Needham cuts Xenon stock price target to $55, maintains Buy rating

On Tuesday, Needham, a research firm, adjusted its price target for Xenon Pharmaceuticals (NASDAQ:XENE), reducing it from $60.00 to $55.00, while sustaining a Buy rating on the company’s shares. Currently trading at $35.85 with a market capitalization of $2.74 billion, Xenon has shown strong momentum over the past month according to InvestingPro data. The revision by Needham follows Xenon’s first-quarter update for the year 2025, which included significant developments in its clinical trials.

Xenon Pharmaceuticals is nearing the completion of enrollment for its phase 3 XTOLE2 trial, which is assessing the efficacy of azetukalner (XEN1101) in treating focal onset epilepsy (FOS). The results for this study are now anticipated to be released in early 2026, a slight delay from the previously projected second half of 2025. Despite this shift, the company expects to file a New Drug Application (NDA) with regulatory authorities around mid-2026. InvestingPro analysis shows the company maintains strong financial health with a current ratio of 17.85 and more cash than debt on its balance sheet, providing adequate runway for its clinical programs.

Additionally, Xenon reported on the Mount Sinai trial of XEN1101 for major depressive disorder (MDD), which was led by investigators. The trial did not achieve its primary neuroimaging endpoint; however, XEN1101 demonstrated effects on the Montgomery-Åsberg Depression Rating Scale (MADRS) and the Snaith-Hamilton Pleasure Scale (SHAPS). These effects were similar to those observed in the phase 2 XNOVA proof-of-concept (PoC) trial.

Needham’s analyst commented on the potential impact of these developments on Xenon’s stock, stating that while there may be some slight pressure, it is not expected to affect the potential of XEN1101 in treating either FOS or MDD. The firm remains optimistic about Xenon’s prospects, particularly as the company approaches a period rich with data.

The price target adjustment to $55 reflects updates to Needham’s financial model and accounts for the new timeline for the NDA filing. Xenon’s progress and the anticipated results from its ongoing clinical trials continue to be closely monitored by investors and analysts alike. With analyst targets ranging from $42 to $65 and a highly favorable consensus recommendation of 1.28 (where 1 is Strong Buy), detailed analysis and additional insights are available in the comprehensive Pro Research Report on InvestingPro, which covers over 1,400 US stocks.

In other recent news, Xenon Pharmaceuticals has reported its fourth-quarter 2024 earnings, showing a slight beat on earnings per share (EPS) expectations. The company posted an EPS of -0.84, surpassing the forecasted -0.85. Additionally, Xenon Pharmaceuticals announced a revenue of $357.14 million for the same period. The company maintains a strong cash position, with cash and cash equivalents totaling $754.4 million at the end of 2024, which is projected to support operations into 2027.

Xenon Pharmaceuticals also made a significant change to its accounting oversight by appointing PricewaterhouseCoopers LLP (PwC) as its new independent registered public accounting firm, replacing KPMG LLP. This transition is part of routine corporate governance and not due to any disagreements on accounting practices. Meanwhile, Chardan Capital Markets initiated coverage on Xenon Pharmaceuticals, assigning a Buy rating with a price target of $55, citing the potential of its lead drug candidate, azetukalner, in treating epilepsy and neuropsychiatric disorders.

The company is advancing its clinical pipeline with multiple Phase 3 studies, including those for epilepsy and bipolar depression. Xenon Pharmaceuticals plans to significantly increase research and development spending in the coming years to support these programs. CFO Sherry Allen announced her intention to step down by June 2025, marking a notable change in the company’s leadership.

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