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Xenon Q3 Loss Narrower Than Expected, Pipeline Development in Focus

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Xenon Pharmaceuticals Inc. (XENE - Free Report) reported a loss of 81 cents per share for the third quarter of 2024, narrower than the Zacks Consensus Estimate of a loss of 82 cents. The company had incurred a loss of 73 cents per share in the year-ago quarter.

In the reported quarter, Xenon did not generate any revenues. Due to the absence of a marketed product, the company only recognizes periodic collaboration revenues in its top line from its ongoing partnership with Neurocrine Biosciences (NBIX - Free Report) for XEN901, now known as NBI-921352. The company did not recognize any revenues in the year-ago quarter as well. 

NBI-921352 is a selective Nav1.6 sodium channel inhibitor. Neurocrine is currently evaluating NBI-921352 in a phase II study to treat patients aged 2-21 years with SCN8A developmental and epileptic encephalopathy. Per the terms of the agreement with NBIX, Xenon is eligible to receive certain clinical, regulatory and commercial milestone-based payments, as well as royalties on future sales.

Xenon, in collaboration with Neurocrine, is also currently evaluating the next lead candidate, a Nav1.2/1.6 inhibitor, in pre-clinical studies, aiming to progress into clinical studies in 2025 as a potential treatment for focal onset seizures (FOS).

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

XENE’s Q3 Results in Detail

In the third quarter of 2024, research and development (R&D) expenses increased 33% to $57 million compared with $42.9 million in the year-ago period. The uptick was primarily due to increased expenses related to the company’s azetukalner late-stage epilepsy studies, as well as pre-clinical and discovery programs to advance multiple potential drug candidates.

Year to date, shares of XENE have lost 5.8% compared with the industry’s 0.9% decline.

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General and administrative expenses were $16.7 million in the reported quarter, up 30% year over year. The significant rise was on the grounds of increased personnel-related costs due to higher employee headcount and stock-based compensation expenses.

Xenon had cash, cash equivalents and marketable securities worth $803.3 million as of Sept. 30, 2024, compared with $850.6 million as of June 30, 2024. The company expects its existing cash balance to fundits current operating plans,which include the completion of the azetukalner phase III epilepsy studies and fully supporting late-stage clinical development of azetukalner in major depressive disorder (MDD) into 2027.

XENE’s Pipeline Updates

Xenon has no approved products in its portfolio at the moment. Therefore, pipeline development remains the key focus of the company.

XENE is currently developing azetukalner in late-stage studies for treatingFOS. 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.

The company is also evaluating azetukalner for primary generalized tonic-clonic seizures in a phase III X-ACKT study, which is currently enrolling patients and intends to support potential regulatory submissions in this additional epilepsy indication.

Xenon has also 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 expects to initiate the X-NOVA2 study, the first of three phase III studies evaluating azetukalner in patients with MDD, before 2024 ends. 

Xenon is also currently collaborating with the Icahn School of Medicine at Mount Sinai to support an ongoing investigator-sponsored phase II proof-of-concept study of azetukalner for the treatment of MDD in approximately 60 subjects. Patient enrollment in the same has been completed and top-line results are anticipated in the first half of 2025.

Furthermore, XENE is currently evaluating multiple preclinical therapeutic candidates targeting Kv7, Nav1.7 and Nav1.1 across various indications, aiming to advance them into clinical development in 2025.

XENE’s Zacks Rank & Stocks to Consider

Xenon currently carries a Zacks Rank #3 (Hold). 

Some better-ranked pharma stocks are Allogene Therapeutics (ALLO - Free Report) and Biogen (BIIB - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Allogene Therapeutics’ loss estimates per share have narrowed from $1.41 to $1.36 for 2024 over the past 60 days, while that for 2025 has narrowed from $1.46 to $1.36 per share. ALLO’s shares have lost 11.5% year to date.

Allogene Therapeutics’ earnings beat estimates in three of the trailing four quarters and matched once, delivering an average surprise of 9.42%.

Biogen’s earnings estimates have risen from $16.12 to $16.38 per share for 2024 over the past 60 days, while that for 2025 has increased from $17.09 to $17.16. BIIB’s shares have lost 35% year to date.

Biogen’s earnings beat estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 9.99%.


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