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Xenoport to be Acquired by Arbor Pharmaceuticals; Stock Up

Xenoport, Inc.’s XNPT shares surged 56.4% after the company announced that it has signed a definitive agreement with Arbor Pharmaceuticals, LLC, under which it will be acquired by the latter for $7.03 per share in cash, or a total value of approximately $467 million.

Under the terms of the agreement, Arbor will begin a tender offer to acquire all outstanding shares of XenoPort. Upon the closing of the tender offer, the companies will execute a merger through which all shares that were not tendered in the offer will be converted into the right to receive $7.03 per share in cash. The transaction is slated to close in the third quarter of 2016.

Through the acquisition, Arbor will add Xenoport’s sole marketed product, Horizant, to its portfolio. Horizant is currently approved in the U.S. for the treatment of moderate-to-severe primary restless legs syndrome and postherpetic neuralgia. The drug generated sales of $13.7 million in the first quarter of 2016, up a whopping 106% year over year.

Meanwhile, under a clinical trial agreement with the National Institute on Alcohol Abuse and Alcoholism (NIAAA), Horizant is being evaluated as a potential treatment for patients with alcohol use disorder. Top-line results from the study are anticipated in the first half of 2017.

Apart from Horizant, the transaction will give Arbor access to a number of candidates in XenoPort’s pipeline such as XP23829 and XP21279.

Our Take

The acquisition is expected to provide immediate and substantial value to Xenoport’s shareholders. With about 500 sales professionals promoting its products, Arbor will be able to offer better resources for expanded commercialization efforts related to Horizant.

Xenoport currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector include Bristol-Myers Squibb Company BMY, Pfizer Inc. PFE and ANI Pharmaceuticals, Inc. ANIP, each sporting a Zacks Rank #1 (Strong Buy).

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BRISTOL-MYERS (BMY): Free Stock Analysis Report
PFIZER INC (PFE): Free Stock Analysis Report
XENOPORT INC (XNPT): Free Stock Analysis Report
ANI PHARMACEUT (ANIP): Free Stock Analysis Report
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