Xenon Pharmaceuticals' shares fell 32.2% after the company voluntarily paused new enrolment in its Phase 3 major depressive disorder and bipolar depression studies due to neuropsychiatric adverse events. The decision came on the same day Xenon submitted a New Drug Application to the US FDA for azetukalner in focal seizures. The NDA is supported by two randomised, double-blind, placebo-controlled trials showing statistically significant seizure reduction and a consistent safety profile across more than 1,500 patient-years of exposure. The pause in psychiatry trials does not directly affect the epilepsy NDA or ongoing Phase 3 seizure studies, which remain the main driver of the company's investment narrative.

Xenon downgraded at Deutsche Bank after pause in depression trials. Xenon Pharmaceuticals (XENE) fell 30% to reach its lowest level since November after the company paused enrollment in Phase 3 depression trials for its lead asset, azetukalner, following safety concerns, leading to a downgrade at Deutsche Bank. Analyst David Hoang Fresh Stock Ideas, Every Day Explore diverse investing perspectives with daily analysis from experts across the market.

Xenon downgraded at Deutsche Bank after pause in depression trials. Xenon Pharmaceuticals XENE fell 30% to reach its lowest level since November after the company paused enrollment in Phase 3 depression trials for its lead asset, azetukalner, following safety concerns, leading to a downgrade at Deutsche Bank. Analyst David Hoang downgraded the Canadian biotech to Hold from Buy after the company paused enrollments in multiple late-stage trials for azetukalner in major depressive disorder and bipolar depression in reaction to several neuropsychiatric adverse events, including psychosis. However, Xenon XENE management argued that the decision was a temporary measure taken as a precaution and there won't be an impact on ongoing epilepsy studies.The nature of the events, as well as their severity and frequency, were in line with the known safety and tolerability profile of the drug, the company added. Despite those remarks, Hoang said, "We disagree and believe this impairs the molecule's overall profile as a potential best-in-class drug that would become the go-to, branded antiseizure medication of choice in focal epilepsy." The analyst slashed his price target on XENE to $46 from $90 per share. However, Stifel, Baird, and RBC Capital Markets were among the firms to reaffirm their bullish ratings on the stock. While the surprising decision leads to uncertainty, "we're confident there's minimal readthrough to FOS," Stifel analyst Paul Matteis wrote with a Buy rating, according to Bloomberg. RBC Capital Markets analyst Brian Abrahams reiterated his Outperform rating yet trimmed his price target to $70 from $81, noting, "We believe the core value remains epilepsy and do not see any major risk to the filing timelines or commercial launch." Baird analyst Brian Skorney also sounded cautious, lowering his price target to $90 from $97 despite an outperforming rating. "We still think the MDD study is adequately powered into the 1Q topline, and we see low-rate psychosis as an AE neurologists are equipped to manage," Skorney added.Disclaimer Content provided by Seeking Alpha is intended for information purposes only, and that Seeking Alpha does not offer any personalist investment advice and is not a licensed securities dealer, broker, US investment adviser or investment bank.