Xenon Pharmaceuticals Inc. (NASDAQ:XENE) Reports Failed Phase 2 Study

Xenon Pharmaceuticals Inc. (NASDAQ:XENE)

Xenon Pharmaceuticals Inc. (NASDAQ:XENE) is based in Burnaby, British Columbia, Canada. XENE shares are down over 50% on massive volumes. The heavy price action reflects the markets view of the announcement by the company that its double-blind, multi-center, vehicle-controlled, parallel group study failed its Phase 2 clinical study. The announcement came in the form of a mid-stage assessment on the efficacy, safety, and tolerability of Xenon’s lead dermatological drug candidate XEN801.

History

XEN801 is a small molecule inhibitor of SCD1 that was developed to treat moderate to severe acne. Acne forms as a result of hair follicles being blocked – typically caused by the sebaceous glands becoming clogged with excess sebum and dead skin cells. Xenon Pharmaceuticals Inc. (NASDAQ:XENE) believed that SCD1 inhibitors, topically applied, would treat acne at the root cause by reducing sebaceous gland enlargement and reducing sebum production. Estimates put the number of Americans that suffer from the condition between 40 50 million.

XEN801 entered into a Phase 1 clinical trial in 2015. That study was completed in the same year. At that time XEN801 was found to be well-tolerated and safe to use as a result of the data gathered from 48 volunteers. The volunteers were dosed with a 14 or 21 day treatment. Different dose applications were evaluated of the 1% XEN801 drug. At this point, no serious side-effects were observed.

Xenon Pharmaceuticals Inc. (NASDAQ:XENE) then initiated a Phase 2 clinical study on 165 patients. Subjects applied a gel version of XEN801 or a placebo topically to the facial area for 12 weeks. The primary endpoint was the percent change in total lesion count from week 1 to week 12. The secondary endpoint included efficacy assessments of inflammatory and/or non-inflammatory lesion counts.

Phase 2 Mid-Stage Announcement

Results assessed by Xenon Pharmaceuticals Inc. (NASDAQ:XENE) showed no statistically significant difference between the placebo and XEN801 in achieving the primary endpoint. Additionally, results showed no statistical difference between XEN801 and the placebo in achieving its secondary endpoints. XEN801 was well tolerated and exhibited favorable safety characteristics. There were no serious drug-related side effects.

The Numbers

Shares of Xenon Pharmaceuticals Inc. (NASDAQ:XENE) fell over 50% on the news. XENE shares closed Thursday at $9.85. After the news hit the markets on Friday, XENE hit a morning low of $4.30. XENE shares have a 52-week high of $9.95, achieved yesterday, and a 52-week low of $5.65, achieved prior to today’s price action. In the past week, the trading range has been over $5.60. Volumes are exceptionally heavy. XENE shares are normally thinly traded – they average less than 87,000 per day. However today, less than an hour into trading, over 1.5 million XENE shares have traded hands.

3/24/2017
Ticker Symbol XENE
Last Price a/o 10:11 AM EST  $                      4.59
Average Volume                      86,350
Market Cap (mlns)  $                  176.71
Sales (mlns) $1.80
Shares Outstanding (mlns) 17.94
Share Float (mlns) 15.34
Shortable Yes
Optionable No
Inside Ownership 1.10%
Short Float 1.02%
Short Interest Ratio 1.8
Quarterly Return 21.60%
YTD Return 27.92%
Year Return 49.58%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.

Author: Marcus Anderson

Marc has a degree in economics and a MSc. in Finance. Marc worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.

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