Xenon Pharmaceuticals pauses depression drug trials over neuropsychiatric side effects

Xenon Pharmaceuticals has temporarily paused enrollment in clinical trials evaluating its experimental drug, azetukalner, for major and bipolar depression due to neuropsychiatric side effects, including confusion and rare cases of psychosis. Despite a subsequent 30% drop in Xenon's stock price, the company is proceeding with its FDA approval application for azetukalner to treat focal seizures, as analysts project the drug could still reach $1.7 billion in annual epilepsy sales.

Azetukalner depression trial pause

• ▪Xenon Pharmaceuticals temporarily paused enrollment of new patients in clinical trials evaluating its experimental drug, azetukalner, for major depressive disorder and bipolar depression
• ▪Patients already enrolled in Xenon Pharmaceuticals' clinical trials evaluating azetukalner for major and bipolar depression will continue treatment, with the ongoing X-NOVA2 trial in major depressive disorder expected to produce data in early 2027
• ▪Xenon Pharmaceuticals is evaluating potential dosing modifications to mitigate neuropsychiatric adverse events and improve the tolerability of azetukalner in depression trials
• ▪The pause in clinical trial enrollment for the experimental drug azetukalner was a voluntary precaution taken by Xenon Pharmaceuticals after consulting with its safety monitoring board

Neuropsychiatric adverse events profile

• ▪The neuropsychiatric adverse events observed in Xenon Pharmaceuticals' azetukalner depression trials, including confusion and rare cases of psychosis, did not appear in an earlier Phase 2 depression study of azetukalner, which Xenon Pharmaceuticals attributed to the larger patient population in the Phase 3 study
• ▪The side effects observed in Xenon Pharmaceuticals' azetukalner psychiatry studies included confusion, speech difficulties, motor coordination issues, and a small number of cases classified as psychosis
• ▪Xenon Pharmaceuticals Chief Medical Officer Christopher Kenney stated that the rate of psychosis in the clinical trials evaluating azetukalner for major and bipolar depression was hovering around 1% or under, and the events were short in duration and reversible

Stock price decline

• ▪TD Cowen analyst Joseph Thome described the sell-off of Xenon Pharmaceuticals stock as overdone, noting that shares sank to levels last seen before the company's positive azetukalner epilepsy data for focal seizures was released
• ▪Following the announcement of Xenon Pharmaceuticals' pause in enrollment for clinical trials evaluating azetukalner for depression, Xenon Pharmaceuticals shares fell by as much as 30% on September 18, 2026, after dropping over 25% in after-hours trading

Epilepsy FDA review status

• ▪Xenon Pharmaceuticals executives and Wall Street analysts expressed confidence in the FDA review of azetukalner for epilepsy, noting that other approved epilepsy drugs carry more serious side effects
• ▪Xenon Pharmaceuticals' pause in enrollment for clinical trials evaluating azetukalner for depression does not impact its epilepsy program, for which the company has submitted an application to the U.S. Food and Drug Administration seeking approval of azetukalner to treat focal seizures

Analyst sales projections

• ▪Prior to Xenon Pharmaceuticals' pause in enrollment for clinical trials evaluating azetukalner for depression, the company's valuation had grown to over $5 billion, making it a top acquisition candidate according to some Wall Street analysts
• ▪RBC Capital Markets analyst Brian Abrahams estimated that azetukalner could achieve $1.7 billion in annual sales for treating epilepsy and advised buying Xenon Pharmaceuticals stock on share price weakness