Neurology focused biopharmaceutical company Xenon Pharmaceuticals (NASDAQ:XENE) doesn’t have a giant market capitalization, but it does offer ambitious clinical programs. As for XENE stock, the share price drifted sideways for a long time — but now, the trajectory is definitely to the upside.
Just to recap, Xenon specializes in areas of high unmet medical need, with a focus on epilepsy. The company’s flagship product is XEN1101, which is designed to treat epilepsy, major depressive disorder (MDD) and potentially other neurological disorders.
Xenon also has other products in the pipeline. However, XENE stock traders had been watching closely, in anticipation of a clinical update on XEN1101.
The company did provide a financial update, which included a mix of good and less-than-good news. What really moved the needle, though, was Xenon’s announcement about XEN1101, which should be viewed as a potential breakthrough for the company’s stakeholders.
XENE Stock at a Glance
The first feature of XENE stock worth mentioning is that it has a 5 year monthly beta of 1.4. This means that it has moderate volatility, so please only use small position sizes with this stock.
Volatility can come at unexpected times, and very suddenly. The market has a way of lulling investors into a sense of complacency, before moving asset prices quickly.
In the case of XENE stock, it stayed in a range for half a year, between $16 and $20. This occurred from March until the end of September.
Then, without warning, the Xenon share price shot up like a rocket in early October. It’s possible that Reddit traders were involved, but the most obvious driver was a news-based catalyst.
Within a few days, XENE stock doubled from $16 to $32. As the stock has effectively been re-rated by the trading community, it’s now necessary to change our price targets.
Don’t ever forget that the trend is your friend — and the trend with Xenon is definitely to the upside. In fact, $40 is now a realistic target in 2021, followed by $43.50 if the momentum persists.
Financial Highlights and Challenges
It’s important to provide a balanced picture when reporting on any investable business.
In most instances, there will be both good news and areas that need improvement. Such is the case with Xenon Pharmaceuticals, which recently provided a quarterly financial report and corporate update with mixed results.
In the good-news category, Xenon demonstrated its improving capital position.
Specifically, the company had cash and cash equivalents and marketable securities totaling $260.5 million as of June 30, 2021. This compares quite favorably to the $177 million recorded as of December 31, 2020.
With that, Xenon anticipates having enough cash to fund operations into 2023 (excluding any revenue generated from existing partnerships or potential new partnering arrangements).
Now, for the top- and bottom-line results. For the second quarter of 2021, Xenon Pharmaceuticals generated total revenues of $2.2 million — not too bad.
Unfortunately, the company also posted a net earnings loss for the quarter. To a certain extent, this was due to higher research and development expenses, as well as general and administrative expenses.
Compelling Top-line Results
So, that’s the overall financial situation, which has positive points but also leaves room for improvement.
At the same time, there’s exciting news to report, related to XEN1101. Just recently, Xenon Pharmaceuticals disclosed positive top-line results from a Phase 2b X-TOLE clinical trial, which evaluated XEN1101’s clinical efficacy, safety and tolerability.
The result was highly encouraging. Reportedly, XEN1101 demonstrated a statistically significant reduction in focal seizure frequency when compared to a placebo.
As it turned out, the median reduction in monthly focal seizure frequency, with 25-milligram doses of XEN1101, was 52.8%, compared to 18.2% with the placebo. “With these compelling topline results, we are eager to work with the FDA to plan for an expedited development path moving forward,” commented Xenon Chief Medical Officer Christopher Kenney.
Hopefully, Xenon will report higher revenues and lower expenses in the next fiscal update, leading to a positive earnings profile. Therefore, XENE stock traders should watch closely for financial updates from the company.
Meanwhile, they can prepare for more breakthroughs in the treatment of seizures as XEN1101 moves forward on the path towards regulatory approval.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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