Xenon Pharmaceuticals (XENE) Just Took A Hit: Here’s Why And What’s Next

128

Xenon Pharmaceuticals Inc. (NASDAQ:XENE) just announced data from a phase 2 study of a drug called TV-45070. The data wasn’t great and the company is taking a bit of a beating in the market as a result. At the session close on Monday, Xenon went for a little over $3.80 a share. By the close on Tuesday, this had dipped to $3 flat – a more than 21% decline during the session and a real hit for the company and its shareholders.

So what happened?

The drug, TV-45070, is a collaboration effort with biopharmaceutical giant and generics drug incumbent Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) and, for shareholders of Xenon, underpins a large portion of the company’s current market capitalization. It was under investigation as a potential therapy for a condition called postherpetic neuralgia (PHN), which is a relatively common complication of shingles, which in turn is caused by the chickenpox (herpes zoster) virus. PHN affects nerve fibers and skin, causing burning pain that lasts long after the rash and blisters of shingles disappear. It’s a nasty condition to have to endure and the current standard of care treatments are limited in that they bring with them various side effects or ineffective based on the fact that this is a viral -induced nerve pain, something not as easily treatable as might be the case with a standard pain management indication.

PHN affects nerve fibers and skin, causing burning pain that lasts long after the rash and blisters of shingles disappear. It’s a nasty condition to have to endure and the current standard of care treatments are limited in that they bring with them various side effects or are ineffective based on the fact that this is a viral-induced nerve pain, something not as easily treatable as might be the case with a standard pain management indication.

TV-45070, which is also called Funapide, is a small molecule sodium channel blocker. These are a common form of pain management drug in the healthcare space, but effective dosing is difficult to manage under certain conditions (especially neuropathic conditions) because of the common onset of unwanted side effects. With TV-45070, Teva and Xenon were attempting to bring a fresh alternative to market that could induce pain relief in this patient population, but could also sidestep the toxicity and tolerability problems associated with current standard of care treatments in the space.

The disappointment derives from the fact that this drug has demonstrated potential clinical benefit across a host of different indications (dental pain, osteoarthritis, neuropathic pain and more) in numerous early-stage trials to date. The assumption was, therefore, that the expansion into PHN shouldn’t be too much of a stretch for an asset that boasts this type of mechanism of action (MOA) and that – as a result – it could be a real winner for a company like Xenon, which has a market capitalization as things stand just $53 million.

Unfortunately for the company and its shareholders, however, this wasn’t the case.

What did the numbers show?

The study was conducted throughout just shy of 50 centers in the US, meaning both Teva and Xenon had a relatively large sample to go at (and in line with this size, a relatively solid representation of the overall US domestic population) and was set up to compare the safety and efficacy of the drug with placebo in this PHN indication.

In total, 300 patients were recruited, and randomized into three arms – one receiving a low dose of the drug, one receiving a higher dose, and a third receiving placebo.

As per the latest data, the drug missed both its primary and a spate of secondary endpoints in the study, with the primary endpoint defined as the change of average daily pain scores from baseline to week four, measured using an 11-point (0-10) numeric rating scale (NRS) and the secondaries including the percentage of patients with greater than 30% and greater than 50% improvement in pain scores, quality of life measurements and adverse events measurements.

Basically, the drug doesn’t work in his indication and while management is yet to put out a definitive forward path for the asset in PHN, it doesn’t look likely that we will see its continuation along this development pathway.

Going forward, then, chances are we will see a near-term continuation of the downside action we are seeing in Xenon as the company shifts to reevaluate its focus, be that with TV-45070 in another indication (which is possible, but looks unlikely as the immediate cause of action) or towards another of its assets in the general pain management space.

An ad to help with our costs