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Xenoport Climbs as Investors Bet on Experimental Drug for MS


Next month, the company is expected to announce very early clinical results for a drug being tested for multiple sclerosis.

MINYANVILLE ORIGINAL The biotech company Xenoport (NASDAQ:XNPT) is having a good run in 2012. The shares almost doubled in the past three months and they are up almost 200% this year.

That's not bad for a money-losing company battling a major development partner in court. But the enthusiasm for the company has little to do with Xenoport's one existing product, Horizant (also known as Regnite), which is for restless leg syndrome as well as one other condition in the US. Rather, the shares are trading largely because of a very early-stage experimental treatment for multiple sclerosis. Top-line data for the drug are expected in October, analysts say.

Xenoport has three drugs in various stages of clinical trials. But the developmental product that is garnering the most attention in recent months is a so-called Phase I drug known as XP23829, tested to treat the form of multiple sclerosis known as relapsing-remitting MS. The drug also is being tested to treat psoriasis.

In recent notes, RBC Capital Markets analyst Michael Yee and Leerink Swann analyst Mark Kozul cited this early-stage drug as the biggest contributor to Xenport's stock growth. Both analysts recommend buying the stock, but caution that the company is in the very beginning stages of clinical studies of the MS/psoriasis treatment.

While the risk is formidable, so is the potential reward. Biogen Idec (NASDAQ:BIIB) is expected to win approval of a new MS drug, possibly by the end of the year. The analysts see Xenoport's drug as a potential competitor and that should interest other companies in either licensing or acquiring it, they say. That is, of course, if the drug works, and that's a big "if" right now.
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