GSK gives up on Horizant as XenoPort decides to go it alone
This article was originally published in Scrip
GlaxoSmithKline and XenoPort have decided to resolve their differences over Horizant (gabapentin enacarbil) extended-release tablets by terminating their collaboration. XenoPort now intends to hire a contract sales force in an attempt to do a better job on its own of commercialising the product.
GSK is returning full rights to XenoPort for Horizant, for which it held commercialisation rights and certain development rights in the US. GSK says the decision is in line with its "ongoing strategy to streamline its portfolio to focus on core franchise opportunities".
"We still believe that Horizant is an appropriate treatment for adult patients with moderate-to-severe primary restless legs syndrome (RLS), and for the management of postherpetic neuralgia (PHN) in adults," GSK told Scrip. "It has provided a valuable treatment option to patients and, since launch in April 2010, has been prescribed by over 6,000 physicians."
Ending the collaboration was the right business decision" for GSK. "Multiple indications were an initial part of the plan for Horizant including RLS, PHN, diabetic peripheral neuropathy (DPN), prophylaxis of migraine headache, among others. Studies for DPN and prophylaxis of migraine headache didn't deliver the results for further advancement of the medicine. While offering a valuable treatment option [for RLS and PHN], these patient populations are relatively small, and generic treatment options are available. During the regulatory and clinical development process, GSK encountered issues that impacted our ability to explore additional patient populations."
In ending the deal, GSK has also agreed to purchase $20 million of common stock in XenoPort at $10.863 per share, a 12.5% premium to the10-day average stock price prior to 31 October, giving it a stake of just over 4% in the US biotech. In addition, for the next six months, XenoPort has the option for GSK to purchase an additional $20 million in equity at a 12.5% percent premium of the 10-day average stock price prior to notifying GSK of its intent to elect the option.
The agreement also resolves all litigation between the parties. XenoPort says it now acknowledges that GSK fulfilled its contractual obligations on the development, manufacturing and commercialization of Horizant.
GSK did not break down Horizant sales in its financial results, but XenoPort's first-quarter SEC filing suggested that sales in the first quarter of 2012 were $1.3 million.
After such slow sales of Horizant in RSL, the approval of which came in April 2011 after a long-fought battle, XenoPort filed a breach-of-contract complaint in January this year against GSK, claiming the UK firm had not fulfilled its obligations to maximize sales of the drug "in an expeditious manner" and reach the sales milestones agreed to under the firms' amended November 2010 agreement (scripintelligence.com, 26 January 2012). XenoPort had been eligible to receive up to $312.5 million in milestones, but in January, it had only garnered $120 million under the deal.
XenoPort also filed a complaint in February in Superior Court of the State of California against GSK for breach of contract, fraud, breach of fiduciary duty, breach of covenant of good faith and fair dealing and unfair competition, seeking damages for lost profits, damage to the value of its stock and unattained royalties, milestone payments and punitive damages and restitution.
GSK countered with its own claim, filing a motion for declaratory judgement in federal court in Delaware in February (scripintelligence.com, 28 February 2012).
Tempers had thought to be soothed in June when the FDA approved Horizant as a treatment for PHN, which triggered a $10 million milestone payment from GSK to XenoPort.
transition
During a transition period, which ends 30 April 2013, GSK will continue to exclusively commercialise, promote, manufacture and distribute Horizant.
GSK will also continue to fund clinical studies it has already initiated. It has also agreed to provide XenoPort with any leftover Horizant, for which XenoPort will make annual payments to GSK of $1 million for six years beginning in 2016.
Following the transition period, XenoPort will assume all responsibilities for further development, manufacturing and commercialization of Horizant in the US. GSK has also agreed that, if requested by XenoPort, GSK will continue to supply Horizant tablets to XenoPort for up to an additional six months following the transition period on agreed terms.
In a conference call today, Ronald Barrett, CEO of XenoPort, said he was "pleased with the business solution", particularly the details of the transition period. "This gives us the opportunity to address the significant unmet medical need of patients with RLS and PHN and make Horizant a successful product."
The investment GSK has agreed to make in XenoPort will "help to mitigate the near-term cost of commercializing Horizant ourselves".
XenoPort believes that "time and education" is all that is needed to make Horizant a success. It intends to deploy sales forces through a "contract sales organisation arrangement to maintain flexibility", that will be focused in the "right areas", specifically in areas of high RLS prescriptions, current Horizant prescriptions and potential prescribers for PHN.