Xenon CEO Ian Mortimer in a lab in Burnaby, B.C, in 2023. After seeing positive results for its epilepsy treatment, Mr. Mortimer says the company will seek approval to market the drug in the U.S. this year.Tijana Martin/The Globe and Mail
Xenon Pharmaceuticals Inc. XENE-Q stock soared Monday after the Canadian drug developer reported better-than-expected results from a late-stage human trial for its epilepsy treatment.
Burnaby, B.C.-based Xenon said it will apply with the U.S. Food and Drug Administration later this year to take the drug to market south of the border. If approved it would be the 15th therapy developed in B.C. to win regulatory approval, according to the industry association Life Sciences BC. The company did not announce on Monday when it would apply for approval in other markets, including Canada.
“This is truly an incredible moment for all of us at Xenon, but more importantly, this is an incredible moment of hope for people living with epilepsy,” chief executive officer Ian Mortimer said on a conference call with analysts.
Xenon stock closed at US$62.76 per share on the Nasdaq Stock Exchange, up 49.6 per cent. The company, already Canada’s most valuable drug developer, closed the day with a US$5-billion market capitalization.
Xenon reported that patients taking a 25 mg daily dose of its drug, called azetukalner, over a one-week trial experienced a 53.2-per-cent median reduction in seizures. That was 42.7 percentage points better than those who took placebos in the 380-person trial.
The numbers improved on Xenon’s last human trial, reported in 2021, which saw patient seizures on the 25 mg pill drop by 52.8 per cent over eight weeks, or 34.6 percentage points more than those on placebo. Those who took a 15 mg pill in the new study experienced a median 34.5-per-cent reduction in seizures.
Analysts had expected Xenon to deliver positive results for its drug, which modulates the flow of potassium ions through electrical channels in the nervous system. That tempers excessive brain activity that causes epileptic seizures for people with the neurological condition, including about three million American adults and more than 300,000 Canadians. Other epilepsy drugs typically focus on sodium channels. But the trial results surpassed their expectations.
Cantor Fitzgerald analyst Josh Schimmer said in a research note the results were “the strongest placebo adjusted data” from a late-stage, or phase III, efficacy trial of a drug focused on the most common form of epilepsy, known as focal onset seizures. That “positions azetukalner for stronger commercial performance than we originally modeled.”
Jefferies analyst Andrew Tsai said in a note the drug “has the attributes of a top-selling epilepsy pill” and upped his estimate of peak annual sales from azetukalner to US$2-billion. Mr. Tsai also raised his target price on the stock, to US$100 a share from US$65.
Analysts and doctors have strong hopes for the drug, which doesn’t require gradual increases in dosing over several weeks, as other epilepsy treatments do. Patients take the drug at night, to minimize the impact of side effects, which can include dizziness, headaches and sleepiness. Xenon is running additional studies to see if azetukalner alleviates mood disorders and pain.
Patients in the latest study were among the most treatment-resistant; most took three anti-seizure drugs already. Among those from the earlier trial who kept taking the drug, more than half experienced a 90-per-cent-plus reduction in the number of seizures over the next 28 months, and 11 per cent had no seizures at all.
Xenon, which has raised US$1.4-billion to date, will need additional funding for its commercial launch. After markets closed Monday the company said it had commenced an underwritten public offering to sell US$500-million worth of common shares. Xenon could also attract takeover interest from Big Pharma, Mr. Tsai said.
Xenon, founded in 1996, started in gene discovery, later shifting focus to developing pain drugs. It went public in 2014 and the stock plummeted three years later after partner programs with drug giants failed or fizzled out.
In 2017 Xenon acquired rights to azetukalner, which had been developed by Valeant Pharmaceuticals International (now called Bausch Health Cos. Inc.). That drug improved on a sister epilepsy treatment developed by Valeant that had reduced seizures but had to be taken three times a day, required a gradual dose strength buildup and turned patients’ skin blue, and sold poorly.
After Valeant encountered market difficulties, a former company researcher, Christopher Crean, set out to rescue azetukalner, licensing the molecule from his employer and then striking a deal with Xenon. The B.C. company’s full cost to buy all rights to the drug will total just US$15-million if it gets to market.