Xenon Pharmaceuticals - Q3 2023

Transcript

Operator (participant)

Hello, thank you for standing by, and welcome to Xenon Pharmaceuticals Incorporated third quarter 2023 earnings conference call. I would now like to turn the call over to Sherry Aulin, our CFO. You may now begin the conference.

Sherry Aulin (CFO)

Thank you. Good afternoon, everyone. Thank you for joining us on our call and webcast to discuss Xenon's third quarter 2023 financial and operating results. Joining me are Ian Mortimer, Xenon's President and Chief Executive Officer, Dr. Chris Kenney, Xenon's Chief Medical Officer, and Dr. Chris von Seggern, Xenon's Chief Commercial Officer. Ian will open today's call with a summary of our progress. Chris Kenney will provide an overview of our ongoing XEN1101 clinical programs, and Chris von Seggern will summarize key findings from our market research around the potential of eleven oh one in major depressive disorder or MDD treatment landscape. I will summarize our financial results, progress within our partnered programs, and anticipated company milestone events before opening the call to your questions.

Please be advised that during this call, we will make a number of statements that are forward-looking, including statements regarding the timing of and potential results from our and our collaborators' clinical trials, the potential efficacy, safety profile, future development plans, addressable market, regulatory success and commercial potential of our and our partners' product candidates, the efficacy of our clinical trial designs, our abilities to successfully develop and achieve milestones in our XEN1101 and other development programs, the timing and results of our interactions with regulators, our ability to successfully develop and obtain regulatory approval of XEN1101 and our other product candidates, anticipated enrollment in our clinical trials and the timing thereof, and our expectation that we will have sufficient cash to fund operations into 2026.

Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the risks and uncertainties described from time to time in our SEC filings. Our results may differ materially from those projected on today's call. We undertake no obligation to publicly update any forward-looking statement. Today's press release summarizing Xenon's third quarter financial results and the accompanying report on Form 10-Q will be made available under the Investor section of our website at www.xenon-pharma.com and filed with the SEC and on SEDAR. Now, I'd like to turn the call over to Ian.

Ian Mortimer (President and CEO)

Thanks, Sherry, and good afternoon, everyone, and thanks for joining our call today. I'm excited to share with you the progress that we have made this past quarter across our neurology pipeline. To begin, we remain confident in our ability to execute on our ambitious XEN1101 phase 3 program, and this includes our X-TOLE2 and X-TOLE3 clinical trials in patients with focal onset seizures or FOS, and our X-ACKT clinical trial in patients with primary generalized tonic-clonic seizures, or PGTCS. We believe our experience with our phase 2b X-TOLE study, which was similar in design to our ongoing X-TOLE2 and X-TOLE3 trials, provides us with a solid foundation of operational experience and strong existing relationships with leading clinical investigators in the epilepsy space.

As a reminder, we aligned with FDA on key elements of our phase 3 program, including plans to submit an NDA upon the successful completion of X-TOLE2, our first XEN1101 phase 3 clinical trial, along with the existing data package from our phase 2b X-TOLE clinical trial and additional safety data from other clinical trials to meet regulatory requirements. In X-TOLE, we screened patients over a period of 26 months, from the first quarter of 2019 through the first quarter of 2021. In X-TOLE2, we initiated our first clinical site late last year, with our first patient being randomized in Q1 of this year. We expect patient enrollment to complete in the second half of 2024. This would be in line or faster than X-TOLE based on our current assumptions and expectations. As a reminder, X-TOLE2 will recruit more patients than X-TOLE.

So overall, we are pleased with the progress our team has made so far this year. In addition to ongoing execution in our phase 3 epilepsy program, we also continue to showcase XEN1101 and connect with leading epileptologists and neurologists, including at the 35th International Epilepsy Congress, or IEC, that took place in Dublin in early September. We presented data from the ongoing open-label extension study from our phase 2b X-TOLE trial, showing the long-term efficacy of XEN1101, as demonstrated by patients experiencing continued seizure reduction during the OLE and extended periods of seizure freedom. This is translating into overall improvements in patients' quality of life. Chris Kenney will provide some more details around the significance of these findings later in the call today.

We are also pleased to report that the peer-reviewed results from our phase 2b X-TOLE study of XEN1101 in adults with focal epilepsy were recently published in the prestigious JAMA Neurology. Turning now to our program in major depressive disorder, we remain on track to see top-line results from our XEN1101 phase 2 X-NOVA study in late November to mid-December. Given the high unmet need in MDD and the fact that depression is the most common comorbidity in epilepsy, we are keenly interested in these data. In September, we hosted a well-received webinar with leading MDD clinicians, Dr. James Murrough and Dr. Sanjay Mathew, who provided their commentary on the mechanistic rationale supporting potassium channel modulation as a potential treatment for MDD...

Before turning the call over to Chris Kenney, I would also like to remind everyone that we have planned for a significant presence at the Annual American Epilepsy Society Meeting, or AES, next month, with multiple posters and presentations alongside our booth and scientific exhibits. For those of you who are planning to attend, we look forward to connecting with you in Orlando next month. I'll now pass the call over to Chris. Chris?

Chris Kenney (Chief Medical Officer)

Thanks a lot, Ian. Let me begin by echoing Ian's acknowledgment of the publication of the phase 2b X-TOLE data in JAMA Neurology. The compelling efficacy and safety data from this clinical trial supported further clinical development of XEN1101 in epilepsy and the ambitious phase 3 program that we're pursuing today. We also continue to gather data from our ongoing X-TOLE open-label extension study, with a cohort of patients now on XEN1101 for more than four years. To date, we have amassed several hundreds of patient years of safety and efficacy data, further supporting XEN1101's compelling profile and differentiating from other molecules in development for epilepsy. We look forward to presenting additional long-term data from the X-TOLE open-label extension at the American Epilepsy Society next month.

As noted by Ian, we recently hosted posters and presentations at the International Epilepsy Congress in Dublin that included interim results from the X-TOLE open-label extension study. Newly compiled interim data focused on quality of life measures, as assessed using a validated tool called the Quality of Life in Epilepsy Inventory-31 in the overall open-label extension group, as well as a subgroup that was seizure-free for at least 12 consecutive months at the time of the interim data analysis. Clinically important improvements in the Quality-31 subscales of seizure worry, social functioning, and medication effects were seen across all patients, with even greater improvements in the seizure-free group, which saw clinically important improvements in all quality of life subscales assessed by the Quality-31.

As a clinician, it is encouraging to see these quality of life data, which are consistent with the compelling clinical results generated to date and contribute further to the growing evidence that support the promise of XEN1101 as a novel, differentiated potential treatment for patients with epilepsy. Turning to our work in major depressive disorder, as noted by Ian, we remain on track to report X-NOVA top-line results in late November to mid-December. While our original trial design planned for 150 subjects, with 50 subjects per arm of 10 milligrams XEN1101, 20 milligrams XEN1101, or placebo. Based on patient randomization rates, the X-NOVA top-line results will include data from more than 160 patients.

As a reminder, within the top-line results, we expect to report out on the primary endpoint, which is to assess the efficacy of 10 milligrams and 20 milligrams of XEN1101 compared to placebo on improvement of depressive symptoms using the MADRS score change from baseline to week six. We also intend to report on the secondary objective, which is to assess the efficacy of 10 milligrams and 20 milligram doses of XEN1101 compared to placebo on improvement of anhedonia symptoms using the SHAPS score changed from baseline to week six. In addition, we will provide data on the overall safety and tolerability seen with XEN1101 in these patients diagnosed with MDD. With that summary of our near-term data announcement, I'd like to turn the call over to Chris von Seggern, who will share some of the primary market research conducted by Xenon in support of our MDD program. Chris?

Chris Von Seggern (Chief Commercial Officer)

Thanks, Chris. I'm pleased to share information from our market research efforts that have helped us better understand the drivers of clinical decision-making, the unmet medical need in MDD, and key attributes desired by clinicians in future treatments. Our research efforts involved U.S. key opinion leaders and high-volume prescribing psychiatrists, with the intended goal of understanding how XEN1101 would fit into a future treatment paradigm. We tested the potential product profile consistent with the adverse event profile seen in X-TOLE to understand physicians' perspectives pertaining to various product attributes, including efficacy, tolerability, mechanism of action, and ease-of-use attributes. Given that antidepressant medications are generally perceived as having non-differentiated efficacy, we learned that there are several other key unmet needs that create an opportunity for future products in the MDD space. First and foremost, physicians are interested in new agents with novel mechanisms of action.

Given the heterogeneity of depression, products with novel mechanisms of action could be used in patients who do not respond initially to generic therapies. While the first and second-line therapies of choice, SSRIs and SNRIs, were seen to offer reasonable efficacy, certain safety liabilities were identified as a concern for many patients. Physicians consistently pointed out challenges with common adverse events, such as sexual dysfunction and significant weight gain, when treating patients with MDD. In testing the adverse event profile of XEN1101 seen in X-TOLE, we gathered feedback that CNS adverse events, such as dizziness, would be acceptable at levels observed in X-TOLE. We also heard interest from physicians about the potential for products that can deliver more rapid relief of symptoms, given the delayed therapeutic response with the current standard of care.

Because currently approved therapies do not address anhedonia, which represents a common comorbidity of depression, this was another dimension of interest. Given that there is preclinical support for the Kv7 mechanism to play a role in addressing anhedonia, the unique mechanism of action of XEN1101 could be viewed as an important differentiator in the eyes of these prescribing physicians. Finally, the ease of use attributes identified in our epilepsy market research, such as once daily dosing with food and no titration, are also important to psychiatrists. In summary, we believe that if approved, XEN1101 could play a significant role within the MDD treatment landscape.

Its novel Kv7 mechanism of action, coupled with a differentiated adverse event profile that lacks the same liabilities as other MDD therapeutics, such as sexual dysfunction or significant weight gain, ease-of-use attributes and the potential to address anhedonia, results in a compelling product profile. Importantly, if XEN1101 shows efficacy in MDD, this could be a striking differentiator in epilepsy, given that certain anti-seizure medications are associated with unwanted mood symptoms, and depression is a common comorbidity in epilepsy patients. I would now like to turn the call over to Sherry, who will give us a brief update on our partnered program with Neurocrine before summarizing our third quarter financial results and upcoming milestones. Sherry?

Sherry Aulin (CFO)

Thanks very much, Chris. Beginning with our partnered programs, our collaborators at Neurocrine are conducting two separate phase 2 clinical trials evaluating NBI-921352. One study is focused on adult patients with focal onset seizures, and the other study is examining the use of NBI-921352 in patients with SCN8A-related epilepsy. Notably, Neurocrine has guided that data from its adult focal study are anticipated to be released later this month. As a reminder, NBI-921352 is a highly selective inhibitor of a sodium channel called Nav1.6, which we discovered at Xenon and licensed to Neurocrine, and we're excited to have this hypothesis of selective sodium channel inhibition be tested. We look forward to working with Neurocrine on this upcoming data release and the next steps in the program.

I'll now touch on some highlights from the financial statements and would refer you to our news release and 10-Q report for further details. Cash and cash equivalents in marketable securities were $639.1 million as of September 30, 2023, compared to $720.8 million as of December 31, 2022. Based on current operating plans, including the completion of the XEN1101 phase 3 epilepsy studies, we anticipate having sufficient cash to fund operations into 2026. So looking ahead to some important milestone events for Xenon, we expect two important clinical data readouts in the near term. First, our top line X-NOVA MDD results are anticipated in late November to mid-December. We also expect data from the adult focal onset study conducted by our partner, Neurocrine, in November.

We look forward to presenting longer-term X-TOLE open-label extension data, including rates of seizure reduction and seizure freedom at the upcoming AES meeting in December. Importantly, we continue to make progress on advancing our XEN1101 phase 3 epilepsy program, including our X-TOLE2 and X-TOLE3 clinical trials in focal onset seizures and our EXACT clinical trials in PGTCS, with patient enrollment in X-TOLE2 expected to complete in the second half of 2024. Our team believes we can make a difference in the lives of patients living with epilepsy and other neurological disorders. We remain focused on executing our clinical development plans and look forward to our near-term milestones and reporting on our progress in the months ahead. I'll now ask the operator to open the line for any questions. Operator?

Operator (participant)

Thank you. At this time, I'd like to remind everyone that in order to ask a question, please press star, then the number 1 on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. That being said, our first question comes from the line of Paul Matteis from Stifel. The line is open.

Paul Matteis (Managing Director, Head of Biotech Research)

Hey, thank you for taking my questions and congrats on the progress. I had two questions, if you don't mind. One on X-TOLE2. Ian, thanks for the color on timing and congrats on the execution. Can you just give some clarity on, once you get to full enrollment, what would be the timing to top-line data? And then second, I had a question for Chris, or really the broader team on X-NOVA, and I thought some of the commentary, Chris, you mentioned on an acceptable adverse event profile that clinicians was pretty interesting, especially related to CNS side effects. Ahead of these data, how would you draw that line as it relates to a dizziness rate or discontinuations due to AEs, where the profile still remains commercially competitive versus a profile where you think it actually might be more problematic in this population?

Thank you.

Chris Von Seggern (Chief Commercial Officer)

Thanks, Paul. Yeah, I'll tackle the first. On the second one, yeah, maybe Chris, one second, you can just start and just, I know we did it in the prepared remarks, but just ensuring that we're all kind of aligned on what we think about in terms of the AE profile, and then Chris Kenney provide perspective on what's acceptable there, as we think about a differentiated AE profile. So in terms of X-TOLE 2, Paul, we've guided today that we think patient enrollment will be completed in the second half of next year. So, when the last patient gets screened into the program, there's a two-month baseline period, and so we need to count the number of patients, or the patients need to count their number... Sorry.

Patients need to count their number of seizures for a baseline number before those patients are randomized, and then it's a 3-month double-blind period. So that's 5 in total, and then there's some follow-up before we can be in a position to unblind data and provide top-line results.

Ian Mortimer (President and CEO)

... So it's kind of in that 6-8-month range, from last patient enrolled to top-line data, again, just depending on the timing of follow-up and database lock and data analysis, but in that range. So hopefully that's helpful. And then, Chris, over to you on the AE profile.

Chris Von Seggern (Chief Commercial Officer)

Yeah, happy to address the AE profile. So, as we indicated in the prepared remarks, what we've done from a profile testing with US prescribers is present them with an AE profile that's consistent with what we've seen coming from X-TOLE, with both the 10-milligram profile and the 20-milligram profile, across the the dimension of AEs that were common from the epilepsy study. So that specific profile in the context of offering efficacy that is, that is, you know, consistent with what we've seen with other products in the space, and then the overarching profile of XEN1101 in terms of once-daily dosing, the ease of use attributes that we mentioned in epilepsy as well. So that's specifically what's been tested.

What we've heard very clearly from physicians is that there's a role for a product that looks like the XEN1101 profile in the future treatment paradigm of MDD, assuming that the product gets approved. There's an appreciation for every product has a risk-benefit that's different, and the lack of very concerning AEs that are seen with SSRIs and SNRIs, specifically sexual dysfunction and ... was viewed to be compelling, from a clinician's point of view, as a potential driver for utilization.

Chris Kenney (Chief Medical Officer)

Yeah, I'll just add a little bit. I think I'd really like to kinda underscore the phrase that Chris just used, risk-benefit, because I understand the question in the context of, you know, the safety and what's acceptable from an adverse event perspective, but the totality of that safety data will be relevant, right? So whatever your sort of your dizziness is, whatever that rate ends up being, if you're not really causing serious—any serious sexual side effects, that's an upside. Also, if you're not having any serious safety issues like, DRESS or, you know, serious rash or anything like that, I think that also puts the safety signal into context. And then, of course, I mean, the question is focused on safety, which makes sense.

I get it, but really, it needs to be taken in the context of the overall risk-benefit of the drug. Because, you know, you think back to the ezogabine controlled trial with a separation of 7.9 points between active and placebo. If you're seeing that sort of separation, then you're, you know, what you're willing to sort of accept in terms of adverse events goes up substantially compared to something where there's just a 2-point separation between active and placebo.

Chris Von Seggern (Chief Commercial Officer)

Fair enough. Thanks very much.

Chris Kenney (Chief Medical Officer)

Thanks.

Operator (participant)

Thank you. Our next question comes from the line of Brian Abrams from RBC Capital Markets. Your line is open.

Brian Abrahams (Managing Director, Co-Head of Biotechnology Research)

Hi, good afternoon, and thanks for taking my question. Congrats on the continued progress. On the efficacy side for MDD, now that you've done the market research and we're getting closer to data, could you talk a little bit more about the scenarios for both MADRS and SHAPS that might prompt you to explore a registrational program focused on MDD, to focus more on anhedonia, or to focus more on building out the mood signal in the epilepsy indication?

And then just secondarily, you know, since you gave the timeline update on X-TOLE2, can you just clarify, I guess, how far behind X-TOLE3 is timeline-wise, and how much of a rate limiter that study is for future filing, or could those safety data just be submitted as a safety update during the review? Thanks.

Ian Mortimer (President and CEO)

Thanks, Brian. Yeah, I'll, I'll tackle these, and then if anyone has anything to add on, on our side, please jump in. Yeah, on. You know, we've kind of really talked about the different outcomes in MDD as there's potentially multiple paths forward, right? Obviously, if we don't see separation and activity, then I think that's clear. And then the two paths in terms of seeing activity, I think if we see a separation and we believe you know that, that we are seeing an antidepressive effect, but we believe that there's still risk in terms of a registration program, then I think that's a good opportunity for us to continue to differentiate XEN1101 in the epilepsy space.

We didn't focus on it on our remarks today, but I think everybody knows, and I'll remind everyone on the call that not only do we have very compelling efficacy in epilepsy, but with a novel mechanism, QD, no titration, and we're seeing early onset to efficacy at week 1, are all things that we think is a very compelling product profile in epilepsy. If we can add mood to that in terms of medical communication and education, I think that could be even stronger. That's obviously an option. Then, although we're not going to put specific numbers around it, and I think risk-benefit that we just spoke about in the previous question, I think is important.

If we think that the risk-benefit overall is compelling in depression, then we are comfortable moving ahead with registration work, in the primary indication of major depressive disorder. So there has to really be a clear bar there that we believe that we can replicate the data in larger studies in phase 3. In terms of your second question on X-TOLE2 and then X-TOLE3. So, X-TOLE2 is on the critical path to us filing an NDA, so it's not X-TOLE2 or EXACT. Obviously, any patient that goes through X-TOLE2, X-TOLE3, or EXACT can go into open label extension, and we can use the safety data from those other studies as part of the requirements in terms of the overall safety database.

But we're really focused on X-TOLE2 on the critical path to filing, because as we discussed with FDA at our end of phase 2 meeting, we'll be filing on the X-TOLE2 data, combined with the X-TOLE data that we've obviously previously published and we've shared with FDA as well. So, at some point in the future, we'll give guidance on X-TOLE3 and EXACT, but to answer your specific question, not on the critical path in terms of registration and filings.

Andrew Tsai (SVP, Equity Research Analyst)

That's really helpful clarity. Thanks, Ian.

Ian Mortimer (President and CEO)

Yep.

Operator (participant)

Thank you. Again, just a reminder, if you'd like to ask a question, please press star one so that you may join the queue. The next question comes from the line of Tess Romero from J.P. Morgan. Your line is open.

Tessa T. Romero (Senior Analyst, SMID Cap Biotechnology Equity Research)

Good afternoon, guys. Thank you for taking our questions. So with enrollment expected to complete in the second half of next year in X-TOLE2, what are the key levers to being on the sooner versus the later end of that enrollment guidance? And it was a little bit alluded to in the prior question, but what is the latest thinking on the cadence of the pivotal datasets for X-TOLE2, X-TOLE3, and EXACT? Should we expect EXACT before X-TOLE3, or how should we be thinking about that? Thank you.

Ian Mortimer (President and CEO)

Thanks, Tess. I'll start, Chris Kenney, provide your perspective as well. You know, Tess, I don't think there's any, from my perspective, specific lever, to pull, to, for, for patient enrollment to be completed earlier in the second half of 2024 versus later in the second half of 2024. You know, we are executing well, against the plan of, of, of site initiations and patient screenings and patient randomization, so we feel confident where we are. We do our best to predict, and as we have guidance that is out, you know, a year or so, we're gonna put some error bars there, based on our best assumptions and expectations. As we get closer, we'll be able to narrow those. But I don't think there's any specific lever in terms of trying to make that go faster.

I think we have from the very beginning, we wanna run, you know, a good study, and we'll go as quickly as we can while maintaining, you know, the integrity and the conduct of the study. Chris, I don't know if you have anything to add specifically there, and then I'm happy to jump in on the second question on the cadence of data then.

Chris Kenney (Chief Medical Officer)

No, I don't have anything to add. I just, you know, for every patient that's enrolled in any clinical trial, there are so many different variables and so many different variables at each site and variables at each country, and so it's just, it's, it's complicated to the extent that it's hard to sort of put my finger on one or two things and say, "This is what's gonna drive the timeline one way or another.

Ian Mortimer (President and CEO)

Then your second question in terms of cadence. So obviously X-TOLE 2 has been our focus, and we've talked often with investors that, you know, we've tried to leverage in X-TOLE 2 as many of those relationships that we had in X-TOLE, so investigators that have experience with the drug and clinical sites that we've worked with in the past. And quite frankly, investigators that still have patients that are being treated with XEN1101 and open label extension from the X-TOLE study. So we're doing all of that in X-TOLE 2. When we have guidance on X-TOLE 3 and EXACT, then, Tess, we can come back to the guidance on which one's gonna read out first of those two separate phase 3 clinical trials. It's premature to do that today.

Tessa T. Romero (Senior Analyst, SMID Cap Biotechnology Equity Research)

Okay. Thanks for taking our questions.

Operator (participant)

Thank you. Our next question comes from the line of Andrew Tsai from Jefferies. Your line is open.

Andrew Tsai (SVP, Equity Research Analyst)

Hey, good afternoon. Thanks for taking my question. Just one on MDD reading out. You know, we understand the AE profile, as you know, eleven oh one can be different from between MDD and epilepsy. I think you've mentioned previously how you are monitoring blinded safety. So how are the blinded AEs and the AEs due to discontinuation rates looking compared to your internal expectations? Is there anything out of the ordinary relative to what you guys assumed going on in the study? Or maybe said another way, directionally speaking, are you seeing lower AEs, AE rates in the MDD study compared to your epilepsy study? Thanks.

Ian Mortimer (President and CEO)

Thanks, Andrew. You know, I'm sure this may be the first of other questions just on some of the details of the MDD study. I'm sure you can appreciate and others can as well.

Andrew Tsai (SVP, Equity Research Analyst)

Mm-hmm.

Ian Mortimer (President and CEO)

The study is now complete, you know, we're very close to unblinding the data, and we'll have data, you know, in the coming weeks, as we've guided in late November to mid-December. So we're not gonna make any specific comments around, you know, what we're seeing in the data. We have said previously that obviously, as we run any clinical study, we're gonna monitor it along the way, and we're gonna do safety review committees that are required. And based on those previous safety review committees, there hasn't been a need to be any adjustments in the study. But we're not gonna talk about specifics on the blinded data, and we're looking forward to sharing the full data set in the near term. Thanks very much.

Operator (participant)

Thank you. The next question comes from the line of Jason Gerberry from Bank of America. Your line is open.

Jason Gerberry (Stock Analyst)

Hi, good afternoon. This is Dina on for Jason. Congrats on the progress this quarter, and thank you for taking our question. So we just, I guess, had a question on the X-NOVA top line that we'll be seeing very shortly. I guess if we don't see a positive trial, does that add any risk or uncertainty, in your view, to being able to generate, you know, additional data for 1101's antidepressant effect in epilepsy patients? And then just wanted to sort of follow up on the MDD market research on 1101 safety profile, kind of given that this is in, you know, safety is kind of a major driving force in the MDD space.

Besides the lack of, you know, serious AEs that come with the SSRIs and SRIs that you mentioned earlier, you know, the sexual dysfunction, weight gain. Did KOLs point out, you know, any part about eleven oh one's AE profile that could be sort of a positive differentiator, in MDD patients? Thank you so much.

Ian Mortimer (President and CEO)

Thanks, Dina. A lot there. So I'll, I think we've got them all down here, but if we missed one, just jump back in. So maybe I'll make one kind of global comment around the X-NOVA study, and then I'll pass it to Chris Kenney, just to talk about, you know, the population that is an epilepsy patient that has comorbid depression, which is different than the primary. Obviously, the patient that has major depressive disorder. And so, Chris, maybe you can just comment about that, and obviously, we are looking, not stratifying, but looking at some of those data in the phase 3, and then, Chris, one second, we can talk about the 1101 A profile in MDD.

You know, I think you know, you started your question with, you know, if XEN1101 doesn't work in X-NOVA. You know, I think if we don't see separation, you know, I'm you know, we're very confident in saying that we don't think there's any read-through into the epilepsy program. So I just want to be absolutely clear with that. You know, we're very confident in the consistency and reproducibility across epilepsy studies and the compelling profile we have from X-TOLE and the ability to execute in X-TOLE2 and X-TOLE3. So, you know, I think this is a really interesting and important readout in the near term in X-NOVA, but I don't think the outcome of that has any read-through into our epilepsy program.

But why don't we go a little deeper, Chris Kenney, just in looking at that comorbid patient or the patient that has comorbid depression, that's an epilepsy patient.

Chris Kenney (Chief Medical Officer)

Yeah, I mean, what I would say is that, you know, the underlying pathophysiology of the depressive symptoms can be different depending on whether you're looking at a patient who has a different psychiatric issue or a neurodegenerative issue or epilepsy. So just because a drug is behaving a certain way in one of those populations, doesn't mean it's going to behave exactly the same in the other. And just to be a little more concrete, in the phase three program, our epilepsy patients, obviously, we're focused on developing an anti-seizure drug, and that's the focus. But we are looking at mood using scales in that population. So once those phase three studies are done, we're going to have this enormous body of information about how those patients respond to the drug, you know, from the standpoint of their depressive symptoms.

Now, the downside is we're not purposely enriching for depressive symptoms the way we are in X-NOVA, and so there are some limitations. But, you know, we're going to let the data guide us for both studies and, you know, just acknowledge the fact that depression isn't the same as epilepsy.

Ian Mortimer (President and CEO)

Thanks, Chris. Chris von Seggern, on the, a little bit more on the MDD or AE profile of 1101 and MDD.

Paul Matteis (Managing Director, Head of Biotech Research)

Absolutely. So just to remind folks, if we take a step back and think about the profile that emerged from X-TOLE with the 20 milligram and the 10 milligram profile, the majority of the AEs that are reported were mild. And when you think about the difference between 20 milligrams and 10 milligrams, the 10 milligram dose was highly comparable, if not indistinguishable from placebo as it pertained to the AE profile. So, and then the 20 milligram profile, highly consistent with other CNS active anti-seizure medication, with dose-limiting or really AEs that emerge at the high end of the dose paradigm, but still appropriate for that patient population. So trying to bookend the AEs in the context of the MDD market research.

Chris Von Seggern (Chief Commercial Officer)

The specific question was around, are there other AEs that can be seen as a positive differentiator? Well, I think, the cleaner the profile looks, the better, XEN1101 emerges in the eyes of, of clinicians. So that very well could be a positive differentiator if one sees an AE profile that is similar to the 10 milligram profile, that emerged from, from X-TOLE. But to be clear, we also spent time in our market research, diving deep into the perspective on, an AE such as dizziness, which is a little less common in the current standard of care.

In the context of it being a mild and potentially transient AE was something that clinicians viewed in the totality of the risk-benefit profile to be certainly within reason and would ultimately result in the product being used in their armamentarium.

Ian Mortimer (President and CEO)

...And maybe I would just add one other point to Chris's comment. If we, you know, we have a huge body of data on XEN1101 now. Just as a reminder, in Chris Kenney's comments earlier, you know, we have our first patients out more than 4 years of dosing. We have hundreds and hundreds of patient years of exposure now, and we're seeing this consistency in profile. And we know that not all patients are going to tolerate these drugs the same. So, as we, in our epilepsy experience, as we move from X-TOLE from 10 to 20 to 25 milligrams, you get a step up in efficacy, and you get a step up in some of the CNS adverse events based on, you know, the potency and activity of this drug.

We know that when we think about epilepsy or we think about depression, there would be multiple doses of the dosages available. And so if you don't tolerate a certain dose, there's an opportunity for you to move to a lower dose, which can address some of the tolerability. So, you know, I think we have, when we think about XEN1101, we know a tremendous amount about it, and we have that flexibility because we know patients will tolerate the drug differently from patient to patient.

Joseph Thome, PhD (Managing Director, Senior Biotechnology Research Analyst)

Great. Thank you so much. I appreciate all the color.

Operator (participant)

Thank you. Our next question comes from the line of Paul Choi from Goldman Sachs. Your line is open.

Paul Choi (Biotechnology Analyst)

Hi, thank you, and thanks for taking our questions. I have two. First, for the team, with regard to the pace of enrollment in XTOL 2, I appreciate your comment that it's tracking faster than XTOL, but could you maybe just comment on if you're seeing any competition for recruiting patients and whether any of your clinical trial sites overlap with others developing potassium channel drugs for epilepsy? And my second question is, under a scenario where X-NOVA reads out positively, can you maybe comment on how the recent FDA rejection of zuranolone has or hasn't affected your thinking on, you know, potential future development in MDD? Thank you.

Ian Mortimer (President and CEO)

Thanks, Paul. Yeah, so I'll, I'll maybe I'll make a couple of comments first on X-TOLE 2, and Chris Kenney, you're very close to the investigators on the site, so please add your perspective as well, and then we can get to the X-NOVA question. So as, as we think about, X-TOLE 2, I mean, I think one of the messages we're communicating, today is that obviously we have a lot of experience in running global epilepsy studies. I think if we look back over the last few years, we have run the largest number of significant epilepsy studies, you know, when we compare ourselves to any other sponsor. So I, I think there's a huge amount of experience that we're gathering.

Often we don't find that a clinical site will take on two competing studies, so they'll focus on one, but I'll let Chris provide his perspective there. And then when we just look at the recruitment rates in XTOL 2, when we look at other companies over the last number of years that have run epilepsy studies, I believe that, you know, our recruitment rate and our ability to complete these studies have outperformed others. And so obviously, you know, we're very proud of the work that the team has done. But, Chris, any other specific comments that you're seeing at individual sites on competition?

Chris Kenney (Chief Medical Officer)

Yeah, I mean, the challenges that have come up, probably the number one challenge at the sites, is more about making sure that each site has the appropriate resources to be able to support the study. And the issue of competition with other anti-seizure medications hasn't slowed down, to my knowledge, even a single site. So if you think about the timing in terms of, I believe, when you say Kv7 drugs, I believe you're alluding to the, you know, the public information that Biohaven's going to start phase 3, you know, by the end of this year. We, you know, we were going out to sites quite a while ago, and so we've locked in those sites, already that we were most focused on. So that really...

Competition with other Kv7s has not had any role in terms of slowing us down to date.

Ian Mortimer (President and CEO)

Thanks, Chris. And then, Paul, your other question on X-NOVA and maybe the regulatory environment. You know, we haven't had a, we haven't had regulatory interaction with the psychiatry division. Obviously, with, you know, if, if X-NOVA is positive and we move into late-stage clinical development, we do an end-of-phase 2 meeting. So I think maybe we'll just pause on that question until we have more interaction. You know, when we look at the zuranolone summary basis of approval, and we've looked at the regulatory information that's publicly available, we don't see any read-through to the work that we're doing, with XEN1101 in major depressive disorder, with the caveat, as I mentioned earlier, that we still need to have, detailed regulatory interaction as, as we would think about a late-stage program.

Paul Choi (Biotechnology Analyst)

Okay, great. Thanks for all the color.

Operator (participant)

Thank you. Our next question comes from the line of Joseph Thome from TD Cowen. Your line is open.

Joseph Thome, PhD (Managing Director, Senior Biotechnology Research Analyst)

Hi there. Good evening, and thank you for taking my questions. Maybe the first one on the upcoming Neurocrine data. How are you thinking about potentially moving forward with that co-fund option? What are some considerations you have, and can you remind us when you have to make that decision? Is it immediately after data? Is it after an end of phase 2 with the FDA, or is there a time on that? And then for the 1101 NDA filing, can you just remind us what kind of safety database is required to initiate that? Is-

Speaker 15

... having patients through that 12-week double-blind period sufficient, or will you need some additional time after the data readout before you could start the filing? Thank you.

Ian Mortimer (President and CEO)

Great, thanks, Joe. Sherry, do you want to tackle the first one on co-fund, and then Chris and I can provide perspective on safety database?

Sherry Aulin (CFO)

Yes, absolutely. So as a reminder, for our collaboration partner, Neurocrine, we have a tiered royalty structure. So ultimately, if the drug progresses, we would be eligible for royalties that are tiered based on sales. So the co-fund option allows for us to opt in to pay for or fund 50% of the phase III development costs. And in return, we would get an incremental step up in that royalty, which at the highest tier, would amount to a 20% royalty. We're gonna have the benefit of having a lot more information in hand before we have to make the decision around whether we want to trigger the co-fund. So importantly, we're gonna have data from this upcoming phase II study, which we'll be able to evaluate, in addition to all of the information around the phase III development program.

An agreed-upon protocol with FDA phase 3, a full budget around what the phase 3 development program will look like, and we'll be able to make a decision based on that, the totality of that information. I do want to point out, I think, you know, given our experience in the space, we are very well-positioned to be able to review all of that and make a very informed and educated decision. Also, I will say that at this stage, you know, Neurocrine is driving the development next steps of the NBI-921352 program. Ultimately, we'll have to see what their next steps are.

So it is possible that from this, phase II signal finding study, they may decide to proceed into larger phase IIB study rather than directly into phase III, in which case the timelines in, around that are, are even longer. So don't expect that it's a decision that we need to make in the near term. I'd say, you know, at, at the fastest, if they are going straight into phase III, probably, you know, I, I'd say at least 12 months, maybe more like 18 months until they have regulatory interaction and, and all of that information I, I, I discussed.

Ian Mortimer (President and CEO)

Thanks, Sherry. And then, Joe, I think your question on, you know, NDA and safety database, when you specifically said around, you know, after the double-blind period, I'm assuming that you're kind of referring more to long-term exposure. So, I'll answer it that way, and then if you have a follow-up, let us know. So, you know, this is a large market opportunity, so we think about ICH guidelines in terms of exposures. The long-term exposures that are required are 300 subjects, or this is the guidance is 300 subjects of six months of exposure and 100 subjects of twelve months of exposure. And, as I'm sure you can appreciate, we have a significant amount of long-term data.

Actually, I think that's one of the things that is continuing to differentiate us versus even those in the competitive space, is that we now have so much experience with this molecule that long-term safety is not gonna be gating to, to an NDA filing, by any means.

Speaker 15

Okay, perfect. That is very helpful. Thank you so much.

Ian Mortimer (President and CEO)

Thank you.

Operator (participant)

Thank you. The next question comes from the line of Danielle Brill from Raymond James. Your line is open.

Danielle Brill (Stock Analyst)

Hi, guys. Thanks so much for the question. I was wondering if you could talk about the decision to permit enrollment of patients with PTSD in X-NOVA. We ask this since PTSD can be associated with lower treatment response rates to more traditional antidepressants. Specifically curious if you stratified enrollment and if you plan to break out treatment response rates within patients with or without PTSD or other comorbid anxiety disorders. Thanks so much.

Ian Mortimer (President and CEO)

Hi, Chris Kenney, can you provide perspective there?

Chris Kenney (Chief Medical Officer)

Well, the top line, you know, analysis of X-NOVA is gonna focus on the MADRS and the SHAPS top line safety, etc. So it's not part of the top line. The second round of data, we can look at those sorts of things, but that isn't a major... Looking at PTSD, it's not stratified in the study, and looking at whether those patients are responding differentially isn't part of the plan. I don't know--Danielle, I don't know the numbers off the top of my head, but I think we're talking about relatively small numbers, and so I think that in the context of a study this size, I think even doing that may have limited utility.

Danielle Brill (Stock Analyst)

Understood. Thanks for the question.

Chris Kenney (Chief Medical Officer)

Sure.

Operator (participant)

Thank you. Our next question comes from the line of Mark Goodman from Leerink Partners. Your line is open.

Madhu Yennawar (Analyst)

Hi, thank you. Hi, thanks. This is Madhu on the line for Mark. Could you just give us an update on your pediatric formulation of XEN1101 and also your second-gen molecules that are in, preclinical development? Could we expect to see any data from these candidates in the near term? Thanks.

Ian Mortimer (President and CEO)

Thanks for the question. Yeah, we are, you know, we have, as we've stated, I think in previous calls, we've got alignment from regulators on what the pediatric plan is for XEN1101. So, there's some layers to this. In terms of focal onset seizures, we have an ability in the U.S. to take advantage of the, what's called the PK extrapolation rule, where we can do open label work in younger cohorts of patients. We'll start with adolescents and then move into children. With our EXACT study or our primary generalized tonic-clonic seizure study, we have, based on feedback from regulators, moved the lower bound of age to 12 and above for that study. So we'll be enrolling some of those patients in the phase 3 program.

And then in terms specifically on a pediatric formulation, so obviously an oral capsule can go down to a certain age group, and then when we get into much younger age groups, we're going to need to work on a pediatric formulation. So that work is ongoing internally. In terms of next generation Kv drugs, yeah, I think we've communicated, you know, a number of times that, you know, we have a number of different chemistries and different molecules that we're interested in preclinically, that target the potassium channels in the CNS.

We don't talk a lot about kind of stage of development, where we are publicly with those, but we would expect, you know, over the next year or two, we would have molecules that will transition into clinical development, and that's probably an appropriate time to start sharing some of the preclinical data publicly as well. Operator, we can move to the next question.

Operator (participant)

I apologize, and thank you. Our next question comes from the line of Laura Chico from Wedbush. Your line is open.

Speaker 16

Hi, this is Ingrid on for Laura Chico. Wondering if you could speak at all to any efforts to co-formulate 1101 with another ASM. Would this be something that could be explored in focal epilepsy space? I realize, this may be challenging to dose optimize, but would there be any advantages to this type of approach? Thank you.

Ian Mortimer (President and CEO)

Thanks, Ingrid. Yeah, really interesting question. Chris von Seggern, I know you've done some time thinking about this and obviously, the types of anti-seizure medicines that have been developed over time. So maybe you can start, and then, Chris Kenney, if you have anything to add as well.

Chris Von Seggern (Chief Commercial Officer)

Yeah. What I can say is in what we expect from a commercial use standpoint in the focal onset seizure market is most certainly combination use with other commonly used anti-seizure medications. And there are a handful of those products which are used quite frequently early in lines of therapy. Levetiracetam, lamotrigine, and increasingly lacosamide are products that would be potentially ideal candidates for thinking about co-formulation opportunities. It's definitely something that's been on our radar for consideration, although there are technical complexities to consider when you think about the range of doses that exist, as well as the requirement for other products to be titrated to full efficacy.

One of the key advantages of XEN1101 in the treatment of FOS is that we don't require titration, and that gets us to a therapeutic dose with the initial dose selected. So there's a little bit more technical complexity to that question than the obvious desire to think about co-formulation with other commonly used anti-seizure medication, and something that still needs to be explored.

Ian Mortimer (President and CEO)

Chris Kenney, anything to add?

Chris Kenney (Chief Medical Officer)

Nothing to add, Ian.

Ian Mortimer (President and CEO)

Yeah. Okay. Yeah, I think, as Chris said, there, there's a real challenge there, is you have a lot of these drugs that are titrated, and not everyone gets to the same dose, and so that provides some inherent technical challenges on co-formulation.

Operator (participant)

Thank you. Our next question comes from the line of Mohit Bansal from Wells Fargo. Your line is open.

Speaker 17

Hi, this is Serena, on for Mohit. Thanks for taking our question. So I have two. The first is that if the monotherapy study in MDD doesn't work, or even if it does, is there a possibility of studying XEN1101 as an adjunctive in MDD to see if there's any synergistic effects? And then my second question is, if you can help us understand why there are no treatments specifically approved for anhedonia, when it looks like some antidepressants have shown a benefit on anhedonia scores. Thank you.

Ian Mortimer (President and CEO)

Sure. Thanks for the questions. Chris Kenney, do you want to start on, maybe I'll start with a global comment, and then maybe you can provide your perspective on monotherapy and potentially future development in-

Chris Kenney (Chief Medical Officer)

Sure.

Ian Mortimer (President and CEO)

in the adjunctive setting as well, and any perspective you have. I think both you and Chris can weigh in on. You know, I think if, you know, just to turn to your, the very first part of your question on, you know, if X-NOVA isn't, you know, isn't positive, would we move ahead with adjunctive studies? I think that, that's unlikely, that, you know, if we don't see a signal in this study, that we would be running an adjunctive study separately to this. I think in the scenario where, XEN1101 is positive in X-NOVA and we're moving ahead, then I think it's a, a question that we've definitely thought about, and it'll be somewhat jurisdictionally, dependent also based on interaction with regulators. But Chris, why don't you provide your perspective there, and then we can move to the anhedonia question?

Chris Kenney (Chief Medical Officer)

I think you covered it, Ian. I don't have anything to add to that.

Ian Mortimer (President and CEO)

Okay, and so, yeah, I mean, maybe just put a different way, if we're positive in X-NOVA and we're moving ahead into registration studies, then, you know, I think we would look at both potentially monotherapy or adjunctive studies in future development. On the anhedonia side, either Chris or Chris, your perspective on maybe why we haven't seen that used as a primary endpoint in development. I know anhedonia is definitely showing up as an endpoint in a lot more studies now, but we haven't seen that used as a primary endpoint in development.

Chris Kenney (Chief Medical Officer)

I mean, I'll start off, and then I'll hand it off to Chris. You know, if you take a look at the patients who meet the criteria for having moderate to severe depression, which is the case in the X-NOVA study, then it's very difficult to find a complete lack of anhedonia. In fact, that's a key feature of you know, getting the diagnosis of MDD. So they tend to lock together pretty closely. And yeah, as Ian just said, I mean, there's been this increasing interest in anhedonia. I think your observation is more driven, I think, by people not focusing on it in the past. And now it's become clear that it's something worthy of treatment. Chris?

Chris Von Seggern (Chief Commercial Officer)

Yeah, the only thing I can add there is that when we go out and do market research, there's very clear consistency with primary efficacy endpoints around MADRS in this space. And, well, one can only assume that's in order to avoid deviating from a regulatory perspective on what gets ultimate FDA approval. But we have seen, to Ian and Chris's point, increased interest in anhedonia as a component of the efficacy profile for these products, given the fact that it's a core comorbidity associated with depression. And, we're eager to see how this unfolds in the coming years.

Speaker 15

All right. Thank you so much.

Operator (participant)

Thank you. And our last question will come from Tim Lugo from William Blair. Your line is open.

Tim Lugo (Partner, Group Head of Biotechnology Equity Research)

Thanks for squeezing me in. For X-TOLE2 and X-TOLE3, I know they're designed very similarly to X-TOLE. However, you know, I think, you know, one of the defining features of X-TOLE was how many therapies those patients had failed, and now XEN1101 is an unknown asset, and Xenon is a very well-known company within the community. Can you just talk maybe how the baseline profiles of X-TOLE2 and X-TOLE3 are lining up versus X-TOLE, and maybe how that could swing what will eventually be the results coming from the study?

Ian Mortimer (President and CEO)

Yeah. Thanks, Tim. I think that's a really interesting question that we're absolutely monitoring. I don't think we have a lot to say on it today, but something that we'll be tracking. So I'll give my perspective, and then Chris Kenney provide yours as well. Yeah, so this is a good opportunity maybe just to take a step back and confirm some of the comments that you made, which are on point, which is X-TOLE 2 and X-TOLE 3 are designed after X-TOLE. Obviously, the naming convention there was very deliberate. So it is the same inclusion/exclusion criteria for X-TOLE 2 and 3 as compared to X-TOLE. But as you suggest, during X-TOLE, 1101 was an unknown, you know, molecule at that time.

And also we know that XTOL was run, at least part of XTOL was run during the pandemic, and we got quite a severe patient population. And when we look at the literature, we can't find another study where it was as severe a population as we trialed in an XTOL. And we look at three different measures. We look at the number of drugs that patients had failed prior to study, the number of background therapies they were on coming into study, as well as the baseline seizure burden. And so there is a hypothesis that maybe in X-TOLE2 and X-TOLE3, we'll get a less severe patient population. Yeah, we'll look at that, Tim. We're not at a point right now to be able to comment on that.

It's always difficult, when you're running a study because those baseline characteristics are changing every day as you're enrolling more patients. But as we get closer to completing these studies, I think that would be something that would be relevant for us to comment on. Chris, anything to add to that?

Chris Kenney (Chief Medical Officer)

Well, I just want to sort of emphasize the importance of keeping an eye on the baseline characteristics of these studies as we go forward. So that's something that we always do because we want to make sure that the population is somewhat in keeping with what we're expecting, and if not, then we want to be able to pivot and not wait till the end of the study to realize that. So that's something that we follow very closely. I think it's hard to imagine a scenario where we're going to end up with patients who are more impaired. And so I think it's more likely, to Ian's point, that we end up with patients who are less impaired. And, you know, as we tease out the data from XTOL, it suggests that those patients actually respond better.

So we would have to confirm that in phase 3, of course. But, so I think that's all I'll say. It remains to be seen exactly how the populations compare.

Tim Lugo (Partner, Group Head of Biotechnology Equity Research)

Thank you so much.

Ian Mortimer (President and CEO)

Thanks, Tim.

Operator (participant)

Thank you. With that, this concludes today's conference call. Thank you for joining. You may now disconnect.

Chris Kenney (Chief Medical Officer)

Okay, thanks.