Xenon Pharma shares moved higher on Monday despite the Vancouver, British Columbia neurology-focused biopharmaceutical company reporting that its investigational therapeutic for major depressive disorder (MDD) failed to meet the primary endpoint of a Phase 2 study.
The study evaluated the efficacy, safety and tolerability of 10 mg and 20 mg of XEN1101 in patients with MDD.
The primary endpoint was a change in the Montgomery-Åsberg Depression Rating Scale (MADRS) at week 6. The company said its drug resulted in a clinically meaningful but not statistically significant reduction.
Analysts at Jefferies highlighted several positives from the study results as XEN1101 (novel Kv7 pill) shows promise for MDD.
“Although the XEN1101 Phase 2 MDD data did not meet the Street’s expectations/criteria for a statistically significant result, the study was fundamentally 80% powered to show a large four-point MADRS delta and there is fundamentally a strong three-point signal,” they wrote in a note to clients.
“The drug arm showed a negative 16.9 MADRS reduction (a meaningful effect) while placebo arm benefited by negative 13.9 points.”
The analysts noted that the bar for success for the trial was fairly high with the drug needed to hit statistical significance, essentially a four-point delta on efficacy versus a fundamental two-point hurdle, and show no surprise safety adverse events, a scenario they felt was 40% to 50% likely.
“We now learn XEN1101 does show good efficacy and clean safety data in MDD, enabling management to advance the novel Kv7 forward rather than introduce an entirely new Kv7 for solely MDD,” they wrote.
If the drug is advanced into a Phase 3 trial, the analysts wrote that a key question is how to control for a placebo response and potentially up the dose to 25mg, given the good safety results seen with 10mg and 20mg.
The analysts believe the XENE story remains rooted in XEN1101 for epilepsy, which they forecast could become an eventual $1 billion blockbuster pill for the indication. In depression, it also presents a $1 billion-plus opportunity, they wrote.
They repeated their ‘Buy’ on the stock and US$60 price target. Xenon Pharma shares traded up 15.2% at US$33.36 at noon on Monday.
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