XenoPort's Q1 Loss Narrows - Analyst Blog

XenoPort, Inc.'s XNPT shares lost 8.4% immediately after the company reported first quarter 2014 results. However, shares gained 10.9% in the following trading session. Overall, shares are down 0.8% since the company released first quarter results.

The company reported a loss of 36 cents per share in the first quarter of 2014, narrower than the year-ago loss of 50 cents per share, but wider than the Zacks Consensus Estimate of a loss of 33 cents per share.

First quarter revenues increased 635.3% from the year-ago quarter to $3.4 million. The increase was driven by Horizant sales. Revenues, however, missed the Zacks Consensus Estimate of $4 million.

The Quarter in Detail

In the reported quarter, Horizant sales were $3 million. In the U.S., total prescription volume and prescribed pill count of Horizant increased 15% sequentially and 25% from the year-ago quarter.

We note that Horizant is approved in the U.S. for the treatment of moderate-to-severe primary restless legs syndrome (RLS) as well as the management of postherpetic neuralgia (PHN) in adults.

R&D expenses decreased 65.1% year over year to $4.7 million. This decline was primarily due to lower costs associated with arbaclofen placarbil and XP23829, decreased personnel costs and lower non-cash stock-based compensation.

SG&A expenses increased 74.9% year over year to $18.8 million, reflecting higher costs associated with the promotion and commercialization of Horizant.

Pipeline Update

XenoPort submitted an Investigational New Drug IND application to the U.S. Food and Drug Administration's (FDA) Division of Dermatology and Dental Products for XP23829 as a potential treatment for moderate-to-severe chronic plaque type psoriasis. The company intends to initiate a phase II study on XP23829 for this indication by mid-14.

Top-line results from this study should be out within 12 months to 14 months of initiation. The company will advance XP23829 to phase III studies for the treatment of either psoriasis or multiple sclerosis depending on phase II results.

In 2014, XenoPort intends to increase Horizant sales through continued promotional efforts, manage costs and increase value of assets which will allow the company to increase prescription volume.

XenoPort carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the health care sector include ANI Pharmaceuticals, Inc. ANIP, Gilead Sciences Inc. GILD and Myriad Genetics Inc. MYGN. All these stocks carry a Zacks Rank #1 (Strong Buy).