Xenon Pharmaceuticals XENE is a clinical-stage biotech developing innovative therapies for neurology indications with a focus on epilepsy. At present, the company has no marketed drug in its portfolio.
Xenon’s pipeline comprises its lead product candidate, azetukalner, a differentiated Kv7 potassium channel, which is being developed for treating epilepsy and other neurological disorders, including major depressive disorder (MDD).
Azetukalner is currently undergoing late-stage development for treating focal onset seizures (FOS). Under the phase III epilepsy program, two identical phase III studies, X-TOLE2 and X-TOLE3, are evaluating 15 mg or 25 mg doses of azetukalner, administered with food as adjunctive treatment in patients with FOS. The first top-line data readout from the X-TOLE2 study is anticipated in the second half of 2025.
Xenon plans to submit a regulatory application seeking approval of azetukalner for FOS, contingent upon the success of the X-TOLE2 study.
The company is also evaluating azetukalner for an additional epilepsy indication, primary generalized tonic-clonic seizures, in a phase III X-ACKT study, which is currently enrolling patients. A positive result from the X-ACKT study is intended to support potential regulatory submissions in this additional epilepsy indication.
Additionally, Xenon has completed a phase II proof-of-concept study on azetukalner called X-NOVA for patients with MDD.Based on the success of the mid-stage study, the company met with the FDA during the first quarter of 2024 and reached alignment regarding the late-stage clinical development program design for azetukalner to treat MDD, which will comprise three phase III clinical studies. XENE expects to initiate the first phase III study in the second half of 2024.
Furthermore, the company continues to evaluate other potential neuropsychiatric indications for the future development of azetukalner.
Year to date, shares of XENE have lost 14.2% against the industry’s 0.2% growth.
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Xenon also collaborates with Neurocrine Biosciences NBIX for XEN901, now known as NBI-921352, which is a selective Nav1.6 sodium channel inhibitor. Neurocrine is currently evaluating NBI-921352 in a phase II study to treat pediatric patients with SCN8A developmental and epileptic encephalopathy. Per the terms of the agreement with NBIX, XENE is eligible to receive certain clinical, regulatory and commercial milestone-based payments, as well as royalties on future sales.
Xenon is also currently collaborating with the Icahn School of Medicine at Mount Sinai to support an ongoing phase II proof-of-concept study of azetukalner for the treatment of MDD in approximately 60 subjects.
Despite the encouraging market opportunity in MDD and epilepsy, several drawbacks could inhibit Xenon’s growth potential.
The company has no approved products in its commercial portfolio, which means that it lacks a source of generating regular income. XENE currently receives periodic collaboration revenues from Neurocrine. However, in 2023, Neurocrine’s study of NBI-921352 for the FOS indication failed, leading to the abandonment of the study of the candidate for the same.
If the study for the SCN8A-DEE indication also fails for any reason, the partnership between Xenon and Neurocrine will end. Under such circumstances, the company will not have any income if further partnership agreements do not materialize until azetukalner is approved.
Furthermore, the presence of only one investigational candidate in its pipeline is risky for Xenon. Thus, any setback, developmental or regulatory, will significantly hurt the prospects of the company with no backup program to fall back on. We note that clinical development involves a high degree of risk.
The market for anti-epileptic drugs is also very crowded. Several anti-seizure medications are already approved like Catalyst Pharmaceuticals markets Fycompa CIII (perampanel) to treat partial seizures and generalized tonic-clonic seizures for people older than 12 years.
Similar competition exists in the MDD space as well. Intra-Cellular Therapies is evaluating its investigational candidate, lumateperone 42 mg, for the treatment of MDD. Axsome Therapeutics already has an FDA-approved treatment, Auvelity (AXS-05), for adults with MDD. Auvelity received regulatory approval for this indication in 2022.
Xenon Pharmaceuticals Inc. Price and Consensus
Xenon Pharmaceuticals Inc. Price and Consensus
Xenon Pharmaceuticals Inc. price-consensus-chart | Xenon Pharmaceuticals Inc. Quote
Zacks Rank & Stocks to Consider
Xenon currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the overall healthcare sector are Illumina, Inc. ILMN and Arcturus Therapeutics ARCT. While ILMN sports a Zacks Rank #1 (Strong Buy), ARCT carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, estimates for Illumina’s 2024 earnings per share have moved up from $1.07 to $3.16. Earnings per share estimates for 2025 have improved from $2.93 to $4.49. Year to date, shares of ILMN have lost 4.8%.
Illumina’s earnings beat estimates in each of the trailing four quarters, the average surprise being 463.46%.
In the past 60 days, estimates for Arcturus Therapeutics’ 2024 loss per share have improved from $4.39 to $2.60. The estimate for 2025 is currently pegged at earnings of 21 cents per share. Year to date, shares of Arcturus Therapeutics have plunged 32.5%.
Earnings of Arcturus Therapeutics beat estimates in each of the last four quarters, delivering an average earnings surprise of 56.73%.
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