GSK hits back at XenoPort in RLS drug dispute

XenoPort knew it would get GlaxoSmithKline's ($GSK) attention with a termination notice. But the sort of attention it wanted? Probably not the sort it got. GSK has sued the smaller company, its partner on the restless legs syndrome drug Horizant, saying it has lived up to its end of the marketing bargain--and asking a judge to hold XenoPort to their exclusive licensing deal.

XenoPort, which discovered and developed Horizant, hooked up with GSK in 2007 to take the drug through approval and to the market. The path wasn't without its twists and turns: there was a delay at the FDA, then a complete response letter, but the drug finally won approval last April. The two companies revised their partnership along the way, too, with XenoPort taking back rights to the drug outside the U.S.

Horizant has thus been on the market for less than a year. The companies said GSK would target 60,000 to 70,000 primary care doctors and neurologists with a sales force of around 500, beginning July 1. Since then, sales have been "sluggish," analysts say. In accusing GSK of breaching their contract, the smaller company said its partner hasn't done enough to "maximize the sales of Horizant in an expeditious manner" or to hit to the sales milestones that would trigger payments to XenoPort. It also says it has received $120 million in milestone payments so far and would be in line for another $290 million if certain sales goals are met.

Well, GSK says it has complied with the terms of the deal, and it's asking a federal court in Wilmington, DE, to hold XenoPort to their agreement, Bloomberg reports. Whatever the judge decides, the partnership dispute is likely to take a toll. In a report after XenoPort's latest earnings release, Deutsche Bank cut its U.S. sales forecast for Horizant, according to StreetInsider. "While we still believe that Horizant could ultimately become a significant drug," the analysts said, "[XenoPort] will have to resolve the issues with GSK or find another partner. Hence, it likely will take even more time for the product to gain traction."

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