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Xenon (XENE)
NASDAQ:XENE

Xenon (XENE) AI Stock Analysis

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XE

Xenon

(NASDAQ:XENE)

Rating:48Neutral
Price Target:
Xenon's primary strengths lie in its strong financial position and positive clinical development progress, as highlighted in the earnings call. However, the absence of revenue and profitability, along with technical and valuation concerns, weigh heavily on the overall stock score.
Positive Factors
Clinical Trial Progress
Management confirmed that recruitment for the X-TOLE2 trial will be completed in the next several months, indicating progress in the trial process.
Market Sentiment
Analyst maintains a Buy rating, ahead of a data-rich period for XENE.
Potential Commercial Success
Azetukalner's effect on anhedonia is encouraging on the drug’s potential to help epilepsy patients’ mood, which could be a key driver of it achieving significant commercial success.
Negative Factors
Competitive Pressure
The delay to the Phase 3 X-TOLE2 readout will be a disappointment for investors, especially in the context of FOS studies by Praxis and Biohaven appearing to enroll more rapidly.
Trial Delays
Investors reacted negatively to the news of the trial delay, resulting in a 10% drop in after-hours trading.
Trial Setbacks
The Mount Sinai trial of XEN1101 in MDD did not meet its primary neuroimaging endpoint.

Xenon (XENE) vs. SPDR S&P 500 ETF (SPY)

Xenon Business Overview & Revenue Model

Company DescriptionXenon Pharmaceuticals Inc. (XENE) is a clinical-stage biopharmaceutical company focused on developing innovative therapies to improve the lives of patients with neurological disorders. The company primarily operates in the pharmaceutical and biotechnology sectors, leveraging its proprietary ion channel neurology platform to advance its pipeline of novel therapeutics. Xenon's core products include a range of investigational drugs targeting various neurological conditions, including epilepsy and pain disorders.
How the Company Makes MoneyXenon Pharmaceuticals generates revenue through a combination of collaboration and licensing agreements as well as potential milestone payments and royalties from its partnered programs. The company's revenue model is heavily reliant on strategic partnerships with larger pharmaceutical companies, which provide funding and resources in exchange for rights to develop and commercialize Xenon's drug candidates. These partnerships often involve upfront payments, research funding, and milestone-based payments as the drug candidates advance through clinical trials and regulatory approvals. Additionally, Xenon may earn royalties on future sales of successfully commercialized drugs developed from its proprietary platform.

Xenon Earnings Call Summary

Earnings Call Date:May 12, 2025
(Q1-2025)
|
% Change Since: -9.62%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Positive
The earnings call indicated significant progress across Xenon's pipeline, particularly with azetukalner in epilepsy and MDD. Financially, the company is well-positioned to support ongoing developments. Despite a slight delay in the X-TOLE2 study and a negative primary endpoint in the MDD study, the overall sentiment remains positive due to consistent progress and strong financial backing.
Q1-2025 Updates
Positive Updates
Progress in Azetukalner Phase 3 Epilepsy Program
Patient recruitment for the X-TOLE2 study is nearing completion with top-line results anticipated early next year. The study metrics align consistently with the successful Phase 2b X-TOLE study.
Extension of Azetukalner Usage Beyond Epilepsy
Enrollment is ongoing in the first phase 3 MDD study, X-NOVA2, with the second MDD study, X-NOVA3, and the first Phase 3 study in bipolar depression on track to initiate by mid-year.
Investigator-Sponsored MDD Study Results
The study results are consistent with prior expectations, showing clear drug activity on MADRS and SHAPS, reaffirming the rationale for further development in MDD.
Financial Position and Revenue Recognition
Xenon recognized revenue of $7.5 million from a milestone payment. Cash and cash equivalents stood at $691.1 million, sufficient to fund operations into 2027.
Negative Updates
Slight Delay in X-TOLE2 Study Completion
There is a slight delay in the completion of patient recruitment for the X-TOLE2 study compared to prior guidance, though it is expected to conclude in the next few months.
Negative Primary Endpoint in Investigator-Sponsored MDD Study
The primary endpoint of the fMRI was not met in the investigator-sponsored study of azetukalner in MDD.
Company Guidance
During the Q1 2025 Xenon Pharmaceuticals Earnings Conference Call, the company provided guidance on several key metrics. Xenon is nearing the completion of patient recruitment for the X-TOLE2 Phase 3 study in epilepsy, with top-line results expected in early 2026. Despite a slight delay in recruitment, the company remains confident due to the consistency of key metrics with their successful Phase 2b study. Xenon anticipates having sufficient cash to fund operations into 2027, thanks to their strong fiscal management. The company is also expanding its neuroscience-focused pipeline, with multiple regulatory filings expected this year, and is preparing for the initiation of first-in-human trials for several new drug candidates. Additionally, Xenon's azetukalner has shown promising results in both epilepsy and major depressive disorder (MDD), with ongoing Phase 3 trials in MDD and plans to initiate trials in bipolar depression by mid-year.

Xenon Financial Statement Overview

Summary
Xenon is facing significant financial challenges with zero revenue and persistent unprofitability. While the balance sheet appears stable with low debt and strong equity, the negative cash flows and lack of revenue growth are critical issues.
Income Statement
20
Very Negative
Xenon's income statement shows a consistent decline in revenue, with total revenue dropping to zero in the most recent year. The company consistently reports negative net income, indicating ongoing unprofitability. The absence of revenue growth and negative profit margins are significant concerns.
Balance Sheet
40
Negative
Xenon's balance sheet reflects a strong equity position with a high equity ratio, which suggests financial stability. However, the company has a low return on equity due to consistent losses. The low debt levels are a positive aspect, but the absence of revenue and profitability diminishes the overall financial health.
Cash Flow
35
Negative
The cash flow statement reveals negative free cash flow and operating cash flow, indicating a cash burn situation. While the company has a substantial cash reserve, the inability to generate positive operating cash flow presents a long-term risk unless revenue generation improves.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue7.50M0.000.009.43M18.44M32.17M
Gross Profit-659.00K0.00-167.51M-96.33M-57.03M-18.36M
EBITDA-291.03M-235.86M-210.51M-127.52M-78.09M-27.97M
Net Income-251.45M-234.33M-182.39M-125.37M-78.88M-28.84M
Balance Sheet
Total Assets743.28M798.14M964.80M754.15M572.01M189.19M
Cash, Cash Equivalents and Short-Term Investments549.63M626.90M638.08M592.09M551.77M177.00M
Total Debt8.68M9.02M10.90M10.44M8.26M3.31M
Total Liabilities39.32M43.24M36.88M32.65M21.97M17.83M
Stockholders Equity703.96M754.90M927.92M721.50M550.03M171.35M
Cash Flow
Free Cash Flow-202.79M-184.46M-150.94M-101.32M-71.55M-50.76M
Operating Cash Flow-199.86M-181.39M-145.33M-98.43M-69.50M-48.12M
Investing Cash Flow245.71M165.00M-117.17M-296.00M-246.77M-16.82M
Financing Cash Flow13.28M12.13M353.52M278.47M447.54M85.80M

Xenon Technical Analysis

Technical Analysis Sentiment
Positive
Last Price32.40
Price Trends
50DMA
33.00
Negative
100DMA
34.35
Negative
200DMA
37.54
Negative
Market Momentum
MACD
0.04
Negative
RSI
53.68
Neutral
STOCH
47.55
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For XENE, the sentiment is Positive. The current price of 32.4 is above the 20-day moving average (MA) of 31.58, below the 50-day MA of 33.00, and below the 200-day MA of 37.54, indicating a neutral trend. The MACD of 0.04 indicates Negative momentum. The RSI at 53.68 is Neutral, neither overbought nor oversold. The STOCH value of 47.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for XENE.

Xenon Risk Analysis

Xenon disclosed 70 risk factors in its most recent earnings report. Xenon reported the most risks in the "Tech & Innovation" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Xenon Peers Comparison

Overall Rating
UnderperformOutperform
Sector (51)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
65
Neutral
$4.01B-58.66%42.77%-51.27%
51
Neutral
$7.41B0.36-61.88%2.34%16.99%1.69%
51
Neutral
$2.31B-103.82%48.04%48.16%
50
Neutral
$3.40B-106.71%-22.34%
48
Neutral
$2.44B-31.60%-10.19%
45
Neutral
$2.69B-62.46%-43.10%
41
Neutral
$3.04B-30.57%-147.80%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
XENE
Xenon
32.40
-6.59
-16.90%
MRUS
Merus
52.99
-6.18
-10.44%
APLS
Apellis Pharmaceuticals
17.43
-20.93
-54.56%
SRRK
Scholar Rock Holding
35.81
27.48
329.89%
IMVT
Immunovant
16.10
-10.30
-39.02%
MLTX
MoonLake Immunotherapeutics
47.52
3.55
8.07%

Xenon Corporate Events

Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures
Xenon CFO Resignation Amidst Strong Financial Outlook
Neutral
Feb 27, 2025

On February 24, 2025, Sherry Aulin announced her resignation as CFO of Xenon Pharmaceuticals, effective June 30, 2025, for personal reasons, with no disputes related to the company’s operations. She will continue as an advisor until August 31, 2025, while the company searches for her replacement. Xenon also reported its financial results for 2024 and provided a business update, highlighting its ongoing and planned clinical trials for azetukalner in epilepsy and neuropsychiatric disorders. The company anticipates a catalyst-rich period in the next 12 to 24 months, with multiple regulatory filings and potential commercial launches. Despite a net loss increase in 2024, Xenon maintains a strong cash position to fund operations into 2027.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Apr 20, 2025