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On Wednesday, Evercore ISI initiated coverage on Xenon Pharmaceuticals (NASDAQ:XENE) with an Outperform rating and set a price target of $55.00. The new coverage follows a significant sell-off in Xenon’s shares on Tuesday, which saw the stock price plummet by 17%. According to InvestingPro data, the stock has fallen over 16% in the past week, with analyst targets ranging from $42 to $65, suggesting significant potential upside from current levels. The decline came after the company announced a slight delay in the anticipated timeline for its upcoming Phase 3 epilepsy trials for its lead asset, azetukalner. The trials are now expected to commence in early-2026, a shift from the previously projected second half of 2025. Despite the recent volatility, InvestingPro analysis shows the company maintains a strong financial position with a current ratio of 17.66, indicating robust liquidity to fund its clinical programs.
Evercore ISI’s analyst noted the sell-off as an opportunity, expressing a high level of conviction in azetukalner’s potential success in the forthcoming trials. The analyst highlighted the drug’s robust safety profile, positive prior data, and strong product profile. Furthermore, feedback from key opinion leaders (KOLs) has reinforced the belief that azetukalner has the potential to become the go-to brand for anti-epileptic medication.
Despite the recent setback in the trial schedule, Evercore ISI’s outlook on Xenon Pharmaceuticals remains optimistic. The firm acknowledges the skepticism surrounding azetukalner’s efficacy in other indications, such as Major Depressive Disorder (MDD) and Bipolar Disorder (BPD). However, the analyst also recognizes the "substantial upside optionality" should the drug prove successful in these additional applications. With a market capitalization of $2.27 billion and a strong cash position, InvestingPro research reveals 8 additional key insights about Xenon’s financial health and market position, available in the comprehensive Pro Research Report.
The coverage initiation and the setting of a $55 price target come as a vote of confidence in Xenon’s lead asset, especially in the wake of the market’s reaction to the trial delay. Xenon Pharmaceuticals has not provided any additional commentary on the new coverage or the recent stock price movement. Investors and industry watchers will be closely monitoring the progress of azetukalner as it moves towards its Phase 3 trials.
In other recent news, Xenon Pharmaceuticals reported its first-quarter 2025 earnings, revealing adjusted earnings per share of -$0.83, which exceeded analyst projections of -$0.91. The company’s revenue reached $7.5 million, significantly surpassing the consensus estimate of $1.25 million. Despite these positive financial results, Xenon announced a delay in the topline data from its Phase 3 X-TOLE2 study of azetukalner for focal onset seizures, now expected in early 2026. This delay has prompted RBC Capital Markets to adjust their price target for Xenon from $58.00 to $55.00, while maintaining an Outperform rating, and Stifel to lower their target from $62.00 to $60.00, keeping a Buy rating. Both firms remain optimistic about azetukalner’s potential, citing strong phase II data and promising results from a study in major depressive disorder. Stifel acknowledges the short-term timeline setback but continues to see significant promise in azetukalner’s applications. Xenon is also progressing with plans to initiate Phase 3 studies in major depressive disorder and bipolar depression, and has started a Phase 1 study for XEN1120. The company ended the quarter with $691.1 million in cash and marketable securities, which is expected to support operations into 2027.
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