While the FDA reviews a new drug application for Solzira (gabapentin enacarbil) in restless legs syndrome, XenoPort Inc. exercised its option to co-promote the drug in the U.S. with partner GlaxoSmithKline plc.
Given the current economy, most biotechs are trading marketing rights for cold, hard cash. Genmab A/S recently took a $4.5 million payment from GSK in exchange for terminating its co-promote option on cancer drug Arzerra (ofatumumab), and Angiotech Pharmaceuticals Inc. opted for $25 million from partner Baxter International Inc. in lieu of future milestones and royalties on its Coseal surgical sealant.
But XenoPort is "well-capitalized," CEO Ronald Barrett told BioWorld Today. The Santa Clara, Calif.-based company had $152.8 million in its coffers at the end of 2008. And the decision to co-promote Solzira doesn't change XenoPort's guidance that its cash will last into the second quarter of 2011, Barrett explained, because the biotech's share of any near-term losses incurred will be deferred until after the drug launches.
XenoPort and GSK originally teamed up on Solzira back in 2007. At the time, the drug was completing Phase III trials for restless legs syndrome (RLS), a neurological condition characterized by burning, creeping, tugging or tingling sensations in the legs. Solzira met its endpoints in three Phase III trials, and analysts touted its potential as a gabapentin-based alternative to currently available dopamine agonists.
GSK agreed to pay $75 million up front and up to $565 million in milestone payments for worldwide rights to Solzira, excluding certain Asian territories previously licensed to Astellas Pharma Inc. in a potential $85 million deal. GSK also gave Xenoport ex-U.S. royalty rights and the option to either take royalties or co-promote the drug in the U.S. (See BioWorld Today, Dec. 2, 2005, and Feb. 9, 2007.)
Barrett said XenoPort has received $203 million in up-front fees and milestone payments to date under the GSK and Astellas deals. He added that the biotech still is eligible for $232 million in development and regulatory milestones under both deals, as well as $290 million in sales milestones under the GSK deal despite exercising the co-promote option.
Under the terms of the co-promote agreement, GSK will market Solzira to primary care physicians and some specialists, while XenoPort will build a 50- to 100-person sales force to target neurological disease specialists. However, Barrett maintained that XenoPort won't put its sales team in place until the company is "confident" of Solzira's approval.
GSK and XenoPort also will share marketing responsibility for GSK's approved Parkinson's disease drug Requip XL (ropinirole). While the immediate-release version of the drug is approved for RLS, it is off-patent and thus not included in the co-promote deal. XenoPort gets to keep the extended-release version in its sales bag for at least a few years, until it faces generic competition as well.
GSK will book all sales for both Solzira and Requip XL. Solzira sales and expenses will be tracked in a joint profit-and-loss (P&L) statement, and the resulting profits or losses will be shared according to an undisclosed split.
Barrett emphasized that the only expenses allowed on the Solzira P&L are those related to costs of goods sold and certain marketing and sales expenses. Costs associated with the development of Solzira in new indications will be borne by GSK, and compensation for XenoPort's detailing of Requip XL will be tracked separately.
The Solzira co-promote agreement is applicable not only in RLS - where an FDA decision is expected in November - but in future indications as well.
GSK is running a Phase IIb trial of Solzira in the prevention of migraines and three Phase II trials in neuropathic pain. Data from all three pain trials - one in painful diabetic neuropathy (PDN) and two in postherpetic neuralgia (PHN) - are expected this year.
Barrett said the PDN trial is likely to read out first . . . and that may not bode well for XenoPort. Last fall, partner Astellas halted a Phase II study of Solzira (known outside of the U.S. as XP13512) in PDN after an interim analysis showed the study was unlikely to reach statistical significance. (See BioWorld Today, Nov. 7, 2008.)
Barrett said Astellas has not disclosed whether it will advance XP13512 any further in pain or when it anticipates starting its Phase III trials of the drug in RLS. Positive Phase II RLS data were reported by Astellas last month.
Elsewhere in its pipeline, XenoPort has used its Transported Prodrug technology - which seeks to leverage nutrient transport mechanisms to improve the bioavailability of existing drugs - to develop products for gastroesophageal reflux disease, spasticity, acute back spasms, Parkinson's disease and other indications.
Shares of XenoPort (NASDAQ:XNPT) fell 21 cents to close at $18.10 on Monday.
Barrett said exercising the Solzira co-promote option was the "right decision" to provide value to investors in case the drug hits it big. And if things don't work out, he added that there is an "out clause" in the contract that would allow XenoPort to revert to collecting a royalty.