Arbor Pharma Shells Out $467 Million for Bay Area’s Restless Leg Drug Company XenoPort

May 23, 2016
By Mark Terry, BioSpace.com Breaking News Staff

Atlanta-based Arbor Pharmaceuticals announced today that it was acquiring Santa Clara, California-based XenoPort for approximately $467 million.

Earlier in the year, there were rumors that XenoPort was up for sale. Inside sources had indicated that the company was working with an investment bank and had made contact with potential buyers. Late last year XenoPort restructured in order to maximize Horizant (gabapentin encarbil), its drug for restless leg syndrome. At that time it was cutting about 25 jobs, and the company’s chief executive officer and director, Ronald Barrett, retired immediately. He was replaced by Vincent Angotti, who had previously been the company’s executive vice president and chief operating officer.

The company had hopes of diversifying beyond Horizant, and was pushing into psoriasis, MS and Parkinson’s disease. But after questionable data from a mid-stage study of XP23820, XenoPort made a strategic pivot and discontinued development of the drug, indicating it would only continue with the help of a partner.

Which it did, in March, signing a deal with Hyberabad, India-based Dr. Reddy's Laboratories that was worth more than $490 million. Dr. Reddy’s Laboratories gained exclusive U.S. rights to develop and market XP23829 for all indications, including moderate-to-severe chronic plaque psoriasis and potentially for relapsing forms of MS.

Arbor’s acquisition of XenoPort is for $7.03 per share in cash, which is about a 60 percent premium over the closing price of XenoPort shares on May 20, 2016.

“We are pleased to be adding Horizant and the XenoPort pipeline to the growing portfolio of Arbor products,” said Ed Schutter, president and chief executive officer of Arbor, in a statement. “We believe that XenoPort’s lead product Horizant offers patients and physicians a valuable treatment option for moderate-to-severe primary restless legs syndrome and post herpetic neuralgia. The XenoPort sales team has done an excellent job of growing Horizant, and we look forward to supporting them to continue this significant momentum.”

Arbor, a privately owned company, has several marketed drugs, including Edarbi (azilsartan medoxmil) for high blood pressure and Zenzedi (dextroamphetamine sulfate) for narcolepsy.

“We think [the buyout] represents a good outcome for current XenoPort investors in the current environment,” wrote Michael Yee, an analyst with RBC Capital Markets, in a research note.

“This transaction provides immediate and substantial value to our stockholders, and we believe that Arbor is well positioned to provide the proper resources for a more expanded commercialization effort of Horizant,” said Angotti, in a statement. “We evaluated many potential options to maximize the value for stockholders and believe this transaction represents a great outcome for XenoPort stockholders.”