Xenon's AZK Approval Path Unlikely to Be Hurt by Safety Issues, RBC Says

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Xenon Pharmaceuticals' (XENE) safety data has raised investor concerns about a potential Food and Drug Administration warning for azetukalner, or AZK, though approval appears largely unaffected, RBC Capital Markets said Thursday in a report.

Recent updates from the company's psychiatry program have raised investor concerns that neuropsychological adverse events may lead the FDA to add a warning, potentially even a boxed warning, to AZK's focal-onset seizures label, RBC said. Investors are also concerned that this could hurt AZK's commercial uptake and weigh on the stock, the report said.

Based on historical precedent, AZK's data to date, and recent FDA feedback, RBC said it doesn't believe AZK is likely to receive a molecule-specific boxed warning, and that approval or commercial uptake isn't facing major risk.

"We continue to see $1.5 billion focal-onset seizures potential, justifying a higher valuation, and while acknowledging it may take time for investors to be reassured, view recent weakness as creating an opportune entry point," the report said.

RBC has an outperform rating on Xenon stock with a $70 price target.

Price: 39.25, Change: +2.06, Percent Change: +5.53

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