Why XenoPort Shares Stumbled
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of XenoPort , a biopharmaceutical company focused on treating neurological disorders, shed as much as 13% following the release of its fourth-quarter earnings results.
So what: For the quarter, XenoPort reported $0.5 million in total revenue compared to $5.1 million in the year-ago period. However, due to a non-cash gain resulting from resolved litigation with GlaxoSmithKline -- prior to this quarter, Glaxo and XenoPort had a collaboration agreement for the sale of Horizant extended-release tablets -- XenoPort turned in a $3 million profit, or $0.07 per share.
Now what: I believe a lot of today's pessimism revolves around investor concern over whether XenoPort can effectively commercialize Horizant without a large collaborative partner. Given that sales of the drug totaled just $2.1 million in the fourth quarter, according to Glaxo's recorded figures, I can't exactly say that things look all too promising. Furthermore, XenoPort announced that it plans to use $100 million to $110 million in cash just in 2013, and it only ended the year with $139 million in cash and cash equivalents. I sense a big dilutive offering potentially on the way either next year or in 2014.
Craving more input? Start by adding XenoPort to your free and personalized watchlist so you can keep up on the latest news with the company.
While you can certainly make huge gains in biotechs like XenoPort, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.
The article Why XenoPort Shares Stumbled originally appeared on Fool.com.Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.