XenoPort Inc. signed GlaxoSmithKline plc as a co-development and commercialization partner for XP13512, its lead product candidate in late-stage development for restless legs syndrome (RLS) and neuropathic pain. The deal could total up to $640 million in up-front and milestone payments.

Santa Clara, Calif.-based XenoPort exclusively licensed to GSK worldwide rights to XP13512, with the exception of certain Asian territories licensed in 2005 to Tokyo-based Astellas Pharma Inc. Astellas is developing the product in Japan, Korea, the Philippines, Indonesia, Thailand and Taiwan. (See BioWorld Today, Dec. 2, 2005.)

For development and commercialization in the rest of the world, XenoPort had been seeking a partner "with a combination of attributes that would lead to the greatest value for stockholders," while accelerating XP13512's pathway to the market, said CEO Ronald Barrett.

He described the GSK partnership as a "very good economic deal," and said the large pharma's interest serves as "a strong endorsement" of the product.

It also doesn't hurt that London-based GSK has some experience in the RLS space. The company's dopamine agonist, Requip (ropinirole), was approved as the first drug to treat patients with moderate to severe RLS, a neurological condition characterized by burning, creeping, tugging or tingling sensations in the legs that forces patients to move their legs to alleviate discomfort, often disrupting sleep.

Though Requip got the FDA's nod in 2005, there still remains a clear unmet medical need, Barrett said. Add to that the fact that Requip faces patent expiration in the next two years, and it's in both companies' "economic interest to develop and commercialize XP13512 for this market," he added.

XP13512, a transported prodrug of gabapentin, is designed to maintain therapeutic levels for a longer period of time so it could treat RLS patients whether they're asleep or awake.

Shares of XenoPort (NASDAQ:XNPT) gained $2.80, or 11.1 percent, Thursday to close at $28.04.

Under terms of the deal, XenoPort will get $75 million in cash up front. Beyond that, the company could earn up to $65 million in milestones leading up to the filing of a new drug application for XP13512 for RLS, up to $210 million in other development and regulatory milestones and up to an additional $290 million in potential sales milestones of XP13512 in RLS and neuropathic pain. Outside the U.S., XenoPort would be entitled to royalties, and in the U.S., the company will have the option to co-promote the drug for a net profit share.

If XenoPort opts for the co-promotion arrangement, it will gain the right to promote GSK's Requip, a dopamine agonist approved for Parkinson's disease and RLS. The deal would include Requip 14-hour for RLS and Requip 24-hour for Parkinson's, both of which are pending FDA approval.

The opportunity to sell Requip "achieves a couple of goals," Barrett told BioWorld Today. In addition to offering a financial benefit, it provides XenoPort the "experience in interfacing with physicians who likely would prescribe XP13512," and gives "us a running start to building our commercial capabilities."

Adding commercial capabilities is part of XenoPort's long-term strategy, Barrett said, and creating a sales force will "allow us to consider, in the future, keeping U.S. commercial rights" for additional pipeline products.

Completion of the Phase III program for XP13512 in RLS will remain XenoPort's responsibility, and those studies "are under way and on track," he said, adding that results from the first Phase III trial evaluating once-daily doses of the drug over a 12-week period are expected in the second quarter.

Pending positive results, GSK will handle the regulatory filing. The pharma firm also agreed to take over ongoing development of XP13512 in the neuropathic pain indication. That program is in Phase II, and with GSK's resources could accelerate that program, Barrett said.

XenoPort, which expects to report its fourth-quarter earnings next week, posted a net loss of $16.3 million for the third quarter of 2006. As of Sept. 30, it had cash totaling $135.5 million. But the GSK deal provides the company with a little more runway.

"We're going to be analyzing the new economic position that we're in," Barrett said, "and see where there might be opportunities to accelerate the development" of other products, such as XP19986, a transported prodrug of R-baclofen.

That compound is expected to move into Phase II studies shortly in gastroesophageal reflux disease and spasticity.