Xenon Pharmaceuticals Inc. (NASDAQ:XENE) Q3 2024 Earnings Call Transcript

Xenon Pharmaceuticals Inc. (NASDAQ:XENE) Q3 2024 Earnings Call Transcript November 12, 2024

Operator: Good afternoon, and thank you for standing by. At this time, I’d like to welcome everyone to Xenon Pharmaceuticals, Inc. Third Quarter 2024 Earnings Conference Call. [Operator Instructions] I will now turn the conference over to Chad Fugere, Vice President of Investor Relations. Please go ahead, sir.

Chad Fugere: Good afternoon. Thank you for joining us on our call and webcast to discuss Xenon’s third quarter 2024 financial and operating results. Joining me today are Ian Mortimer, Xenon’s President and Chief Executive Officer; [technical difficulty]

Sherry Aulin: I’m just going to jump in for Chad. So Ian will begin with a summary of our recent progress across our business. Chris Kenney will provide an overview of our clinical stage programs and ongoing outreach to the medical community and I will close with a summary of our financial results and anticipated milestones. We will then open the call up for 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 clinical trials, the potential efficacy, safety profile, future development plans in current and anticipated indications, 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 clinical development programs, the timing and results of our interactions with regulators, our ability to successfully obtain regulatory approvals, anticipated timing of the top line data readout for our clinical trials of azetukalner and our expectation that we will have sufficient cash to fund operations into 2027.

Today’s press release summarizing Xenon’s third quarter 2024 financial results and the accompanying quarterly report on Form 10-Q will be made available under the Investors section of our website at xenon-pharma.com and filed with the SEC and on SEDAR+. Now I’d like to turn the call over to Ian.

Ian Mortimer: Thank you, Sherry, and good afternoon, everyone, and thanks for joining us on our call today. We have made significant progress over the past quarter, consistent with our overall strategy of being at the forefront of discovery and development of ion channel therapeutics. And our focus hasn’t changed to maximize the full potential of our lead product, azetukalner, to build upon our leadership position in the Kv7 space and to continue to mature our promising ion channel pipeline. Xenon’s leadership position in the Kv7 field is unmatched as azetukalner represents the only highly potent and selective Kv7 potassium channel opener in clinical development for multiple indications that is backed by long-term efficacy and safety data in patients living with epilepsy and encouraging proof-of-concept data in patients with major depressive disorder.

Within our portfolio, we remain focused on three key areas: continuing the execution of our Phase 3 azetukalner epilepsy program while raising the profile of azetukalner with both physician and patient communities, advancing our Phase 3 azetukalner MDD program with a focus on X-NOVA2, which is expected to initiate before the end of this year and expanding our pipeline, both through the advancement of our portfolio of next-generation ion channel modulators as well as further potential indication expansion of azetukalner. As I said earlier, Xenon’s leadership in the Kv7 landscape is unmatched. Azetukalner represents the most advanced clinically validated potassium channel modulator in late-stage clinical development. Our substantial clinical experience with azetukalner includes robust long-term efficacy and safety data with over 600 patient years of exposure in focal epilepsy patients.

Importantly, we have generated highly compelling double-blind efficacy data from our X-TOLE study that we believe demonstrates the best placebo-adjusted results ever seen in a clinical study in patients with focal onset seizures. In our X-TOLE open-label extension study, we are seeing patients experience the long-term benefits of seizure freedom and improved quality of life as well as a favorable safety profile. We believe that azetukalner represents a potentially best-in-class anti-seizure medication that could be paradigm shifting in the treatment of epilepsy. In addition to the impressive efficacy data generated to date, azetukalner has other important attributes such as once-daily dosing without the need for titration, rapid onset of effect, novel mechanism of action and potential mood benefit.

The body of compelling clinical evidence that we have amassed to date continues to generate significant excitement from physicians and key opinion leaders as they see the potential of what azetukalner could mean to the epilepsy community. As we continue to educate key stakeholders around the benefits of azetukalner, Xenon will have an increased presence at the upcoming American Epilepsy Society Meeting, or AES, taking place December 6 through the 10 in Los Angeles. We’ll have new data presentations and updated results from our ongoing X-TOLE open-label extension study. Patients in the X-TOLE OLE have now been on drug for at least three years with some patients in the OLE having more than five years of exposure to azetukalner. We continue to see better efficacy in the open-label extension, the longer patients are on drug, and many patients are experiencing the long-term benefits of seizure freedom and improved quality of life, and we’re excited to present this new 36-month data at AES next month.

We believe this long-term data package will support our regulatory filings on the pathway towards commercialization and is a key differentiator when compared to other molecules in earlier-stage clinical development. Further, we are in an incredibly fortunate position in that azetukalner’s attributes enable significant potential across both epilepsy and neuropsychiatry, including MDD and potential other indications. Physicians who treat MDD are looking for medications with novel mechanisms and favorable product profiles such as the ability to address anhedonia, demonstrate a rapid onset of effect or avoid adverse effects that are seen with standard of care agents, such as sexual dysfunction or weight gain. As we shared last quarter, clinical site planning is well underway, and we expect to initiate our Phase 3 MDD program before the end of this year.

Shifting gears beyond azetukalner to our broader pipeline. Our discovery team has applied its many years of experience in ion channels to advance multiple Kv7 product candidates that are chemically diverse from azetukalner so that we can leverage the target’s pipeline and the mechanism potential, providing us with numerous clinical development opportunities across a broad range of therapeutic indications, including seizure disorders, pain and neuropsych conditions and ultimately extending the reach of this differentiated mechanism to even more patients in need of better therapeutic options. Today, we have multiple Kv7 candidates in our pipeline and IND-enabling work is currently underway to support our goal of filing an IND or equivalent for the first of these candidates in 2025.

Staying on the topic of our early-stage pipeline, we continue to make meaningful progress within our Nav1.7 sodium channel program as well. We are proud of Xenon’s pioneering work to identifying promising genetic targets associated with rare phenotypes. It was through these efforts that the connection was made between individuals who had the inability to perceive pain and the complete loss of function mutations in the gene encoding for Nav1.7. Conversely, individuals who experienced non-precipitated spontaneous severe pain correlated with Nav1.7 gain of function mutations. This identification of Nav1.7 as an important pain-related target also offered the possibility of a new class of pain medications that are not burdened by the liabilities of opioids.

Importantly, we believe that Nav1.7 has by far the strongest genetic validation amongst pain targets, and we continue to pursue the development of novel, non-opioid-based pain medications. And while the development of ion channel therapeutics is certainly a complex challenge, we are applying all of the knowledge gained from the past molecules to advance novel selective Nav1.7 inhibitors within our portfolio of next-generation modulators. Currently, IND-enabling work is underway with a lead Nav1.7 development candidate in support of our goal of filing an IND or equivalent in 2025, enabling us to generate important derisking proof-of-concept data. In addition to Nav1.7 and Kv7, we are also advancing potentiators of Nav1.1 with the aim of addressing the underlying etiology of Dravet syndrome and delivering a disease-modifying therapy.

In support of our hypothesis that a precision medicine therapy for Dravet syndrome should restore Nav1.1 activity specifically without impacting other neuronal functions or proteins. We look forward to presenting some of our preclinical Nav1.1 data, including protection against spontaneous seizures and SUDEP as well as strengthening long-term potentiation at the upcoming AES meeting. These data support an incredibly compelling profile for a small molecule Nav1.1 potentiator when compared to other drugs available and in development to treat Dravet syndrome. Finally, as I continue to reiterate, it’s an exciting time for Xenon due to the advancement of our clinical programs and our progress towards commercialization. In August of this year, Dr. Matthew Ronsheim joined our senior executive team as Chief Operating Officer based in Boston, overseeing our R&D operations and providing strategic and operational leadership for our pipeline of small molecule programs and preparation for the anticipated commercial launch of azetukalner.

Matt’s extensive operational, pharmaceutical development and manufacturing expertise are important as we expand our Phase 3 programs, plan for regulatory submissions and commercialization as well as progressing our broad portfolio of early-stage assets. Matt has already made a positive impact, and we look forward to his continued leadership. With that, I’ll now turn the call over to Chris Kenney to provide a brief overview of our clinical stage programs and our ongoing outreach with healthcare providers at key medical congresses. Chris, over to you.

Chris Kenney: Okay. Thanks, thanks a lot. I’m pleased to report that our late-stage clinical development programs for azetukalner are progressing as planned. Our Phase 3 epilepsy program includes X-TOLE2 and X-TOLE3 in focal onset seizures and X-ACKT in primary generalized tonic-clonic seizures. Importantly, the first top line focal onset seizure data readout from X-TOLE2 is anticipated in the second half of 2025. In support of an anticipated NDA filing, we plan to submit the results from X-TOLE2 along with the existing data package from X-TOLE and additional safety data from other clinical trials. In parallel with the significant progress made across our Phase 3 azetukalner programs, our medical affairs team continues to engage with the broader medical community to highlight the robust scientific evidence generated to date.

We are in an enviable position as not only can we showcase the positive results from our completed X-TOLE trial, but we have our ongoing 7-year open-label extension study, providing further long-term data from patients living with epilepsy, which we believe is a key differentiator from other molecules currently in development. To give you a sense of some of these interactions, in September, we attended the European Epilepsy Congress, which attracted more than 3,600 delegates from around the globe, Xenon had a strong presence, presenting three posters and hosting a scientific exhibit. We successfully engaged with key opinion leaders, prescribing clinicians and principal investigators from our study sites. Many of our discussions centered around the X-TOLE data, which we believe demonstrate the best placebo-adjusted clinical efficacy in the most refractory patient population trial as well as a favorable tolerability profile in adult patients with focal onset seizures.

Furthermore, we continue to receive strong feedback from the epilepsy community on the long-term efficacy data from our X-TOLE open-label extension study, which shows increased seizure reductions with patients on azetukalner out to 30 months experiencing a greater than 90% reduction in median monthly seizure frequency. Additionally, approximately one in four patients on azetukalner for at least two years in the X-TOLE open-label trial have been seizure-free for a full year or longer, giving both us and the epilepsy community tremendous confidence in azetukalner’s potential to address the significant need for new anti-seizure medications. These data are particularly impressive given that the literature concludes the likelihood of achieving seizure control once a patient has failed three anti-seizure medications is less than 5%.

And we believe that future open-label extension data updates, including our upcoming 36-month data set at AES will continue to strengthen our leadership position. Physicians regularly treating epilepsy patients are impressed by the azetukalner data gathered to date, noting that it sets an incredibly high bar, not just for other Kv7 drugs in earlier-stage clinical development, but other anti-seizure medications within the current treatment landscape. This is especially true when considering some of azetukalner’s potentially differentiating attributes such as its positive impact on mood. Our outreach to the medical community is not limited to epilepsy, we’re also engaging with prescribing physicians in the MDD space. With our Phase 3 MDD program, the first of three planned Phase 3 clinical trials examining azetukalner in major depressive disorder is anticipated to initiate before year end.

At the end of October, we attended the Psych Congress in Boston, giving us another key opportunity to interact with physicians in the MDD space and present our Phase 2 X-NOVA data, discuss the potential use of azetukalner as a treatment for MDD and outline our near-term plans to initiate a Phase 3 program in major depressive disorder. We continue to emphasize azetukalner’s potentially differentiated profile versus standard of care agents in MDD as physicians continue to have a particular interest in azetukalner’s novel, selective Kv7 mechanism of action and its potential benefit on anhedonia, rapid onset of effect as well as its potentially favorable tolerability profile with no notable adverse effects on sexual function or weight gain. We have the benefit of being able to reference not just the X-NOVA data for efficacy, but also the long-term tolerability data gathered from our ongoing X-TOLE open-label extension study.

We’re excited to be advancing another late-stage clinical development program for azetukalner with the hope of addressing the needs of patients diagnosed with MDD who are still struggling to find effective treatments. We also continue to support the investigator-led MDD study conducted by Dr. James Murrough of Mount Sinai School of Medicine and Dr. Sanjay Mathew at the Baylor College of Medicine. This 60-patient placebo-controlled Phase 2 trial has a functional primary endpoint with the objective of evaluating the effect of azetukalner on brain measures of reward as measured by the change in activation within the bilateral ventral striatum from baseline to end of treatment at week eight as assessed by functional MRI. Also, the study is evaluating secondary endpoints that include MADRS and SHAPS.

Patient enrollment was recently completed and results anticipated in the first half of 2025. Now looking ahead, we’re incredibly excited to expand our presence at AES this year as part of our ongoing outreach to the medical community. As the premier epilepsy conference, AES is an important venue for us as we continue to strengthen our profile and reputation as a leader in epilepsy, laying the foundational framework for a successful future potential launch in epilepsy. We have scheduled numerous meetings with physicians, key opinion leaders, academic leaders and patient advocacy groups. I’m extremely proud that we have five accepted abstracts at this medical meeting and look forward to presenting these posters, including an update to our X-TOLE open-label extension study.

We have expanded our presence in the exhibit hall and are eager to welcome all visitors to the Xenon booth who are interested in learning more about azetukalner and our broader pipeline. I’ll now turn the call over to Sherry, who will provide an overview of our third quarter financial results and upcoming milestones. Sherry?

Sherry Aulin: Thanks, Chris. Looking briefly at our third quarter financial results. As of September 30, 2024, we had cash and cash equivalents and marketable securities of $803.3 million compared to $930.9 million as of December 31, 2023. Based on current operating plans, including the completion of the azetukalner Phase 3 epilepsy studies and fully supporting late-stage clinical development of azetukalner in MDD, we anticipate having sufficient cash to fund operations into 2027. I’d refer you to our news release and 10-Q report for further details around our financial results. We anticipate that 2025 will be a pivotal and transformational year for Xenon with several important milestones on the horizon. First and foremost, we’re driving towards the highly significant data readout from X-TOLE2 expected in the second half of 2025.

Importantly, positive results from X-TOLE2 will enable the submission of our NDA with the goal of advancing azetukalner towards commercialization. In the MDD program, we’re anticipating results from the investigator-sponsored Phase 2 proof-of-concept study of azetukalner in MDD in the first half of 2025. In addition, our company-sponsored broad Phase 3 MDD program will be well underway with the initiation of X-NOVA2 anticipated before this year end. As we continue to advance our early-stage preclinical pipeline, we anticipate filing multiple INDs or equivalent in 2025 with the goal of initiating first-in-human trials across multiple targets, while also exploring other potential indications for azetukalner that may be well suited for late-stage clinical development.

With this in mind, we have built a foundation of strong, thoughtful fiscal management, which positions us to execute on our planned strategies to advance azetukalner through late-stage clinical development in both epilepsy and MDD, while at the same time supporting a robust pipeline of next-generation ion channel therapeutic candidates. To summarize some of the key takeaways from today’s call, we believe strongly in azetukalner’s compelling clinical profile, which is built on its unique mechanism of action and supported by the meaningful body of clinical data we’ve generated thus far. We’re excited to engage with key patient and physician communities to raise further awareness about the potential of azetukalner in the future treatment of epilepsy at the upcoming AES meeting, where we will also present the latest data from our ongoing X-TOLE OLE study.

For those of you on the call attending AES, we look forward to connecting with you in Los Angeles. And looking slightly further out, we look forward to connecting at the upcoming JPMorgan conference, which will give us an opportunity to kick off the year and outline our key goals for 2025 in more detail. I hope you share our excitement as we continue to execute our clinical development plans and anticipate these key events next year. Thank you for your attention today, and we look forward to sharing more in the coming months. I’ll now ask the operator to open the line for any questions.

Q&A Session

Operator: [Operator Instructions] Your first question comes from the line of Paul Matteis with Stifel. Your line is open.

Unidentified Analyst: Hi there. This is Julien on for Paul. Thanks so much for taking our question and congrats on the progress. Just wondering if you could provide a little bit of color, again, on enrollment dynamics and whether things are tracking according to your expectations? Any other details or learnings perhaps since our last quarterly update? And then secondly, quickly, just on the MDD investigator-sponsored study, I’m just curious on how you perceive that study either reading on to or not reading on to your Phase 3 pivotal program and thus confidence in execution of your own study?

Ian Mortimer: Thanks very much for the question. So I’m happy to take the first one and maybe start on the second one. And Chris Kenny, you can provide your perspective on the IST and MDD as well. Yes. Obviously, we get a lot of questions on just how we’re doing in the Phase 3 epilepsy program. We’re really comfortable where we are. I’m not sure anything has changed in the last quarter to your very specific question. I would always remind people that I think we have more experience kind of in the contemporary clinical trial environment of executing large focal epilepsy studies. So we’re very comfortable on where we are. Obviously, we always give the best information we can. And currently, the guidance for X-TOLE2 is to have top line data in the second half of next year.

So I don’t think there’s anything specific that you haven’t heard from us and seen from us that I need to add to that answer. In terms of MDD, yes, I’ll give maybe a perspective on the read-through to what we’re thinking about. And then Chris can just remind the group what we expect to see from that study because the endpoints, Chris mentioned in his prepared remarks, but they are slightly different than what we would look like — we would look at on the sponsor side. We’ve always said that these are two really important KOLs in terms of the group at Mount Sinai and at Baylor with Dr. Murrough and Dr. Mathew. And they’ve done a lot of the early and pioneering work around this mechanism in major depression. And so we’re very happy to support them in terms of drug supply and collaborate with them, their key collaborators with us.

That said, it’s a small IST at two medical centers. And it’s not something that we’re reading through to our own MDD program, we’ve committed to running three Phase 3 clinical trials in major depression with the 20-milligram dose of azetukalner. And as we mentioned, the first of those studies, X-NOVA2, we’ve made really nice progress, and that will be up and running shortly. So really no read-through in terms of what that study may show. We — it looks like we’ll have top line data from that study in the first half of 2025. Chris, do you want to add your perspective?

Chris Kenney: Sure. Just as a reminder, the investigator-initiated trial has enrolled 60 patients, one arm in placebo and one arm in active. And as a reminder, our X-NOVA study had like 168 patients. And as we go forward into Phase 3, our Phase 3 studies are going to have 450 patients. So I’m just trying to make the point that the investigator-initiated trial is relatively small in size, 30 patients per treatment arm. And so it’s underpowered from the standpoint of the clinical outcomes like MADRS and SHAPS. What it is powered for is to show improvements in fMRI based upon the fMRI work that was done with ezogabine in moderate-to-severe depression. And so it will be interesting. I think two things will be interesting from that study.

One is, is there a readout on fMRI, which is — it’s a bit academic, but it’d still be quite interesting to understand why this mechanism is helpful in major depressive disorder. The hypothesis is that it helps out with the reward circuit. So that will be interesting. But to Ian’s point, it’s not going to gate our Phase 3 plans. And the other thing that I think the study will be interesting is we saw great tolerability in the — in our Phase 2 study. And so it will be nice to confirm that — or confirm or refute that in the — when we see those results next year. That’s all I have.

Unidentified Analyst: Thanks.

Ian Mortimer: Thank you. Operator, we can go to the next question.

Operator: Next question comes from the line of Tessa Romero with JPMorgan. Your line is open.

Caroline Pocher: Hi team. This is Caroline Pocher on for Tessa Romero with JPMorgan. Thanks for taking our questions. So first from us, when can we expect to learn more about the clinical profile of the lead Nav1.7 candidate, including the level of receptor occupancy and potentially finding site? And then if I could just sneak another one in. Based on your prepared remarks, it sounds like a proof-of-concept study is in the cards for next year. Could you just frame what such a study could look like for Nav1.7? Thank you.

Ian Mortimer: Great. Thanks very much. I’m happy to take that one. Yes, we’ve been — I think a lot of the overall properties you’ve hit a couple of receptor occupancy and binding site. I mean it’s even broader than that in terms of just the selectivity profile, the biodistribution, there’s a number of things that we track that I think we’ve learned a ton from the field. We haven’t provided a lot of that information publicly, and I don’t think you’re going to hear a lot from us. I think that’s really important learnings that we’ve made that we’re incorporating into our program that we’re not sharing broadly. But needless to say, we believe we have the right profile of molecules to really run the correct human experiment to see whether selective Nav1.7 sodium channel inhibition with high receptor occupancy can provide analgesia.

So I think we’re very comfortable that we have the right profile to test the hypothesis in humans, which is what we’re really excited about. In terms of the clinical development plan, so the initial study will be a standard first-in-human study, SAD/MAD. And then when we talk about proof of concept, not fully designed yet, but probably as no surprise, we’re really thinking about running a proof-of-concept study in bunionectomy. So we’re starting to bring all of that planning together. But first step would be to get through GLP toxicology and file an IND and get into the first-in-human studies.

Operator: Next question comes from the line of Andrew Tsai with Jefferies. Your line is open.

Andrew Tsai: Hi, good afternoon. Thanks for the updates. Thanks for taking my question. Maybe a brief question is just for the ongoing X-TOLE studies, X-TOLE 2 and 3, what are you assuming for the placebo rate on seizure reduction? Is it similar to what you saw in the Phase 2b? And how are you controlling for placebo risk if there is one? Thanks.

Ian Mortimer: Thanks, Andrew. Chris, maybe I’ll start because I might take the question in a little bit of a different direction, Andrew, just to give you — provide a little bit of context and perspective that I think would be helpful. And then, Chris, maybe you can just weigh in on controlling the placebo rate in epilepsy studies in terms of jurisdiction and quality of sites that we’re working with. But Andrew, in terms of our modeling, because I think the question really comes down to what are we comfortable with in terms of the study design and the powering and the statistical analysis. So what we’ve done is we’ve looked at all of the data we generated in the X-TOLE study. Obviously, that was a large 4-arm study, three active doses and placebo.

And that really forms the basis of our statistical model on powering. So we’ve used the actual placebo rates, which if you recall from our X-TOLE study, but just as a reminder, that was kind of in the high-teens in terms of the placebo rate. And that’s kind of what we expected going into the Phase 2 study. So I think it was really well executed and what we would expect. And then we can take those actual data in terms of the placebo rate, the active rate, the standard deviation into our model for Phase 3. And as I think what we said previously is at the high dose of 25 milligrams, we have more than 99% power and we have around 90% power for the lower dose of 15 milligrams. And so in terms of the sizing of the studies, we really went off that lower dose because we have considerable power at the high dose.

Chris, maybe just you can comment on the execution of Phase 3 in terms of placebo rate.

Chris Kenney: Yes. I mean one of the luxuries of epilepsy compared to other areas of neurology or psychiatry is the translatability of the data going from Phase 2 to Phase 3. So — but that said, there are several things that we’re doing to try to mitigate the risk of an increasing placebo effect. And it largely has to do with geography. So there are known geographical regions where the placebo effect in epilepsy is higher relative to others. And the other thing that we’ve used is to target experienced sites, not just experienced sites based upon other drugs, but actually sites that have — had experience working with azetukalner. And then we’ve also been fairly picky about the sites that, in general, that we allow into the study in terms of their experience with epilepsy.

So you could potentially open up a study like this to many other sites, and we’ve been quite choosy and most all of our sites have dedicated expertise within epilepsy. So those are the main ways in which we’re working on mitigating the placebo effect going from Phase 2 to Phase 3.

Ian Mortimer: And Chris, I’ll add — and Andrew, I’ll add one more, which I think is really interesting is the use of electronic diaries. And when we were initiating the X-TOLE study, that was a real conversation internally because it was where it seemed to be a transition between companies using and sponsors using paper diaries or electronic diaries. And obviously, we can’t run the experiment twice, but I think we do have a feeling internally that the electronic diary and the technology that we used in Phase 2 that we’re — and we’re using electronic diaries in Phase 3 as well has helped on that side because we’re continuously reminding patients to enter in their seizure data and we can track that real time in the cloud to make sure that there’s not missing data. I think that’s also beneficial.

Operator: Next question comes from the line of Brian Abrahams with RBC Capital Markets. Your line is open.

Brian Abrahams: Hi there. Thanks for taking my question and congrats on the continued progress. As we head into AES, I’m wondering if you could talk a little bit more about what some of the highest focus elements of the 36-month data will be relative to prior cuts, your level of confidence in the continued safety profile? And then some of the key aspects that you’re going to be highlighting and seeking input on there as you ramp up your presence and engagement. Thanks.

Ian Mortimer: Thanks, Brian. Yes, really important questions. I think this AES is really the most important medical congress in epilepsy, and it’s a huge amount of planning for our team going into it. We’re going to have an incredible presence there. We’re really excited about showcasing all of the work we’re doing across the portfolio. So maybe I’ll start and both Chris Kenny and Chris Von Seggern to provide their perspective as well because both of their teams are going to have a really large presence there, both as we continue on our medical communications side as well as the preparation on the commercial side of the business. But I’ll — my perspective initially on the 36-month data. So the nice thing is, Brian, you’ve seen the OLE data cuts from us before.

So you’re going to see consistency there. You’re going to be — you’re going to see all of the patients have gone through 36 months, so we have a cut of those data where we can show what the population looks like in terms of the seizure reduction. And as we’ve mentioned, we can — we’ve seen improved seizure reduction over time for those that stay on drug, just as a reminder. The second thing we’ll see is just what the seizure freedom rate is. And that number continues to go up because patients are on the drug for longer. And so for that 12-month seizure freedom rate, which is really kind of the focus of the clinical and medical community is that more patients have the opportunity to have that 12 months of seizure freedom. So we’re excited to be able to communicate that.

I don’t want to lose the point that Chris Kenny made in his prepared remarks. You shouldn’t — if we look at the literature that this patient population, given the number of drugs that they have failed and kind of the refractory nature of them, we really shouldn’t be seeing seizure freedom or the literature would suggest it should be less than 5%, but we’ve seen considerably higher seizure freedom in our 24-month cut of the data last year, and we’ll be updating it for 36 months this year. And on the safety side, one of the things, again, that gives us a lot of confidence is we’ve seen a real consistency in the safety profile. So we will provide a safety update, but the types of adverse events that we’re seeing in the double-blind period is consistent with what we’re seeing in open-label extension as well.

So as we mentioned, now that we have patients over five years of dosing, and we have over 600 patient years of exposure, we’re really understanding the adverse event and safety profile overall of the molecule and have real comfort and confidence around that. But Chris Kenny, why don’t you start with your perspective and then Chris Von Seggern, I know this is a big meeting for your team as well.

Chris Kenney: Yes, it’s our Super Bowl. We have a lot going on at AES above and beyond the open-label extension poster. But that’s what, Brian, you focused the question on that. I think Ian covered it pretty thoroughly. The only thing that I’ll add is that we’ll also have retention rates out for a longer period of time, not just at one year and two year, but out to three years. And I think what we’re seeing is that patients who — once they reach two years, they really tend to stay in the study for a long time. And just to build on what Ian said about seizure freedom, just the longer that study goes, the longer we’re able to look at seizure freedom over longer periods of time. I think you’ll be impressed with the data. Chris?

Chris Von Seggern: Yes. And then beyond just the data platform itself, which we’re really excited about, AES represents a phenomenal opportunity for us to engage with potential future prescribers in this marketplace. And we think about AES as a high concentration of epileptologists and broader neurologists with a focus on epilepsy. And our team is going on masks in order to have the opportunity to interact with as many potential — both key opinion leaders as well as potential future prescribers in this marketplace as possible to hear feedback on azetukalner, the profile and how it could potentially fit into a marketplace. So this meeting represents, as Chris has already mentioned, our Super Bowl for not just data, but the opportunity to interact with a number of leading physicians in the space.

Operator: Next question comes from the line of Brian Skorney with Baird. Your line is open.

Luke Herrmann: This is Luke on for Brian. Thanks for taking my question. On FOS, can you share your current thinking on bringing azetukalner into development for pediatric patients? And is this something that could commence ahead of X-TOLE2 data? And is there anything unique from X-TOLE2 in how you would conduct a study in these patients? Thanks.

Ian Mortimer: Yes, good questions. We haven’t actually talked about the pediatric development probably for a few quarters now. So a nice reminder. So yes, we have agreed upon pediatric plans with both FDA as well as EMA. So we know exactly what we need to do to bring the molecule into younger patients. So just as a reminder, in FOS, X-TOLE2 and X-TOLE3 are focused on adults. Actually, in our primary generalized tonic-clonic seizure study, we’re going down to 12-year-olds. So that was based on some FDA feedback. So that study is looking at 12 and above. But we have an agreed-upon plan and essentially, you go through younger cohorts of patients over time. There’s nothing specific in the X-TOLE2 data that we’re looking for that necessarily informs there.

A lot of the work we’re doing is really the pediatric formulation, juvenile toxicology, the other work that we need to do to get into younger patients. So a lot of that work is happening in parallel. And then over time, you’ll see kind of these age groups of cohorts as we step down all the way into very, very young patients over time. So the pediatric plan is ongoing kind of in parallel in the background, and you’ll start to see some clinical development over the next couple of years in younger FOS patients. And then as I mentioned, on the primary generalized side, we’re already down to age 12.

Chris Kenney: Yes. The only thing I’ll add to that is that you asked a question about — Luke, you asked about the unique take on the pediatric. The only other thing that we need to take into account is that, of course, those patients are lighter in weight. So we have to make dose adjustments. But that’s it. Otherwise, Ian covered everything.

Luke Herrmann: Thanks.

Ian Mortimer: Next question. Thanks Luke.

Operator: Next question comes from the line of Jason Gerberry with Bank of America. Your line is open.

Jason Gerberry: Hi guys, thanks for taking my question. Mine just is a patent question actually. So specifically, your food effect patent, my understanding is the strength of these patents tends to be, can you get some sort of incorporation in the product labeling around the food effect such that generics wouldn’t be able to eventually one day carve it out in their own insert. So just wanted to get your confidence when you think about the Phase 3 study protocol and getting label language around a recommendation for dosing close to meal time, which I think is sort of a key to that bioavailability argument with that patent. And just wanted to understand kind of how you’re thinking about that and the strength of that patent. Thanks.

Ian Mortimer: Yes. I think you framed it really well. Sherry can go into the details on our approach.

Sherry Aulin: Yes. I won’t get into too much detail on this, Jason, as I’m sure you can appreciate there’s some sensitivities around this. But look, overall, we’re very comfortable in this food effect patent but more broadly in our patent portfolio, which takes us out to 2039, ’40 absent extension of term. But on the food effect point specifically, so we do have a food effect with this molecule, which is unique to azetukalner. So it’s not something that is seen broadly with the mechanism. So it wasn’t, for example, seen with ezogabine. And we understand it’s not seen with other Kv modulators in development, not something that was therefore predicted by us. But yes, we have been dosing azetukalner with food in proximity with the evening meal through our Phase 2 study, X-TOLE as well as in Phase 3 development, both in our epilepsy program as well as in MDD.

So we do reasonably expect that, that will be on label at the end of the day, given that’s how the drug has been dosed and not doing so would potentially have implications on both or either of efficacy and tolerability.

Operator: Next question comes from the line of Sarah Schram with William Blair. Your line is open.

Sarah Schram: Congrats on another great quarter and thanks for taking my question. So given what we know about other sodium channel targeting therapeutics in the clinic to treat pain, would you expect to pursue both acute and chronic pain indications? Or do you anticipate a little bit more of a narrow focus? I know you mentioned bunionectomy studies earlier, but is there kind of anything specific to Nav1.7 that would be more well suited to one pain setting or the other? And relatedly, given your expertise in ion channel chemistry, would you ever look to develop a Nav1.8 inhibitor? Or do you see that space is increasingly crowded here?

Ian Mortimer: Yes, happy to answer those questions. So a priority, the target of Nav1.7 does not lend itself just to acute or chronic nociceptive or neuropathic. So as we sit today and with the caveat that it’s still early days, this is still a preclinical asset. I think we want to do a proof-of-concept study like bunionectomy to show target engagement and that we can get an analgesic effect. But as we think about the mid- and later-stage clinical development, nothing is off the table right now. So I think we would be looking at all of those things because, as I mentioned, kind of going into this — we’re not guided one way or another based on the genetics or based on the target. In terms of Nav1.7 versus 1.8, that’s a question we often get.

We like 1.7 as a target, a number of reasons. We think the genetics are stronger. I think you mentioned it’s a less competitive space. I think it’s been harder chemistries. And I think we have a real leadership position there that we can capitalize on. We have some other ideas on where we may want to go, which we haven’t really talked about publicly, but we don’t have a formal Nav1.8 program just to address that question head on. We’ve really focused on Nav1.7 because I think it is a target where we’re uniquely suited to be able to run the human clinical experiment.

Operator: Next question comes from the line of Paul Choi with Goldman Sachs. Your line is open.

Paul Choi: Hi, thanks for taking our question. Clinicaltrials.gov is currently showing that the X-TOLE3 study will reach primary completion just four months after X-TOLE2. So presumably, the top line results should be available roughly or concurrently with your planned NDA filing for azetukalner following X-TOLE2. So can you maybe just update us on your latest thinking of how X-TOLE3 might figure as part of your data strategy for your filing? Will it be primarily included in the NDA? Or is it primarily for the European filing? Just your latest thoughts there would be great. Thank you.

Ian Mortimer: Yes. Thanks Paul. I’m happy to start. Chris, if you’ve got comments, please add in. Yes. I mean we’ve said for some time that we’ve prioritized X-TOLE2 over X-TOLE3 and that’s being pulled through a couple of different ways. One, X-TOLE2 was just initiated before X-TOLE3 in terms of those first clinical sites up and running. We also prioritized a number of the sites that had experience with the molecule into X-TOLE2. And we did have a bias in jurisdiction as well, where these studies get up and running generally quicker in the U.S. than they do in some other jurisdictions. And so we’ve biased a number of those sites into X-TOLE2. So — and the priority and the focus on X-TOLE2 is really because that’s on the critical path, as you’ve mentioned, to filing the NDA and commercialization in the U.S. In terms of X-TOLE3, yes, we think it’s important for filing in jurisdictions outside of the U.S. So you’re absolutely right there.

And it’s really important for our overall safety database. So obviously, we think about safety in terms of the requirements under ICH, but also just exposures in the labeled population. So I think we’re going to have a huge — we’ve talked a lot this afternoon about our long-term exposure. We’re going to have lots of long-term exposure, but I think we’re going to have a lot of unique exposures as well, both with X-TOLE, X-TOLE2, X-TOLE3 and X-ACKT and all of the open-label work. So I think that kind of provides the perspective in terms of how the interplay between the two studies. Chris Kenny, anything that I missed?

Chris Kenney: No, you didn’t miss it, but I just think it’s really worth emphasizing that we are positioning the X-TOLE study as our first pivotal trial in focal onset seizures. once we get the second trial, presumably X-TOLE2, we will submit the NDA. So there will be no holdup waiting for X-TOLE3 to submit the NDA. I just want to be — I just want to make sure that’s absolutely clear.

Operator: Next question comes from the line of Danielle Brill with Raymond James. Your line is open.

Danielle Brill: Chris, you commented during the prepared remarks that in X-TOLE, azetukalner demonstrated the best placebo-controlled efficacy to date. If the effect size happens to diminish in X-TOLE2 relative to X-TOLE, what impact might that have, if any, on its value proposition? Thanks so much.

Chris Kenney: You want me to go in?

Ian Mortimer: Chris, do you want me to start and then you carry on?

Chris Kenney: Sure, yes.

Ian Mortimer: Thanks Danielle. Yes, I mean the message really is that I think we set an incredibly high bar here, right? So in terms of our review of the literature with all the caveats of cross-trial comparisons, we believe azetukalner has the best efficacy on a placebo-adjusted basis. So looking at 25 milligrams, the MPC primary endpoint in X-TOLE minus the placebo rate has the highest number that we can see in the literature. And just as a reminder, in the most severe or refractory population ever trial at least based on our review of the literature. So I know we’re doing cross-trial comparisons, but I think it’s a very impressive efficacy outcome and has set a very, very high bar. Because as we’ve just talked about in the last question, because we’re filing on X-TOLE and X-TOLE2, that doesn’t change, right?

We — no one is going to — those data are completed. That double-blind is unblinded. We have those data already. So the nice thing about epilepsy is we see this reproducibility and consistency study to study, but there’s always going to be differences, and I think there’s always going to be a different rate. And so to your very specific question, Danielle, if the X-TOLE2 data aren’t quite as robust as X-TOLE, I still think we have the X-TOLE data and X-TOLE2, we believe are going to be confirmatory that this is an efficacious agent and an important molecule and there’s all of the other attributes as well. So we actually don’t anchor too much on exactly what the efficacy readout is going to be in X-TOLE2 and what the implications may be. And I think Chris Kenny should provide his perspective, but Chris Von Seggern as well because ultimately, I think you’re asking a commercial question if we see something different in X-TOLE2 than in X-TOLE.

So Chris Kenny, maybe you want to add and then Chris Von Seggern.

Chris Kenney: Well, I’ll just say one thing quickly. I mean we really emphasize the X-TOLE data because it’s what we have and because we think it’s quite compelling. It’s not that we’re looking at X-TOLE2 or 3 and saying, I think the data is going to be better or worse or the same, it’s sort of hard to predict these things. So it’s really — we’re just making that emphasis because it’s the actual data that we have in hand. But I mean, ultimately, what we need is for the trial to be positive and then we can submit the NDA. Chris?

Chris Von Seggern: Yes. And then if we think about the positioning of azetukalner in a potential future commercial environment, clearly, what we’ve said in the past is that physicians are looking for new medicines to address continued seizures in this patient population and efficacy is an important value attribute. But when we think about efficacy, there are multiple dimensions beyond just the top line data. We’re going to share the updated open-label data, which are going to show continued durable response and impressive seizure freedom data over time. That’s the totality of the efficacy story in addition to potential rapidity of onset as demonstrated by week one efficacy. And then there are a whole host of other ease-of-use attributes that consistently are identified by physicians as a reason to turn to azetukalner for a patient who’s continuing to suffer from residual seizures.

So while efficacy is important, the totality of the data package associated with this molecule, we consistently hear time and time again is compelling. And therefore, we believe it will offer a really important treatment alternative to patients in this marketplace.

Operator: Next question comes from the line of Marc Goodman with Leerink Partners. Your line is open.

Marc Goodman: Ian, can you just talk about the strategy for MDD program just in total with respect to when are we going to get the second trial started and the third trial started and how you’re thinking about that, how to stagger it and just in the same light as the way you talk about the epilepsy program, just so we have an update. Thanks.

Ian Mortimer: Yes, very consistent with the epilepsy program. So essentially, we want to run the Phase 3 studies in MDD in parallel, but they just never practically start at the same time. So we’re not gating X-NOVA3 on an outcome on X-NOVA2, but there will be a natural stagger. It’s usually kind of in a couple of quarters between — we’re right now focused on X-NOVA2 and getting that up and running and then there will be a bit of a natural delay before X-NOVA3 is run. But both of those studies and then X-NOVA4, those studies will be run essentially in parallel. As you know, the MDD studies are a little quicker to enroll than our epilepsy studies. And so maybe I’ll kind of zoom out a little bit. And if we think about over the next couple of years, 2025, 2026, 2027, there’s going to be a huge amount of clinical data coming from Xenon with azetukalner kind of across the entire portfolio.

Operator: Next question comes from the line of Joseph Thome with TD Cowen. Your line is open.

Joseph Thome: Hi there. Good afternoon and thank you for taking my question. Maybe as we think about the Kv7 development candidates that you have in the early pipeline, how are those differentiated from azetukalner? Do they have different selectivity, different PK or sort of what will you be looking for, for those assets? And then related to an earlier question, would all of these have, I guess, a new IP portfolio around it? Can you talk a little bit about that as well? Thank you.

Ian Mortimer: Yes, thanks Joe. To answer your last question first, yes, these are all novel structures, novel markers. So yes, all different intellectual property when compared to azetukalner. One of the interesting things and discussions we have internally when we think about the Kv7 molecules and maybe franchise is there’s nothing specific in the profile of azetukalner that we’re trying to change or improve on. So as you can understand, these things are multifactorial, right? We’re looking at a whole bunch of different properties on these molecules, but we haven’t really zeroed in on any one specific thing. You mentioned PK or selectivity. There’s nothing one thing that we’re really focused in on because I think the profile as Chris and Chris just mentioned, is so compelling of azetukalner.

That said, we absolutely have chemical diversity. And so these are novel, but we do have chemical diversity. And in terms of really what some of those properties are going to be, I mean, I think we’re really excited about the properties preclinically. But I think the proof is really as we transition those into the clinic and we start to learn about the PK in a human and also making sure one of the nice things about epilepsy, and I know we’re going to go broader than epilepsy for our Kv portfolio, but we also know kind of the exposure levels that we’re looking for in a human because the translatability in terms of some of the preclinical work, we know that we’re in — we’ll be in the right range. We also know with azetukalner at a certain exposure in the plasma, we’re seeing an anti-seizure effect, we’re also seeing an antidepressant effect.

And so we know we can look at that translatability from animals into humans as well. So yes, it’s a real exciting time for the early-stage portfolio in addition to Kv with the 1.7 program and the 1.1 program. But I think you’re going to see multiple molecules on Kv7 mature and head into human clinical development over the next couple of years. And some of them will look — we expect will look more like azetukalner and some, I think, will probably have some different properties, which we’ll learn about in the development.

Operator: And our last question comes from the line of Laura Chico with Wedbush Securities. Your line is open.

Dylan Shindler: Hello, thank you for taking our question. This is Dylan on for Laura Chico. We’re just wondering, so how should we think about the cadence and readouts for the ion channel portfolio? And should we be looking for data in the 2025 timeframe?

Ian Mortimer: So thanks for the question, Dylan. We haven’t got to that level of granularity yet. I think from the prepared remarks and what you’ve seen in our press release and in our Q, the Kv7 molecules and the 1.7 molecules are a little bit ahead of where we are with Nav1.1. So what we said is we’re in IND-enabling studies for Kv7 and for and for Nav1.7. So those molecules are going to transition if everything goes well in the remaining non-clinical studies, those will transition into human clinical development next year. I think depending — and we’ll give updates during 2025 as those transition. And depending on the timing of that transition is when we’ll have a better idea of when we’re going to see some human PK data as well as our SAD/MAD data and then we can start talking about some of the properties of those molecules like we talked about on the last question, an earlier question in terms of exposure as it relates to receptor occupancy in terms of our Nav1.7 program.

So I think we’re going to learn a lot in those first-in-human studies, and then we’d move into the proof-of-concept studies thereafter. So stay tuned for further updates in 2025.

Operator: And no further questions at this time. I will turn the call back over to Sherry Aulin for closing remarks.

Sherry Aulin: Great. Thanks, everyone, for joining us today. If we didn’t manage to get your question during the allotted time, we’ll reach out directly to connect. Operator, we can now end the call.

Operator: And this concludes today’s conference call. You may now disconnect.