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Xenoport Climbs as Investors Bet on Experimental Drug for MS

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

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Shares of Xenoport rose 3% to $11.10 midday Thursday.

Here's more of the backstory of the company: Xenoport developed a drug for the condition known as restless leg syndrome with GlaxoSmithKline (NYSE:GSK) and Japanese pharmaceutical maker Astellas. Glaxo has rights to sell the drug, known as Horizant, in the US. Astellas sells the product in Japan and five other Asian countries under the brand name Regnite.

In June, Glaxo and Xenoport won approval to sell Horizant in the US for the additional use of treating pain from shingles. That approval came even as the two companies were fighting in court over terms of their collaboration.

While Xenoport will get payments from sales of its only approved drug, investors are looking ahead to the company's possible future approvals. Xenoport is in the late stages of testing another drug, arbaclofen placarbil, to treat muscle spasms in people with multiple sclerosis. The company expects top-line data from the trial in the first quarter of next year. If the drug works, Xenoport expects to file for US approval in the second half of next year. If approved, the drug may hit the market as soon as 2014. The company also has a drug in the mid-stages of development to treat Parkinson's. But, clearly, a large share of the stock's current valuation is tied up in the Phase I drug. If the drug doesn't pan out, expects a sizable drop in the shares.

Twitter: @brettchase

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No positions in stocks mentioned.
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