Xenon Pharmaceuticals Inc (NASDAQ: XENE) stock has reached new heights after announcing promising trial results for its drug XEN1101 in the treatment for adult patients with focal epilepsy. The promising data rang bells on Wallstreet, with investors sending the stock 101.92% higher. Investors may be wondering if the stock is now overvalued with such a large jump in the share price. However, analysts on Wallstreet see the stock moving much higher with Jefferies analyst Andrew Tsai rating the firms valuation to $50 a share.
What does Xenon’s trial data suggest?
The phase 2b trial demonstrated a statistically significant and dose-dependent reduction in focal seizure frequency when compared to placebo. Local seizures are the most common type of seizure experienced by people with epilepsy and XEN1101 aims to reduce the frequency of these seizures. The median reduction in monthly seizure frequency was 52.8% in the XEN1101 25 mg group, 46.4% in the XEN1101 20 mg group and 33.2% in the XEN1101 10 mg group. This is in comparison to 18.2% median reduction in the placebo group. The company noted in a press release that because of the compelling topline results, they will be working with the FDA to plan for an expedited development path moving forward.
“The X-TOLE results generated from this large, multicenter, controlled trial are truly exciting because they demonstrate impressive efficacy of XEN1101 for adult patients with focal epilepsy, including those with seizures that are deemed difficult to treat.”Jacqueline A. French, MD, Professor in the Department of Neurology at NYU
Jeffries analyst sets $50 price target for Xene Stock
The promising trial results caught the attention of Jefferies analyst Andrew Tsai. The analyst raised the firm’s price target on Xenon Pharmaceuticals to $50 a share. Tsai noted that XEN1101 could net between $500 Million to $1 Billion in sales and has the potential to become a top selling treatment for epilepsy according to thefly. For comparison, Xenon generated $6.5 million in revenue in the first half of the calendar year. These projected sales figures highlight the potential dividends the company can generate if they can successfully commercialise XEN1101.
The analysts price target currently represents a 61.2% upside from the current XENE stock trading price. However, Andrew Tsai was not the only analyst who sees the Phase 2b data as a “home run” scenario.
Guggenheim analyst sees revenues potentially exceeding $1.5 Billion
Yesterday, Guggenheim analyst Yatin Suneja raised their valuation on Xene stock to $45 a share. The analyst noted that the results beat Wallstreets expectations in regards to baseline reductions. Suneja raised the firms probability of success for the XEN1101 program to 85% from 55% and increased sales estimates to $1.5B according to TheFly. The firms price target implies a 45% upside from the current XENE stock price.
The Bottom Line – XENE stock
In summary, the positive trial data has caught the attention from Wallstreet with increased valuations across the board. The data highlighted from the trials was both statistically significant and yielded a dose dependant reduction further highlighting XEN1101’s efficacy. With an average price target exceeding $40, it is clear that Wallstreet remains bullish on the mid-term outlook of Xene stock.
In saying this, we can expect higher levels of volatility after the huge surge we saw on Monday’s trading session. Generally speaking, as companies get closer to commercialisation of a certain treatment the stakes can become greater for shareholders. We have seen this occur with multiple companies including Cassava Sciences and Biogen. Xenon Pharmaceuticals is also issuing $250 Million in common stock after its rally, which is likely to dilute the shares currently outstanding.
The information above is presented as factual information and is not financial advice nor does it constitute a recommendation. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
Subscribe to our Youtube channel here.
We are now official partners with Tradingview
Firstly, Tradingview is a social network of 30 million traders and investors using the world’s best charts and analysis tools to spot opportunity in global markets. You can sign up to Tradingview by clicking the banner below. Tradingview allows you to follow your favorite assets, find trading ideas, chat with others, spot trends, and place trades directly on our charts.
Looking to start trading in Australia or the UK?
Do you live in Australia or the United Kingdom and looking to invest in the US market? Good news! We’ve partnered with Stake. Trade 4,500+ US stocks and ETFs with $0 brokerage and no fx fees per trade. Use our code “YIG” to receive a free stock when funding your new account.
In addition, Stake is one of the leading US trading platforms for Australian and UK investors. Click hereto start trading US stocks with a streamline trading experience. Lastly, for more information on our referral program and how it works click here.