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Xenon (XENE)
NASDAQ:XENE
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Xenon
(NASDAQ:XENE)
Rating:48Neutral
Price Target:―
Positive Factors
Clinical Progress
The company's lead asset azetukalner has a good chance to report positive data from ongoing Phase 3 studies in focal onset seizures, with potential peak sales over $1B for this indication alone.
Financial Resources
The company ended the quarter with $691M in cash, which is believed to fund operations into 2027.
Market Potential
Azetukalner could provide a pipeline-in-a-product opportunity with potential label expansion into major depressive disorder, bipolar depression, and generalized epilepsy, which are large markets.
Negative Factors
Clinical Challenges
The Mount Sinai trial of XEN1101 in MDD did not meet its primary neuroimaging endpoint.
Competitive Landscape
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.
Xenon (XENE) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.36B
Dividend YieldN/A
Average Volume (3M)1.23M
Price to Earnings (P/E)―
Beta (1Y)0.92
Revenue GrowthN/A
EPS Growth-10.19%
CountryUS
Employees316
SectorHealthcare
Sector Strength42
IndustryBiotechnology
Share Statistics
EPS (TTM)-0.83
Shares Outstanding76,733,600
10 Day Avg. Volume1,063,308
30 Day Avg. Volume1,229,881
Financial Highlights & Ratios
PEG Ratio1.62
Price to Book (P/B)3.56
Price to Sales (P/S)0.00
P/FCF Ratio-14.22
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$55.17Price Target Upside74.37% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering15
Xenon Business Overview & Revenue Model
Company DescriptionXenon Pharmaceuticals Inc., a clinical-stage biopharmaceutical company, engages in developing therapeutics to treat patients with neurological disorders in Canada. Its clinical development pipeline includes XEN496, A Kv7 potassium channel opener that is Phase III clinical trials for the treatment of KCNQ2 developmental and epilepsy encephalopathy; and XEN1101, A Kv7 potassium channel opener, which is in Phase II clinical trial for the treatment of epilepsy and other neurological disorders. The company's product candidates also comprise NBI-921352, a selective Nav1.6 sodium channel inhibitor that is in Phase II clinical trials for the treatment of SCN8A developmental and epileptic encephalopathy, and other potential indications, including adult focal epilepsy; and XEN007, A central nervous system-acting calcium channel modulator, which is in Phase II clinical trials. It has a license and collaboration agreement with the Neurocrine Biosciences, Inc. to develop treatments for epilepsy; and with Flexion Therapeutics, Inc. to develop PCRX301 (XEN402, a Nav1.7 inhibitor) for the treatment of post-operative pain. Xenon Pharmaceuticals Inc. was incorporated in 1996 and is headquartered in Burnaby, Canada.
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: -11.74%|
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 a lack of revenue, persistent losses, and negative cash flows. While the balance sheet shows a strong equity position, these financial concerns raise sustainability issues.Income Statement
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.20
Very Negative
Balance Sheet
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.40
Negative
Cash Flow
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.35
Negative
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 0.00 | 0.00 | 9.43M | 18.44M | 32.17M | Gross Profit |
| 0.00 | -167.51M | -96.33M | -57.03M | -18.36M | EBIT |
| -279.30M | -214.05M | -129.14M | -78.99M | -31.30M | EBITDA |
| -279.30M | -210.51M | -127.52M | -78.09M | -27.97M | Net Income Common Stockholders |
| -234.33M | -182.39M | -125.37M | -78.88M | -28.84M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 626.90M | 638.08M | 592.09M | 551.77M | 177.00M | Total Assets |
| 798.14M | 964.80M | 754.15M | 572.01M | 189.19M | Total Debt |
| 9.02M | 10.90M | 10.44M | 8.26M | 3.31M | Net Debt |
| -133.70M | -137.74M | -46.81M | -167.43M | -41.69M | Total Liabilities |
| 43.24M | 36.88M | 32.65M | 21.97M | 17.83M | Stockholders Equity |
| 754.90M | 927.92M | 721.50M | 550.03M | 171.35M |
| Cash Flow | Free Cash Flow | |||
| -181.39M | -150.94M | -101.32M | -71.55M | -50.76M | Operating Cash Flow |
| -181.39M | -145.33M | -98.43M | -69.50M | -48.12M | Investing Cash Flow |
| 165.00M | -117.17M | -296.00M | -246.77M | -16.82M | Financing Cash Flow |
| 12.13M | 353.52M | 278.47M | 447.54M | 85.80M |
Xenon Technical Analysis
Neutral
31.64
Price Trends
32.88
Negative
35.42
Negative
38.08
Negative
Market Momentum
-0.96
Negative
50.08
Neutral
81.49
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For XENE, the sentiment is Neutral. The current price of 31.64 is above the 20-day moving average (MA) of 30.63, below the 50-day MA of 32.88, and below the 200-day MA of 38.08, indicating a neutral trend. The MACD of -0.96 indicates Negative momentum. The RSI at 50.08 is Neutral, neither overbought nor oversold. The STOCH value of 81.49 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 1 New Risks
1.
Disruptions at the FDA and other government agencies caused by funding shortages could prevent our product candidates from being developed, approved, or commercialized in a timely manner, or at all, which could negatively impact our business. Q4, 2024
Xenon Peers Comparison
Overall Rating
UnderperformOutperform
Sector (54)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
65 Neutral | $4.19B | ― | -58.66% | ― | 42.77% | -51.27% | |
54 Neutral | $5.31B | 3.29 | -45.39% | 2.79% | 16.77% | -0.07% | |
52 Neutral | $2.40B | ― | -103.82% | ― | 48.04% | 48.16% | |
50 Neutral | $3.25B | ― | -106.71% | ― | ― | -22.34% | |
48 Neutral | $2.36B | ― | -31.60% | ― | ― | -10.19% | |
45 Neutral | $2.74B | ― | -62.46% | ― | ― | -43.10% | |
41 Neutral | $3.14B | ― | -30.57% | ― | ― | -147.80% |
* Healthcare Sector Average
Performance Comparison
XENE
Xenon
31.64
-6.60
-17.26%
MRUS
Merus
56.21
2.88
5.40%
APLS
Apellis Pharmaceuticals
19.28
-22.42
-53.76%
SRRK
Scholar Rock Holding
34.23
24.60
255.45%
IMVT
Immunovant
16.77
-8.64
-34.00%
MLTX
MoonLake Immunotherapeutics
46.88
4.92
11.73%
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
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.