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On Wednesday, Chardan Capital Markets initiated coverage on Xenon Pharmaceuticals (NASDAQ:XENE), assigning a Buy rating to the company’s stock with a price target of $55.00. Currently trading at $35.18, the stock sits well below the broader analyst consensus target range of $42-$65, according to InvestingPro data. The firm’s analysts highlighted the strong potential of Xenon’s lead drug candidate, azetukalner, for treating epilepsy and neuropsychiatric disorders. This optimism is based on the drug’s performance in the Phase 2b X-TOLE trial for focal onset seizures (FOS) which took place in November 2021.
The stock experienced a significant leap following the promising results from the X-TOLE trial. Recent performance has been mixed, with InvestingPro data showing a -7.91% decline over the past week, though the stock maintains strong returns over a five-year period. Investors now await the Phase 3 X-TOLE2 data, which is expected to further confirm azetukalner’s drug profile. Chardan analysts believe that the forthcoming X-TOLE2 results, anticipated in the second half of 2025, have a high likelihood of success. Such an outcome is seen as a pivotal de-risking event that could substantially elevate the stock’s value.
Chardan’s positive outlook also encompasses the potential for a buyout deal, which could be spurred by the success of the upcoming X-TOLE2 readout. The analysts underscored the significant upside that a positive trial result would contribute to Xenon’s narrative in the central nervous system (CNS) space.
Xenon Pharmaceuticals concluded the year 2024 with approximately $750 million in cash reserves. According to the Chardan analysts, this financial position is expected to sustain all planned clinical programs into the year 2027, providing a solid runway for the company’s research and development efforts. InvestingPro analysis confirms the company’s strong financial health, with a current ratio of 17.85 and minimal debt-to-equity ratio of 0.01. These metrics, along with eight additional ProTips and comprehensive financial analysis, are available in the Pro Research Report. Xenon’s financial stability, combined with the anticipated clinical milestones, underpins the Buy rating and the $55 price target set by Chardan Capital Markets.
In other recent news, Xenon Pharmaceuticals has announced its fourth-quarter 2024 earnings, revealing a slight beat on earnings per share (EPS) forecasts. The company reported an EPS of -0.84, slightly better than the anticipated -0.85, and achieved revenue of $357.14 million. Despite the earnings beat, Xenon Pharmaceuticals plans to significantly increase research and development spending in 2025 and 2026 to support multiple Phase 3 studies. Additionally, Xenon Pharmaceuticals has appointed PricewaterhouseCoopers LLP as its new independent registered public accounting firm, replacing KPMG LLP, with the transition set to be effective by March 3, 2025. The company confirmed that the change was not due to any disagreements with KPMG on accounting practices. In another development, CFO Sherry Allen announced her intention to step down by June 2025. Xenon Pharmaceuticals is also advancing its clinical pipeline, including its lead asset, AZETU Calnar, in epilepsy and bipolar depression. Notably, Xenon Pharmaceuticals maintains a strong cash position with $754.4 million in cash and cash equivalents at the end of 2024, extending its cash runway into 2027.
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