XenoPort, Inc. (XNPT)

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XenoPort, Inc. (XNPT)

Credit Suisse 2012 Healthcare Conference

November 14, 2012 4:00 a.m. ET


Ronald Barrett - Chief Executive Officer


Ravi Mehrotra - Credit Suisse


Ravi Mehrotra - Credit Suisse

Good afternoon everybody. My name is Ravi Mehrotra, I am biotech analyst at Credit Suisse. We have Ron Barrett, CEO of XenoPort. We will be taking the breakout session in this room after Ron’s presentation. Over to you Ron.

Ronald Barrett

Thank you, Ravi. Thank you for the invitation to speak today. Before I get started I will remind you that I am going to be making forward-looking statements and that you should consult our SEC documents for information regarding to the risks and uncertainties of our business.

So it’s great pleasure for me to come here and talk about last week’s news in which XenoPort reacquired the rights to Horizant from our former partner GSK. We are going to be assuming all responsibility for the development, manufacturing and commercialization of Horizant after a transition period and so our start date will be May 1, 2013. I wanted to first go through some of the details of the transition period. So GSK will continue to commercialize Horizant during that transition period until April 30, 2013. We have already transferred the NDA for Horizant to XenoPort.

Our previous agreement had a profit share arrangement. We will not be responsible for any losses that occurred during the previous agreement and we will not receive any revenue or incur any losses during the transition period. As part of the approval process there were some post-marketing study that were required and GSK will be responsible for fully funding the cost of clinical trials initiated prior to the termination of the agreement and importantly that includes a rather large 500 patient in RLS patients. Examining lower doses.

GSK also manufactured a substantial amount of Gabapentin Enacarbil and we will be receiving any of the unused inventory of Gabapentin Enacarbil. It’s a large amount and we estimate that the stability of that material will allow us to use that material for several years and therefore we will reduce our cost of goods sold for the next several years. And as part of the deal we will be making payments of $1 million, annual payments for six years beginning in 2016. And then importantly as part of the agreement there was an equity purchased by GSK. It was structured in two tranches. We announced yesterday in 8-K that we have exercised the put and we now have purchased or GSK has purchased the full $40 million of common stock.

And we are very happy that we are able to reach this resolution with GSK. The agreement ends our ongoing litigation and provides us with the ability to first and foremost, continue to make Horizant available to patients moving forward but also gives us a great opportunity to be successful with the product.

Now just a few words about how Horizant has done to date. So as you know Horizant was launched in July of 2011 for the treatment of moderate to severe primary restless legs syndrome which I will refer to as RLS, and in July of 2012 for the management of postherpetic neuralgia in adults which I will refer to as PHN. In October of 2012 there were approximately 5000 total prescriptions of Horizant. 60% of Horizant prescriptions are being generated by specialists, primarily neurologists. The use of prescriptions of Horizant are highly concentrated with about 80% of Horizant prescriptions being generated by about 2200 physicians. And about 70% of current prescriptions are through commercial plans.

The managed care access currently for Horizant in terms of commercial plans, about 65% of all insured lives are in unrestricted tier two or tier three position with 90% of that being tier two. And in terms of Medicare Part D coverage, a small fraction less than 10% is in an unrestricted position. I would just point out that there has been very limited contracting for the product to date since it was launched in July of 2011.

Now how do we see the opportunity going forward. This is not a trivial market. There are about 5 million adults in the U.S. who suffer from moderate to severe primary RLS. About 60% of those sufferers are aware of their condition but have not received a prescription to date. There are about 6 million annual RLS prescriptions in the U.S. with Dopamine agonists having by far the greatest share, 80%-85% of prescriptions. One that has happened in the last several months that we are very excited about is the fact that the expert community in the field has really undergone change of view with regard to how RLS should be treated.

Up until recently, the first line therapy was recommended by these expert groups to be Dopamine agonists. But the international restless legs study group recently recommended that α2δ ligands should be considered as first line therapy for patients with severe sleep disturbance or insomnia, RLS or co-morbid pain, generalized anxiety disorder, a history or impulse control disorder. So this is really a sea change in how the experts in the field view the first line treatment. Then not only has this come about because of the studies that we conducted with gabapentin enacarbil to show a successful but an increasing concern about the use of dopamine agonists for long term therapy for RLS treatment.

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