possible in the wake of this news, as well as in the wake of other developments."

Consequently, XenoPort is now suffering from Restless Investor Syndrome - its shares are down a whopping 67% in midday trading to about $6.54 on nearly 10 times normal trading volume. Given these events, Bennett has to be sorry Horizant isn't already available to treat migraines.

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