Xenon Pharmaceuticals Inc. (NASDAQ:XENE) Q1 2023 Earnings Call Transcript May 13, 2023

Operator: Hello, and thank you for standing by. My name is Gigi, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Q1 2023 Xenon Pharmaceuticals Inc. Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Sherry Aulin, Chief Financial Officer. Please go ahead.

Sherry Aulin: Thank you, and good afternoon, everyone. Thank you for joining us on our call and webcast to discuss the Xenon’s First 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 proprietary pipeline programs. Chris Kenny will provide an overview of our XEN1101 Phase 3 epilepsy program, as well as a brief summary of the recent oral presentation of supporting data from the X-TOLE open-label study that was presented at the American Academy of Neurology’s Annual Meeting, or AAN. I will summarize our financial results, progress within our partnered programs and our anticipated company milestone events.

Chris Von Seggern will be available during our Q&A session to address questions about commercialization strategies. 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 clinical trials, the anticipated presentation of data from 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 ability 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 first quarter financial results and the accompanying annual report on Form 10-Q will be made available under the “Investors” section of our website at www.xenon-pharma.com and filed with the SEC and on SEDAR. Now, I would like to turn the call over to Ian.

Ian Mortimer: Thanks, Sherry. And good afternoon, everyone, and thanks for joining us on our call today. We are excited about the continued progress across our broad XEN1101 Phase 3 epilepsy program, including the recent initiation of X-TOLE3. All planned Phase 3 epilepsy clinical trials are now actively recruiting patients, including X-TOLE2 and X-TOLE3 in patients with focal-onset seizures, or FOS and X-ACKT, in patients with primary generalized tonic-clonic seizures, or PGTCS. XEN1101 is the only potassium channel modulator in late-stage clinical development, and we continue to build on our leadership position in the Kv field, driving our mission to provide new therapies for patients with epilepsy and other neurological conditions.

Based on our experience with our X-TOLE Phase 2b study, which was similar in size to both X-TOLE2 and X-TOLE3 and supported by our continued relationships with key investigators, many of whom already have familiarity and experience with XEN1101, we maintained a high degree of confidence in our ability to execute on our XEN1101 Phase 3 program and we are pleased with our progress to-date. In addition to our ongoing Phase 3 epilepsy program in adults, we recently obtained feedback from the FDA that has shaped our strategy for our pediatric development plans for XEN1101. Progress and highlights from our XEN1101 pediatric plans include ongoing work on a pediatric formulation of XEN1101 for younger patients. We also expect to take advantage of the FDA’s pharmacokinetic extrapolation rule for focal-onset seizures, which allows us to over time move into cohorts of progressively younger patients with focal-onset seizures, with XEN1101 in an open-label setting.

And finally, we’re in the process of expanding the X-ACKT Phase 3 clinical trial to include patients as young as 12 years of age, and this was driven by feedback from FDA. We believe XEN1101 has the profile and attributes to support broad development, including moving into younger patients with epilepsy, where there continues to be considerable need for new medicines. And so, after careful consideration, we are prioritizing our XEN1101 pediatric epilepsy development plans and will no longer pursue the clinical development of XEN496. We wish to extend our sincere gratitude to the patients and their families who participated in the EPIK clinical trial. We intend to work with study investigators to offer an option for continued access through a transition period for those patients currently on XEN496.

Turning to non-epilepsy indications, our Phase 2 XEN1101 X-NOVA study in Major Depressive Disorder or MDD, continues to make good progress. Our decision to examine XEN1101 in MDD was based on encouraging published clinical results with ezogabine, as well as promising preclinical data with XEN1101. We were further interested in gathering additional data given that depression is a common comorbidity within the epilepsy patient population. X-NOVA, which as a reminder was initiated only 12 months ago, has progressed well, and we expect to screen the last patient next month in June. After the last patient goes through a screening period lasting up to 4 weeks and has been randomized, there is a 6-week treatment period and a 4-week follow-up visit, after which the database can be locked and the data analyzed.

Given these steps, we are looking forward to a topline data readout for X-NOVA in the fourth quarter of this year, which is a slight shift in our previous guidance of topline data in the third quarter. These data will help guide our future plans for XEN1101 in MDD. In summary, we remain laser-focused on the continued advancement of our Phase 3 XEN1101 program, including X-TOLE2 and X-TOLE3 clinical trials in focal-onset seizures; and X-ACKT clinical trial in PGTCS; as well as executing on our pediatric development plans. We are also looking forward to the important data from our Phase 2 X-NOVA study in MDD later this year. Lastly, we continue to generate important long-term data from our ongoing X-TOLE open-label extension study that affirms the X-TOLE Phase 2b results, supporting our position that XEN1101 presents a novel compelling product profile with the potential to address some of the currently unmet needs of patients with epilepsy.

And as Chris and Sherry will highlight in their remarks later in the call, we are excited to be entering a data-rich period for Xenon. Between now and the end of the year, we will present additional XEN1101 X-TOLE open-label data focused on quality-of-life measures at the International Epilepsy Congress in September, and 30-month OLE data at the American Epilepsy Society Annual Meeting in December, as well as the 2 Phase 2 readouts in the first quarter of this year, including data from our XEN1101 X-NOVA study, as well as data from our collaboration with Neurocrine. So I’d now like to turn the call over to Chris Kenney, who can provide additional details on the progress made within our Phase 3 XEN1101 program as well as recent and upcoming data presentations for XEN1101.

Chris, over to you.

Dr. Chris Kenney: Okay. Thanks, Ian. I would echo that we believe the clinical data generated to-date support a very compelling product profile for XEN1101, and that the efficacy data from the Phase 2b X-TOLE study and the ongoing X-TOLE open-label extension, compare favorably to medicines currently available for focal-onset epilepsy patients. To briefly review the XEN1101 clinical trials within our robust Phase 3 program. As Ian mentioned, we now have initiated X-TOLE3, which is running in parallel to our X-TOLE2 study. Each of these studies will enroll approximately 360 subjects with focal-onset seizures who will be randomized 1:1:1 with once daily dosing of either 15 milligrams or 25 milligrams of XEN1101 or placebo. The primary efficacy endpoint is the median percent change or MPC and monthly seizure frequency from an 8-week baseline through the 12-week double-blind period with XEN1101 compared to placebo.

We’ve also successfully executed on our plans to pursue another epilepsy indication, our Phase 3 X-ACKT clinical trial is expected to enroll approximately 160 subjects with primary generalized tonic-clonic seizures. Subjects will be randomized 1:1 for once daily dosing of either 25 milligrams of XEN1101 or placebo. The primary efficacy endpoint is the MPC and monthly PGTCS frequency from an 8-week baseline through the 12-week double-blind period of XEN1101, compared to placebo. I’ve noted that this parallel approach in both focal-onset seizures and primary generalized tonic-clonic seizures at this stage of development is unique. Our rationale is based on the Kv mechanism in the photo-sensitive proof-of-concept model of generalized epilepsy, favorable data in multiple preclinical epilepsy models and clinical data, including activity we saw across all focal seizure subtypes in the Phase 2b X-TOLE study.

Our hope is that we are setting the groundwork for potentially broader use of XEN1101 in both the most common forms of epilepsy, should it be approved. We recently met with physicians and epileptologists at the Annual Meeting of the American Academy of Neurology, who continue to assert the need for new therapeutic options with differentiated mechanisms of action to improve upon existing anti-seizure medications. At AAN, in addition to a poster outlining our X-ACKT clinical trial design, we were thrilled that the XEN1101 program was selected for an oral presentation at this important neurology-focused meeting. Dr. Jackie French, one of the preeminent leaders in the epilepsy field, presented data from our ongoing open-label extension study with XEN1101.

She outlined how these data build upon the strong efficacy data generated in the Phase 2b X-TOLE clinical trial. Importantly, she spoke about the data demonstrating continued seizure reduction and extended periods of seizure freedom experienced by patients in the open-label extension study. Her podium presentation outlined several key takeaways. During the open-label extension, there was a sustained monthly reduction in seizure frequency, specifically 80% to 90% seizure reduction as measured by median percent change from the double-blind period baseline. Also, seizure freedom for greater than or equal to 6-month and greater than or equal to 12-month consecutive durations was achieved in 17.5% and 10.5% of patients, respectively. XEN1101 continues to be generally well-tolerated in the open-label extension with adverse events consistent with prior results in other anti-seizure medications.

Dr. French expressed that these data are encouraging for prescribing physicians who continue to seek new differentiated therapeutics that improve upon existing options and may provide further hope for the many patients who experience the debilitating impacts of focal seizures even while taking multiple anti-seizure medications. Looking ahead, our team is excited to continue to showcase XEN1101 at medical conferences later this year, including our presence at the upcoming 35th International Epilepsy Congress in Dublin in September, and at the American Epilepsy Society Meeting in December. At IEC in September, we have multiple podium and poster presentations highlighting our XEN1101 Phase 3 program as well as new quality-of-life data from the ongoing X-TOLE open-label extension.

In addition, we are in the process of submitting abstracts to the American Epilepsy Society Meeting, including 30-month open-label extension data from X-TOLE supporting the long-term use of XEN1101, as well as important seizure freedom data. We look forward to keeping you updated on our progress on the XEN1101 Phase 3 epilepsy program, as well as continuing to build a profile of XEN1101 with physicians and the medical community. I’ll now turn the call over to Sherry, who will give us a brief update on our partnered program with Neurocrine, before summarizing our first quarter financial results and upcoming milestones. Sherry?

Sherry Aulin: Thanks very much, Chris. So beginning with our partnered programs, our collaborators at Neurocrine are conducting 2 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 pediatric patients with SCN8A-related epilepsy. We’re looking forward to the results from Neurocrine’s adult focal study, which are anticipated in the fourth quarter of this year. 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 and marketable securities were $687.3 million as of March 31, 2023, compared to $720.8 million as of December 31, 2022.

Based on current operating plans, including the completion of the planned XEN1101 Phase 3 epilepsy studies, we anticipate having sufficient cash to fund operations into 2026. Before concluding our prepared remarks, I’ll briefly summarize some of our goals and milestone events ahead, including, as Ian mentioned, a data-rich period for Xenon between now and the end of the year. We will focus on advancing our XEN1101 Phase 3 program, including our X-TOLE2 and X-TOLE3 clinical trials in focal-onset seizures, and our X-ACKT clinical trial in PGTCS. We are excited to present additional XEN1101 X-TOLE open-label extension clinical data at both IEC in September and AES in December. We anticipate topline results in the fourth quarter from our X-NOVA clinical trial in MDD, and we expect another data readout in the fourth quarter of this year from the adult focal-onset study conducted by our partner, Neurocrine.

In closing, we believe that we have established an enviable leadership position in the Kv field, that’s supported by our clinical development efforts and financial resources to help us execute on our ambitious plans. As we focus our efforts on our Phase 3 epilepsy program, I’m proud of the team we continue to build at Xenon. We are grateful to our employees across the business who are committed to Xenon’s mission to deliver new neurology therapeutics to patients in need. I am excited by our success to-date and look forward to reporting our progress through 2023. I’ll now ask the operator to open the line for any questions.

Q&A Session

Operator: Thank you. [Operator Instructions] Our first question comes from the line of Paul Matteis from Stifel.

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Operator: Thank you. This concludes the Q&A portion of the call. This concludes today’s call. Thank you for joining, and you may now disconnect.