Dear Reader,
They declared a ceasefire!
Until they didn’t.
Then Trump said we were about to sign a deal.
Until we started shooting at each other again.
According to one source, Trump has said an Iran deal is “close” 38 times since the war began.
In the time between writing this message and you reading it, who knows whether we’ll be hearing about an imminent deal… or more bombing.
And it doesn’t matter.
This is all a distraction.
Here’s the REAL reason why Trump may NEVER end this war.
To your future,
Addison Wiggin
Founder, Grey Swan Investment Fraternity
Xenon Falls 31% After Psychiatry Trial Pause
Three firms moved their Xenon Pharmaceuticals (XENE) targets in a single session Friday. Deutsche Bank cut to Hold and dropped its target from $90 to $46. RBC Capital maintained Outperform but trimmed from $81 to $70. Needham kept Buy and moved from $78 to $60, stripping every MDD and bipolar projection from its model in the same stroke.
That spread says everything about the debate this stock now carries.
What Actually Happened
Two announcements landed in one press release Thursday evening. The azetukalner NDA for focal seizures was submitted to the FDA on schedule. Simultaneously, Xenon disclosed a voluntary pause on new-patient enrollment across every ongoing psychiatry study, covering the X-NOVA2 and X-NOVA3 MDD programs and the X-CEED bipolar depression program, following an analysis of neuropsychiatric adverse events conducted in consultation with the Data Safety Monitoring Board.
The adverse events included confusion, somnolence, ataxia, and rare cases of psychosis. The company noted the observed events are consistent with the known safety and tolerability profile of azetukalner and its mechanism, but that such adverse events had not previously been seen in the Phase 2 X-NOVA clinical study in MDD. That distinction is the crux of the bear argument: something is appearing in the larger, non-epileptic psychiatric population that the earlier trial did not capture.
The NDA Is Not in Doubt
The NDA submission rests on results from the Phase 2b X-TOLE and Phase 3 X-TOLE2 studies, where azetukalner showed statistically significant reductions in monthly focal-seizure frequency versus placebo. Ongoing epilepsy studies are unaffected by the psychiatry pause. Jefferies analysts put the FDA’s decision date at September 2027.
William Blair described the 42.7% placebo-adjusted improvement in median percent change in monthly seizure frequency from X-TOLE2 as a truly remarkable result in a highly refractory population. The firm wrote that the stock’s reaction is overblown. Wells Fargo’s Benjamin Burnett held his Overweight rating, saying he sees no negative read-through for the focal onset seizures indication from the psychiatric trial pause.
Bull / Base / Bear
- Bull: The FDA accepts the NDA and approves azetukalner in focal seizures by late 2027. Peak FOS sales estimates sit at $1 to $1.5 billion. The psychiatry pause proves temporary, dosing modifications resolve tolerability, and the MDD data reading in Q1 2027 reopens that optionality.
- Base: FDA approval proceeds on schedule, but Needham’s move to strip all MDD and bipolar projections from the model reflects a permanent re-rating of the psychiatric pipeline. XENE trades on epilepsy fundamentals alone, with psychiatry as a far-off call option.
- Bear: Azetukalner’s safety concerns materially impact its psychiatric disorder prospects and introduce regulatory and commercial uncertainties around dosing and market positioning. The psychosis signal, even if manageable in epilepsy patients, complicates FDA labeling discussions and depresses peak sales estimates across all indications.
Technical Overlay
XENE opened Friday at $44.02, against a 12-month range of $35.97 to $72.66. The 50-day moving average sat at $62.70 and the 200-day at $58.07. Friday’s selloff pushed the stock well below both, with shares trading near $39 intraday. The prior 12-month low at $35.97 is now the closest structural support in plain sight.
What to Watch
- FDA acceptance and formal review timeline for the focal-seizure NDA
- X-NOVA2 topline data, expected in Q1 2027, with enrollment concluding at roughly 360 patients
- Whether Xenon’s dosing modification review leads to a protocol amendment that reopens enrollment in the depression programs
- Analyst revisions from firms still carrying psychiatry revenue in their models
Bottom Line
The market sold the whole company Friday. The epilepsy drug that is sitting at the FDA did not change. What changed is the psychiatric pipeline, and the degree to which investors had been paying for it. With a market cap around $3.9 billion, XENE is now priced without psychiatric optionality. Whether that is a floor or a ceiling depends almost entirely on what the FDA does with the focal-seizure application, and what the X-NOVA2 data shows in early 2027.
