XENE's Q2 Loss Narrower Than Expected, Sales Nil, Pipeline in Focus

XENE's Q2 Results in Detail

In the second quarter, research and development (R&D) expenses increased 32.3% year over year to $99.2 million. The uptick was primarily due to increased expenses related to Xenon’s ongoing azetukalner late-stage studies in epilepsy, major depressive disorder (MDD) and bipolar depression (BPD), as well as manufacturing activities supporting the planned regulatory submission. Costs incurred in supporting the early-stage studies of XEN1701 and XEN1120, as well as increased personnel-related costs, also contributed to higher R&D expenses.

General and administrative expenses totaled $23.9 million in the reported quarter, up 24.4% year over year due to higher personnel expenses from a larger workforce and increased professional and consulting fees.

Xenon had cash, cash equivalents and marketable securities worth $1.2 billion as of June 30, 2026 compared with $1.3 billion as of March 31, 2026. Based on its current operating plans, Xenon expects its existing cash position to support operations into 2029.

Year to date, XENE shares have gained 44% compared with the industry’s 4.3% growth.

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XENE's Pipeline Updates

Xenon is advancing azetukalner, its lead investigational therapy, through a late-stage clinical development program for the treatment of focal onset seizures (FOS). The company's phase III epilepsy program includes two similarly designed studies, X-TOLE2 and X-TOLE3.

In March, Xenon announced positive top-line data from the phase III X-TOLE2 study, which met its primary endpoint. The company remains on track to submit a new drug application for azetukalner in FOS in the third quarter of 2026 following a successful pre-NDA meeting with the FDA. If approved, azetukalner would become the only KV7 potassium channel opener available for treating epilepsy.

The identical phase III X-TOLE3 study is currently enrolling patients and is intended to support potential regulatory submissions for azetukalner for FOS in ex-U.S. jurisdictions. Patient enrollment outside of Japan is expected to be completed in 2026. XENE is evaluating azetukalner for primary generalized tonic-clonic seizures in a phase III X-ACKT study, which is currently enrolling patients.

Two of Xenon’s three planned phase III clinical studies, X-NOVA2 and X-NOVA3, evaluating azetukalner in patients with MDD, are currently underway, with top-line data from X-NOVA2 expected in the first half of 2027.

XENE’s first of two phase III clinical studies, X-CEED, evaluating azetukalner in patients with BPD I or II, is also currently ongoing.

Xenon has initiated two separate early-stage studies evaluating XEN1120 and XEN1701 in healthy adult participants, targeting Kv7 and Nav1.7, respectively. Both studies are expected to be completed in the second half of 2026, supporting the initiation of separate phase II proof-of-concept studies in acute pain.

XENE, in collaboration with Neurocrine Biosciences, is currently evaluating NBI-921355, a Nav1.2/1.6 inhibitor, in a phase I study as a potential treatment for certain types of epilepsy. Top-line data is expected in 2027.

XENE's Zacks Rank & Stocks to Consider

Xenon currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the biotech sector are Harmony Biosciences HRMY and Liquidia Corporation LQDA, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the past 60 days, earnings per share estimates for Harmony Biosciences have increased from $3.20 to $3.33 for 2026. Over the same period, estimates for earnings per share increased from $3.64 to $3.92 for 2027. HRMY shares have risen 3.5% year to date.

Harmony Biosciences missed on earnings in three of the trailing four quarters and beat in the remaining one, delivering an average negative surprise of 13.97%.

Over the past 60 days, estimates for Liquidia’s 2026 earnings per share have increased to $3.02 from $2.97. Over the same period, EPS estimates for 2027 have risen to $5.31 from $4.81. LQDA shares have gained 159.3% year to date.

Liquidia’s earnings beat estimates in three of the trailing four quarters and missed in the remaining one, with the average surprise being 54.40%.

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