After the bell Monday evening XenoPort (XNPT) released results from three early studies of XP23829, the company’s novel fumaric acid ester compound and a prodrug of monomethyl fumarate (MMF). The drug is being developed as a treatment for relapsing-remitting multiple sclerosis and psoriasis. Biogen Idec’s (BIIB) recently approved Tecfidera (dimethyl fumarate, DMF) is also a prodrug of MMF. If ‘829 can demonstrate a similar or improved efficacy and safety profile, it may be able to a) cannibalize sales of Tecfidera, which generated $192MM in its first full quarter on the market; and b) follow a simpler 505(b)(2) pathway through the approval process. Although early, the studies indicate that ‘829 could some day be a direct competitor to Tecfidera.
The first Phase I study was a randomized, double-blind, placebo-controlled, multiple ascending dose-escalation study of the pharmacokinetics, safety and tolerability of two formulations of ‘829 in healthy subjects. In the study, 400mg BID ‘829 Formulation 1 dosed without food provided an MMF PK profile that was nearly identical to that of 240mg BID Tecfidera dosed without food. ‘829 Formulation 2, administered as 800mg QD and 500mg BID dosed with food, provided more extended exposure to MMF. The company believes that Formulation 1 could be bioequivalent to DMF based on MMF in plasma. This would be important to the 505(b)(2) pathway and the company believes there’s a streamlined strategy forward. Formulation 2 could potentially be dosed once-daily vs. Tecfidera’s twice-daily dosing. It should be noted that adverse events, primarily flushing and GI events, were not quantified in the released results, although CEO Ron Barret said they are confident the adverse event profile could be superior to Tecfidera.
The second Phase I study was an open-label, pharmacokinetic and mass balance study in healthy subjects. One group of subjects received a single dose of ‘829 that incorporated a radiolabel in the fumarate portion of the molecule, and a separate group of six subjects received ‘829 with the radiolabel in the promoiety. The metabolism and disposition of radioactivity from the fumarate-labeled version of ‘829 was similar to what has been publicly reported for dosing healthy subjects with Tecfidera labeled in the same position.
XenoPort also finished 13-week toxicology studies in three different species. The adverse effects of ‘829 dosed in a manner similar to Tecfidera were similar to the approved drug, except for fewer and less severe adverse effects after dosing. There was no increase in severity of any adverse effects for ‘829 compared with Tecfidera.
The path forward for ‘829 is unclear. CEO Ron Barrett suggested XenoPort could pursue a 505(b)(2) path to approval with Formulation 1, while Formulation 2 could be clearly differentiated from Tecfidera with less frequent dosing. XenoPort has always been notoriously slow in development, and it now sounds like they won’t be announcing publicly a go-forward plan until the end of the year. The company will continue its dialog with potential partners and the FDA until then, although we have little conviction that the company can secure a partnership before clear FDA guidance on the 505(b)(2) pathway. It should be noted that XenoPort did not mention the accelerated pathway for 829 Formulation 2.
XNPT has been a perpetual disappointment in 2013, but we’re finally in the green on our position. While ‘829 is an interesting asset, XenoPort’s $240M valuation is rich considering that the re-launch of Horizant, a treatment for restless leg syndrome, is just getting underway. We have little evidence on which to base expectations for Horizant, and until XenoPort has a solid strategy on the path forward for ‘829, we’d prefer to be on the sidelines as Horizant sales will be the near-term investor focus. Note that XenoPort had cash, equivalents and short-term investments of $93M at the end of the second quarter and has averaged a quarterly operating burning of $21M. Without a partnership in the next six months or cash flow from Horizant, XenoPort will be casting around for another source of cash.
