Despite a recent Phase II miss, Xenon Pharmaceuticals is forging ahead with its candidate for major depressive disorder, offering 8.4 million common shares for sale.
Pictured: Woman sitting on bed alone/iStock, Farknot_Architect
Despite a mid-stage miss, Xenon Pharmaceuticals is forging ahead with its major depressive disorder program and needs cash to do so. Thursday the Canadian company announced a public offering of its shares for total proceeds of $300 million.
Focused on neurology, Xenon’s XEN1101 is the biotech’s primary asset. The candidate is being tested in two different seizure types, but the major depressive disorder (MDD) market is a far greater opportunity for the company. MDD affects almost 7% of the adult population in the U.S.
Thursday’s announcement comes days after Xenon reported that XEN1101 failed to beat placebo with statistical significance in a Phase II trial for MDD. Yet a clear dose response and clinically meaningful efficacy has the company convinced there’s still a place for the drug. Two endpoints were achieved—statistically significant improvement on the Hamilton Depression Rating Scale and a reduction in anhedonia, the inability to experience pleasure.
Research suggests anhedonia is a core risk factor for suicidal ideation, making it an important symptom of depression to address.
Analysts believe XEN1101 has a chance. Xenon’s stock price has been up around 16% since last Friday. Stifel analyst Paul Matteis said in a note he believes “there’s value to be unlocked for XEN1101 in MDD” and that the drug holds some promise. Analysts noted lack of weight gain and sexual dysfunction side effects as promising, key secondary endpoints.
Xenon’s public offering will include over 8.4 million common shares at $32.50 a piece for the $300 million proceeds. The company’s cash on hand was around $639 million as of September 30, and it anticipates having a sufficient runway to fund them into 2026.
However, MDD can be a tough market to break into. Sage Therapeutics and its partner Biogen experienced a bittersweet moment in August 2023 when their treatment zuranolone was approved by the FDA as the first pill for postpartum depression (PPD) but rejected as a treatment for MDD.
In the CORAL study, zuranolone showed a statistically significant reduction in depressive symptoms for MDD patients after just three days of treatment. Yet the FDA’s complete response letter stated the application did not provide “substantial evidence of effectiveness” and more studies would be required.
A few weeks later, Sage announced a strategic reorganization, downsizing 40% of its workforce to provide more resources for commercial hires to support zuranolones launch into the PPD market. Jeffries analyst Mike Yee said at the time that zuranolone had a more than $1 billion sales opportunity in clinical depression “compared with $250 million to $500 million potential for postpartum depression.”
Kate Goodwin is a freelance life science writer based in Des Moines, Iowa. She can be reached at kate.goodwin@biospace.com and on LinkedIn.
