Xenon Pharmaceuticals Plunges 30% After Pausing Azetukalner Enrollment in Phase 3 Depression Trials

Xenon Pharmaceuticals shares fell as much as 30% on Friday, their worst single-day decline since 2017, after the company voluntarily halted new enrollment in its Phase 3 studies of azetukalner in major depressive disorder and bipolar depression following adverse events. The company said the events were consistent with azetukalner's known safety profile but had not appeared in the earlier Phase 2 X-NOVA depression trial, raising concern about the drug's risk profile in psychiatric indications.

The selloff, which began with a roughly 25% drop in after-hours trading Thursday, deepened through the premarket session to around 24% before reaching approximately 30% by midday Friday. The move placed Xenon among the largest premarket and midday losers in the broader market, alongside Netflix and Steel Dynamics.

Wall Street reactions were mixed. Deutsche Bank downgraded XENE to Hold from Buy and set a $46 price target, citing safety concerns. Needham also cut its price target following the trial pause. By contrast, H.C. Wainwright and Stifel both reiterated their Buy ratings, and RBC Capital Markets argued that azetukalner retains its core value in epilepsy. Xenon separately disclosed it has submitted a New Drug Application for azetukalner in focal seizures, keeping the epilepsy opportunity intact even as the psychiatric program faces uncertainty.