Is Xenon Pharmaceuticals, Inc. overvalued or undervalued?

As of 12 May 2025, the valuation grade for Xenon Pharmaceuticals, Inc. has moved from does not qualify to risky, indicating increased concerns regarding its financial health. The company appears to be overvalued given its high Price to Book Value of 3.45 and negative EV to EBITDA of -6.47, alongside a troubling ROE of -35.72%. Comparatively, Madrigal Pharmaceuticals, Inc. also carries a risky valuation with a P/E of -35.88, while Cytokinetics, Inc. shares a similar risky status with a P/E of -10.74.
In terms of stock performance, Xenon Pharmaceuticals has underperformed relative to the S&P 500 over the past year, with a return of -5.81% compared to the index's 17.14%. This trend reinforces the notion that the stock may not be a favorable investment at its current valuation levels.