Earnings call: Xenon Pharmaceuticals Q2 2024 results and clinical updates

Xenon (NASDAQ:) Pharmaceuticals Inc. (ticker: XENE), a clinical-stage biopharmaceutical company, has provided a comprehensive update on its financial health and the progress of its clinical programs during its Q2 2024 earnings call. The company has reported a robust cash position of $850.6 million and has discussed the advancement of its lead drug candidate, azetukalner, in Phase 3 trials for epilepsy and major depressive disorder (MDD). Xenon has also highlighted the positive feedback on azetukalner’s clinical profile and its potential to address unmet needs in the treatment of epilepsy and MDD.

Key Takeaways

• Xenon Pharmaceuticals reported a strong cash position, with sufficient funds to support operations into 2027.
• The company expects to file an Investigational New Drug (IND) application for its lead candidates in 2025.
• Phase 3 trials for azetukalner in epilepsy and MDD are progressing, with plans to initiate the MDD program in the second half of the year.
• Positive clinical data and feedback have been received for azetukalner in epilepsy and MDD.
• Xenon is exploring new indications beyond epilepsy and depression with its next-generation ion channel modulators.

Company Outlook

• Xenon plans to present data from the Phase 2 X-NOVA trial at upcoming conferences.
• The initiation of Phase 3 MDD program trials is scheduled for the latter half of the year.
• The company is preparing to submit regulatory approval for azetukalner in the US based on upcoming data readouts.

Bearish Highlights

• The SCN8A Phase 2 clinical trial for focal-onset seizures did not meet expectations.
• The specific late-stage clinical development plan for Nav1.7 in pain remains undetermined.

Bullish Highlights

• Xenon reported positive feedback from opinion leaders on azetukalner’s efficacy and safety in epilepsy and MDD.
• The company is developing diverse molecules targeting potassium and sodium channels for therapeutic diversification.
• Phase 2b data for azetukalner showed promising results in patients with focal seizures that generalized.

Misses

• The company did not disclose the split between U.S. and ex-U.S. sites for their clinical studies.
• Details on the late-stage clinical development for Nav1.7 in pain have not been designed yet.

Q&A Highlights

• Xenon is focusing on U.S. sites for Phase 3 trials, with potential expansion to ex-U.S. sites in the future.
• The company emphasized azetukalner’s unique features, including rapid onset and the ability to target anhedonia in MDD.
• Enrollment for the X-TOLE2 study has been steady without impact from competitive dynamics.
• Xenon’s partnership with Neurocrine (NASDAQ:) involves the development of a new molecule targeting Nav1.6 and Nav1.2 for epilepsy studies.

Xenon Pharmaceuticals continues to make strides in the development of its drug candidate azetukalner, with a strong emphasis on the treatment of epilepsy and major depressive disorder. The company’s financial stability and strategic clinical developments suggest a commitment to addressing significant unmet medical needs and expanding its portfolio in neuroscience. Xenon remains focused on bringing innovative treatments to patients, while carefully navigating the complexities of clinical development and regulatory pathways.

InvestingPro Insights

Xenon Pharmaceuticals Inc. (XENE) has demonstrated a prudent financial strategy by maintaining a cash-rich balance sheet, which is a positive sign for investors considering the company’s long-term viability. This is underscored by the fact that Xenon holds more cash than debt, providing a cushion for its extensive research and development activities. An InvestingPro Tip also highlights that the company’s liquid assets exceed its short-term obligations, indicating that Xenon is well-positioned to fund its operations and clinical trials without the immediate need for additional financing.

In the realm of market performance, Xenon’s stock has experienced volatility, with a notable decline over the last week. This is a critical piece of information for investors tracking the company’s short-term market dynamics. However, it is important to consider the company’s historical performance, which has shown a strong return over the last five years. This could suggest resilience and potential for recovery in the stock’s value.

From an earnings perspective, while analysts have revised their earnings upwards for the upcoming period, they do not anticipate the company will be profitable this year. This aligns with the company’s current focus on advancing its clinical programs, which may lead to higher expenses in the short term but could result in significant long-term gains if its drug candidates are successful.

InvestingPro Data metrics further inform our understanding of Xenon’s financial health and market position:

• Market Cap (Adjusted): $2.99 billion USD

• P/E Ratio (Adjusted) as of Q1 2024: -15.77, reflecting the company’s current lack of profitability.

• Price % of 52 Week High: 77.86%, suggesting that the stock is trading below its annual high, which could indicate a potential buying opportunity for investors.

For those seeking deeper insights and additional tips, InvestingPro offers a comprehensive list of tips for Xenon, which can be accessed at https://www.investing.com/pro/XENE. There are currently 9 additional InvestingPro Tips available, providing a more nuanced understanding of Xenon’s financial and market performance, as well as its future prospects.

Full transcript – Xenon Pharmaceuticals Inc (XENE) Q2 2024:

Operator: Thank you for standing by. My name is Meg, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 2024 Xenon Pharmaceuticals, Inc. Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you. I would now like to turn the conference over to Mr. Chad Fugere, VP, IR for Xenon. Please go ahead.

Chad Fugere: Good afternoon. Thank you for joining us on our call and webcast to discuss Xenon’s second quarter 2024 financial and operating results. Joining me today are Ian Mortimer, Xenon’s President and Chief Executive Officer; Dr. Chris Kenney, Xenon’s Chief Medical Officer; and Sherry Aulin, Xenon’s Chief Financial Officer; along with Dr. Chris Von Seggern, Xenon’s Chief Commercial Officer, who will be available during the Q&A period. Ian will begin with a summary of our recent progress across our business, including a summary of our expanding preclinical pipeline programs. Chris Kenney will provide an overview of our ongoing clinical stage programs, including our plans in major depressive disorder, or MDD. And Sherry 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 may make a number of statements that are forward-looking, including statements regarding the timing of and potential results from clinical trial, the potential efficacy, safety profile, future development plans and 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 develop and 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 second 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 would like to turn the call over to Ian.

Ian Mortimer: Thank you, Chad, and good afternoon, everyone, and thank you for joining us on our call today. This is an exciting time for Xenon as we expand our pipeline and further progress towards becoming a fully integrated biopharmaceutical company. We remain sharply focused on three key areas across the business where we have continued to make significant advancements this past quarter. Number one, the continued execution across our Phase 3 azetukalner epilepsy studies; number two, preparation for our azetukalner MDD program with a focus on finalizing our Phase 3 protocol and study initiation later this year; and number three, the advancement of our portfolio of next-generation ion channel modulators. Over the last decade, epilepsy research has been a primary focus at Xenon driven by a continued and significant unmet medical need, with many patients still struggling to control focal onset seizures and primary generalized tonic-clonic seizures despite available medications. For that reason, the continued progress of azetukalner and our broad Phase 3 epilepsy program remains core to our business. As a reminder, azetukalner is the only Kv7 potassium channel opener in development with Phase 2b efficacy and long-term safety data in epilepsy patients. No other Kv7 molecules in development have efficacy and safety data in epilepsy or depression patients. And we have set an incredibly high bar for other Kv drugs in development to achieve the impressive attributes of the azetukalner. Data from our Phase 2b X-TOLE epilepsy trial demonstrated the best placebo-adjusted clinical efficacy in the most refractory patient population ever trialed as well as a favorable tolerability profile in adult patients with focal onset seizures. Furthermore, long-term efficacy data generated through our X-TOLE open-label extension support increased seizure reduction, with patients out to 30 months on azetukalner showing a greater than 90% reduction in median monthly seizure frequency, while approximately one in four patients on azetukalner for at least two years have been seizure-free for a full year or longer. In addition, we now have over 600 patient-years of exposure as well as patients on azetukalner for more than four years in the OLE, giving us and the epilepsy community tremendous confidence around the future potential of azetukalner to address the need for new anti-seizure medication. With that in mind, we continue to progress patient enrollment across our ongoing Phase 3 epilepsy studies with top-line results from X-TOLE2 in focal onset seizures anticipated in the second half of 2025. Positive results would enable the submission of our NDA with the goal of advancing azetukalner towards commercialization. Overall, we are very pleased with the progress in our Phase 3 program and it’s exciting to be in a position to develop what we believe will be the next important medicine to treat patients with focal epilepsy. Focusing now on our azetukalner MDD program, we recently presented the Phase 2 X-NOVA trial results at the American Society of Clinical Psychopharmacology, or ASCP, the annual meeting held in Miami in May. This medical meeting was a great opportunity for us to continue to raise awareness of data supporting azetukalner’s potential differentiated profile versus standard-of-care agents in MDD, including a rapid onset of effect, tolerable safety profile, and a potential benefit on anhedonia, a common comorbidity with a significant unmet need. These data form the basis of our decision to advance azetukalner into a Phase 3 program in MDD, which we expect to initiate in the second half of this year. We are also continuing to evaluate additional clinical development opportunities for azetukalner, focusing specifically on other neuropsychiatric indications where a scientific rationale exists as well as a commercial fit with epilepsy and MDD. Beyond azetukalner, we continue to expand Xenon’s leadership in the small molecule ion channel space, based on our extensive work in channelopathies over the past two decades as we build out a world-class discovery team. We have recently expanded our pipeline by nominating multiple development track candidates, or DTCs, targeting potassium and sodium channels. Achieving DTC status is a critical milestone for our program as it reflects a molecule that has met our rigorous criteria to be advanced into GLP toxicology studies and if successful, will form the basis of an IND or IND-equivalent submission. One of our key areas of focus are potassium channels as we believe Kv7 offers potential pipeline and mechanism opportunities. The breadth and depth of potential therapeutic indications for the mechanism provides a compelling strategic rationale for the development of additional Kv7 product candidates that are chemically diverse from azetukalner and can provide additional development opportunities across a broad range of therapeutic indications, including seizure disorders, pain and neuropsychiatric conditions. For that reason, we continue to advance multiple Kv7 molecules, so that we can potentially extend the reach of this promising and differentiated mechanism to more patients in need. Building on our extensive experience against the Kv7 target developed over many years, we have made significant progress across several promising novel chemical series. And this past quarter, we nominated multiple Kv7 development track candidates with a lead candidate now in IND-enabling studies to support our goal of filing an IND or IND-equivalent in 2025. We believe these advancements in our Kv7 pre-clinical program, combined with the promising and robust clinical data we have generated to-date with azetukalner in epilepsy and MDD, set Xenon at that forefront of both drug discovery and development for this important mechanism. Turning now to our sodium channel work. As an early pioneer in the space, Xenon scientists focus on identifying genetic targets associated with rare phenotypes. Through this early work, it was uncovered that individuals with complete loss of function mutations in the gene encoding for Nav1.7 have an inability to perceive pain. While those individuals with gain of function mutations have non-precipitative spontaneous severe pain, leading to the identification of Nav1.7 as an important pain-related target, offering the possibility of a new class of the pain medicines without the limitations of opioids. While other sodium channels involved in the transmission of pain signals, such as Nav1.8 have recently been clinically validated, we believe Nav1.7 has by far the strongest genetic validation. To-date, efforts to develop Nav1.7 inhibitors have faced a number of different challenges, and we have learned a tremendous amount from these previous molecules. We are now advancing novel Nav1.7 inhibitors, which we believe will have the appropriate properties to evaluate the clinical potential of a selective Nav1.7 inhibitor. In this past quarter, we nominated a lead Nav1.7 candidate, which is expected to enter IND-enabling studies in the near-term with the goal of filing an IND or IND-equivalent in 2025. If successful, this program has the opportunity to generate important and early de-risking human proof-of-concept data. We are also advancing potentiators of the sodium channel Nav1.1, which is based on a scientific rationale that a precision medicine therapy for Dravet syndrome should aim to restore Nav1.1 activity, specifically without impacting other neuronal targets. We are pursuing brain-penetrant small molecule potentiators of Nav1.1 in an oral dosing formulation as we believe this approach could directly address the underlying etiology of Dravet syndrome and provide a potential disease-modifying therapy. To round out our extensive CNS discovery work, we continue to make progress as part of our ongoing collaboration with Neurocrine Biosciences to develop treatments for epilepsy. In addition to the ongoing Phase 2 study evaluating NBI-921352 in an orphan pediatric epilepsy, the next lead candidate and Nav1.2/1.6 inhibitor is now in IND-enabling studies with the intent to progress into human clinical trials in 2025 as a potential treatment for epilepsy. So overall, I’m extremely proud of the continued progress across the organization and our pipeline, including both clinical and preclinical efforts, and this positions Xenon with one of the most exciting CNS portfolios that exist today. So I’ll now turn the call over to Chris Kenney, and Chris will provide more detail on the progress on our azetukalner clinical programs as well as some near-term conferences where Xenon will have a presence. Chris, over to you.

Chris Kenney: Thanks a lot, Ian. I’ll start by echoing that this is indeed an exciting time at Xenon as we continue to receive enthusiastic feedback from opinion leaders and site investigators about the emerging clinical profile for azetukalner. Beginning with our Phase 3 epilepsy program, which includes X-TOLE2 and X-TOLE3 in focal onset seizures and X-ACKT in primary generalized tonic-clonic seizures, our Phase 3 FOS studies continue to advance with the first top-line data readout of X-TOLE2 anticipated in the second half of 2025. Our plan remains to submit results from X-TOLE2, along with the existing data package from our Phase 2b X-TOLE clinical trial and additional safety data from other clinical trials with the goal to meet regulatory requirements in the U.S. for approval. We also continue to highlight the robust scientific evidence generated through the X-TOLE open-label extension study with the medical community. As Ian referred to, healthcare providers observe a high burden of illness within the epilepsy community despite current medications. So it’s been important to share the long-term X-TOLE OLE data with the objective of gaining further insights on the potential benefits of azetukalner. We will have additional opportunities to engage with the treatment community at the upcoming European Epilepsy Conference taking place in Rome, Italy from September 7 to September 11, where we’re presenting two posters on our ongoing X-TOLE OLE study as well as participating in a scientific exhibit where we plan to showcase survey results related to quality of life measures from focal onset seizure patients. In addition to seizure burden, patients reported other symptoms that illustrate the broad burden of epilepsy and its negative impact on quality of life, such as fatigue, lack of energy or other comorbidities, including anxiety and depression. Shifting to progress we’re making toward our Phase 3 MDD studies, we have now finalized and filed our protocol with FDA and clinical site planning is well underway. Our Phase 3 MDD program will include three Phase 3 trials in approximately 450 subjects each with moderate to severe MDD, assessing the efficacy and safety of 20 milligrams of azetukalner versus placebo. The primary end point will be the change from baseline in HAM-D17 total score at week six. Key secondary end points will include SHAPS total score and CGI severity at week six and HAM-D17 at week one. We expect the first MDD study initiation to occur in the second half of the year with study sites exclusively in the U.S. As Ian noted, in addition to this extensive internal planning work, our clinical and medical teams highlighted our Phase 2 proof-of-concept X-NOVA trial in patients with MDD at the ASCP meeting in May. This was the first time presenting these data at a major medical meeting, which demonstrated that treatment with azetukalner led to a clinically meaningful reduction in MADRS, a statistically significant reduction in HAM-D17, a rapid onset of effect a statistically significant reduction in anhedonia and a potentially differentiated safety profile compared to standard of care agents. Feedback on the data was received with great interest by the experts in the field. There was recognition of the potential of azetukalner to be a meaningful treatment option for patients with MDD with particular interest in the novel mechanism of action and potential benefit on anhedonia and a favorable tolerability profile with no notable adverse effect on sexual dysfunction or weight gain. We’re also looking forward to presenting encore X-NOVA data at the upcoming Psych Congress taking place in Boston from October 29 to November 2. These opportunities to educate healthcare professionals on our MDD data are incredibly important and we value the insights gained as we further our azetukalner clinical programs. Now rounding on my comments on MDD, we also continue to support the investigator-led MDD study conducted by Dr. James Murrough of Mount Sinai and Dr. Sanjay Mathew at the Baylor College of Medicine. This 60-patient placebo-controlled Phase 2 trial has a functional primary end point 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. The study is also evaluating secondary clinical end points including the MADRS and SHAPS. It is anticipated that patient enrollment will be completed this quarter, and we look forward to providing further updates in the coming months. To summarize, our team is driven to continue advancing our azetukalner late-stage clinical development programs in both epilepsy and depression and we continue to be highly encouraged by the positive response to azetukalner from physicians and key opinion leaders. I look forward to updating you on our progress. I’ll now turn the call over to Sherry, who will provide an overview of our second quarter financial results and upcoming milestones. Sherry?

Sherry Aulin: Great. Thank you, Chris. So beginning briefly with our financial results. We’re well-positioned with a strong balance sheet to support our plans for azetukalner in both epilepsy and MDD and other earlier stage programs in our pipeline. As of June 30, 2024, we had cash and cash equivalents and marketable securities of $850.6 million, compared to $930.9 million as of December 31, 2023. Based on our current operating plans, including the completion of the azetukalner Phase 3 epilepsy studies and fully supporting late-stage clinical development of the azetukalner in MDD, we anticipate having sufficient cash to fund operations into 2027. I would refer you to our news release and 10-Q report for further details around our financial results. So in summary, as you heard from the team today, we remain focused on our goal to improve outcomes for patients in areas of high unmet medical need. We believe azetukalner has the potential to be a paradigm shifting best-in-class medicine. The strong belief in azetukalner’s compelling profile is centered around its unique mechanism of action and supported by the significant body of clinical data generated to-date. Looking ahead, we anticipate a number of important milestone events and goals. We will continue to advance azetukalner Phase 3 epilepsy program with X-TOLE2 top-line data expected in the second half of 2025. We expect to initiate the first of three Phase 3 clinical trials in MDD in the second half of this year, and we will continue to explore other development opportunities for azetukalner. Lastly, we’ll continue to advance our early-stage preclinical pipeline with the goal of filing multiple INDs or equivalent in 2025. Thank you all today for your attention, and we look forward to sharing more in the coming months. I’ll now ask the operator to open the line for any questions.

Operator: Thank you. The floor is now open for questions. [Operator Instructions]. And your first question comes from the line of Paul Matteis with Stifel. Please go ahead.

Paul Matteis: Hey there, good afternoon. Congrats on all the progress. As it relates to X-TOLE2, I was wondering if by now, you have a good sense of how the patient demographics as it relates to baseline seizure frequency, refractoriness, et cetera, comparing to X-TOLE1. And then just as it relates to your updated timing guidance for top-line, thanks for that. Is the expectation still that you’ll complete enrollment around the end of this year, early next year? Thanks so much.

Ian Mortimer: Thanks, Paul. I’ll take the second one and maybe make a quick comment on the first one, and then Chris Kenney, if you want to add any of your perspective as well. So on the first question, just on demographics. So obviously, we track that. We see it on a blinded basis and all the things you’d expect us to track, we’re looking at on a blinded basis. We haven’t historically given any information publicly on what we’re seeing just because as the study is ongoing, those demographic data are changing all the time. So — but we’re definitely tracking it. So as we get to the end of patient screening, in randomization, we can — we’d be in a position to give some of that information publicly. But Chris can add in a minute there also. Yes, and then in terms of guidance, I think you kind of nailed it. We moved to top-line data guidance now. So just to reiterate, I know we said it a few times, but X-TOLE2 top-line guidance second half of next year. Just to take a step back, I think we said it before, it’s about six months to eight months from last patient screened to top-line data, and that’s because these patients go through a screening period. And then there’s a two-month baseline period where they have to count seizures in an electronic diary, that’s we can come up with a monthly seizure burden. Then the randomization visit happens, and there’s three months of the double-blind period. And then there is safety follow-up. That safety follow-up, the timing depends a little bit on whether those last patients go into open-label extension or not. So just trying of back all that out, where exactly screening will complete, we’re comfortable with our guidance, the second half data, which means that kind of back out six months to eight months from that is when we expect patient screening to be completed. So hopefully, that just gives a little bit more background and color on kind of the process that we’re going through. Chris, anything else on the demographics that you want to comment on?

Chris Kenney: Yes. So just as a reminder, the seizure burden in the X-TOLE Phase 2b study was pretty high. Patients had an average of 13.5 seizures per month at baseline. Half the population were taking three anti-seizure medications. And on average, patients had failed six anti-seizure medications even before coming into the study. And despite that, we saw really robust efficacy with the largest separation between the high dose and placebo from the perspective of median percent change in seizure frequency compared to any other study we can find in focal onset seizures. So we’re pretty pleased with that. So the spirit of the subsequent Phase 3 program is do the best you can to not deviate from what was done in X-TOLE because that worked out pretty well. And so that’s what we’ve tried to do. And more directly, as an answer to the question, what we’re seeing so far is that the population has shaped up very similarly in the Phase 3 program as it did in the Phase 2 study. And obviously, we’re keeping an eye on that in real time, gives the opportunity to make an adjustment if you had to, if you were getting something unexpected, but we’re not right now.

Paul Matteis: Good to hear. All right. Thank you both very much.

Operator: Your next question comes from the line of Brian Abrahams with RBC Capital Markets. Please go ahead.

Leo Leung: Hey, it’s Leo Leung on for Brian. Thanks for taking my question. I had maybe one and then just a quick clarifying question as well. I guess, on the MDD trial design, I guess, as you’re thinking about how azetukalner might position itself, and there’s a number of other agents that are also potentially having effects on anhedonia, I guess, how’s those other competitive trials? And I think the Kappa-opioid start to readout. I guess, are you looking for any data there and how they perform on anhedonia to maybe inform and whether you want to change selection for anhedonia or how that might impact market positioning for azetukalner. And then just to clarify, I think you guys said that you’re not running ex-U.S. sites for the MDD Phase 3 program. And I think maybe before you had said that you would use both international and U.S. sites. I guess, can you maybe talk about what drove that change, if I heard you guys correctly, and maybe how that might impact any expectations on timing and how quickly you can move? Thanks.

Ian Mortimer: Thanks, Leo. I can start and then Chris Kenney to add in on the MDD side. And Chris Von Seggern, if you can provide perspective a little bit about the market and what we’re hearing back in our market research and the importance of anhedonia and maybe how we believe is that your calendar can differentiate with some of the other molecules, both in development, but also those that are commercially available currently. So a couple of comments. Yes, just on clarification in terms of the ex-U.S./U.S. sites, we’ve said that we’re running three Phase 3 clinical trials in depression. We had always — this isn’t a change. We had always expected that definitely the first study, which will start in the next couple of months, would focus on U.S. sites. As we get to the second and the third studies, we may move to some ex-U.S. sites. But right now, that’s where the Phase 2 was run. I think that’s where a lot of the clinical development for major depressive disorders done in the U.S. So we’ll definitely focus that for what we’re calling X-NOVA2, which is the first Phase 3. And then as we move into the other Phase 3s, there may be some difference in site selection as we move forward. So hopefully, that helps. In terms of the protocol, how we may be informed by other readouts, the protocol for us in the MDD study is locked. So we — as Chris said in his prepared remarks, we have filed the Phase 3 protocol to the — with the FDA, and we expect to hear back shortly on that and initiate that study. So in terms of the inclusion/exclusion criteria as it relates to baseline, both depression and anhedonia, all of that stuff is now locked. And as we said on previous calls, I think we’re very much informed by our Phase 2 program using HAM-D17 as primary also increasing the severity of the patients as we move from Phase 2 to Phase 3. So although I think additional readouts are always interesting, they’re not going to change in terms of our strategy or approach. But Chris Kenney, why don’t you add to that; and then Chris Von Seggern, on just differentiation in the marketplace.

Chris Kenney: Yes. I would just zooming out from anhedonia for a second. I think why azetukalner is so interesting in MDD is really kind of a constellation of features, not just anhedonia. So we’ve got the unique mechanism of action. We have the rapidity of onset, which also happened in focal onset seizure patients, which makes you think it may be real; and then the safety. So on the safety side, from an MDD perspective; we had no notable issues with sexual side effects or weight gain. And in fact, the drug at 20 milligrams was better tolerated in the MDD population compared to the focal onset seizure population. So that safety tolerability data, no SAEs in any of the 10 or 20 milligram treatment groups in X-NOVA, that is — I think it’s is important or perhaps even more so. But I would say it’s more of the constellation of all those features not one per se. And maybe I’ll turn it to Chris to see his perspective as from a commercial perspective.

Chris Von Seggern: Yes. Thanks, Chris. So maybe just to ground everyone, when we think about the major depressive disorder treatment landscape, it’s important to note that the mainstay of treatment in this space, SSRIs, SNRIs, notably do not have a benefit, specifically on the anhedonia component of the disorder. And when we conduct our market research as we think ahead towards commercializing azetukalner in major depressive disorder, clinicians have very clearly identified anhedonia as one of those constellation of features that Chris Kenney mentioned but also the fact that having a benefit in this core symptom domain or comorbidity of major depressive disorder is something that is very, very encouraging and clinicians are actively looking for given the fact that the SSRIs and SNRIs don’t provide benefit along that dimension. So when we do our research and we do our testing of a potential azetukalner profile, it’s something that clinicians absolutely latch onto and appreciating that folks are now focused on this area in large part because of the unmet medical need that exists in the marketplace today.

Ian Mortimer: Thanks, Chris. Operator, we can move to the next question.

Operator: [Operator Instructions]. Your next question comes from the line of Tessa Romero with J.P. Morgan. Please go ahead.

Tessa Romero: Good afternoon and thank you for taking our questions. So Ian, you’ve outlined top-line X-TOLE2 data in the second half of 2025 here. Digging back up on like an earlier question that was asked, maybe asked slightly differently, can you just provide a little bit of an updated view for us on how the pace of enrollment has been going? And just kind of curious, has it been pretty steady since all the sites were activated? Or there — have you observed any changes due to competitive dynamics or anything else here in the U.S. or globally across sites? And can you just remind us what the split is between U.S. and ex-U.S. sites? And what are the key regions outside the U.S.? Thanks so much.

Ian Mortimer: Thanks, Tessa. I think I’ve got it all, but others can jump in if I missed something. So yes, in terms of pace of enrollment and kind of top-line guidance, as you said, top-line for X-TOLE2 second half 2025, I mean it’s really exciting for us, right? I mean that’s a critical path now we — with the data from X-TOLE and X-TOLE2, we’ll be ready to engage with FDA and file an NDA. So it’s really exciting now to have that top-line data guidance out. In terms of cadence or pace of enrollment, we said on previous calls that just the number of sites that you need to complete these studies, which is kind of in 100 medical centers, give or take, in each of X-TOLE2 and X-TOLE3 is that you just naturally do get some ebb and flow and up and down of enrollment. So we’ve been comfortable with where we are, and we’re comfortable with the guidance that we’re giving. And obviously, we have more experience in running these types of studies than anybody else out there right now. So I think we’re in really good shape. In terms of competitive pressures, we haven’t seen anything. So we haven’t seen the pace of enrollment change from a competitive perspective. We’re — obviously, when we were running X-TOLE, there’s at times other studies that are being run and the same thing when you’re running X-TOLE2. And that’s not just all. I think your question is probably a little bit more focused on drug trials, but there’s device studies as well that are ongoing. So there’s always other things that are happening often at these clinical centers. But we haven’t really seen any change in the last little while that has given us any pause or any concern. In terms of regions, so X-TOLE2, we’ve really tried to use X-TOLE as much as our guide. We went back to a lot of the same centers from X-TOLE into X-TOLE2 and use investigators that have experience with the molecule. As a reminder, in the X-TOLE Phase 2 study, we had sites — clinical sites in Europe and clinical sites in the U.S. At the end of the day, 60% of patient enrollment came from Europe and 40% came from the U.S. Again, while we’re partway through the study, I don’t really want to comment on where we’re coming from in X-TOLE2, but the same jurisdictions that we used in X-TOLE we’re using in X-TOLE2. I think I got all of your questions there, but if there’s anything else, please let me know.

Tessa Romero: You did. Thanks so much, Ian. Talk to you soon.

Ian Mortimer: Thank you, Tessa.

Operator: [Operator Instructions]. Your next question comes from the line of Jason Gerberry with Bank of America. Please go ahead.

Dina Ramadane: Hi, good afternoon. This is Dina on for Jason. Thank you so much for taking our questions. I just wanted to ask about the next-generation Kv7 asset that’s in IND-enabling studies. Could you please provide some more color on the specific drug properties that led you to advance this asset? Is your aim to improve upon azetukalner’s profile? Or is this more of a life cycle management play to advance Kv7 into neuropsych opportunities beyond the current epilepsy and MDD set? Thank you.

Ian Mortimer: Thanks, Dina. Yes, I think it’s a really important question. Obviously, the success we’ve had with azetukalner, now in late-stage clinical development, we think it’s really important for us to continue to maintain and build upon what we think is really a considerable leadership position in this mechanism, which we’re really excited about. So we’ve been working on additional molecules against the same target for quite some time, so completely diverse chemistries from azetukalner. As you mentioned, we said in our prepared remarks, multiple candidates have been identified, including the lead one is in GLP toxicology studies. So we’re excited to get that into human clinical development as well. We touched upon what we call our DTC, or a development track candidate. And you asked a question around product drug properties. It’s quite a long list of things that we try to optimize all of these drugs for obviously, potency and selectivity on target, but a bunch of the drug properties as well. So what’s really interesting about azetukalner is there isn’t any one specific attribute of azetukalner, which we’re trying to improve on. Right now, as we’ve gone through data, as we’ve mentioned, this is best-in-category efficacy on a placebo-adjusted basis, the novel mechanism, the rapidity of onset, so we think we have so many of the important attributes to be successful both in epilepsy and depression that these next-generation molecules have diverse chemistries, have properties that meet our criteria but we’re not specifically trying to improve on any one attribute from azetukalner. There will be an opportunity, as you mentioned, to have some therapeutic diversification. So as we move forward, obviously, for this mechanism, we continue to be excited about epilepsy, neuropsychiatry, pain and other indications. So absolutely, you’ll see the next molecules go into some indications that we’re not going to with azetukalner as well.

Dina Ramadane: Got it. Thank you so much. And I guess a quick follow-up to that. You highlighted some additional neuropsych indications. Will we be looking at data from Kv7 competitor in bipolar mania and potentially migraine to kind of inform the indications you plan to assess with this next-gen molecule? It might be a little bit too mature of a question to ask. Thank you.

Ian Mortimer: Yes. And Chris Kenney and Chris Von Seggern feel free to add your perspective here. I’ll start and please add to it. Yes, we’ve done a significant amount of LCM work on the mechanism. We’re very much informed by what we learn and the work that we do rather than anchoring to any competitive product. And we’re making decisions all the time. And the Kv7 drug that you’re probably referring to in development is years and years and years away from any efficacy data, and we’ll be making decisions far in advance of that. So we’ll make decisions based on all of the work that we’ve done, where we think these molecules would be best suited for early clinical development. But we’ve done — probably over the last year or more, we’ve done a lot of work to do commercial assessments and mechanistic assessments and a bunch of preclinical work to understand that’s where we can take these molecules in the future. But Chris or Chris, anything to add to that?

Chris Kenney: I’ll just say something quick. Ian in his prepared remarks, Ian talks about Kv7 offering the potential for a pipeline and a mechanism opportunity. And as Chris Von Seggern and I and our teams have looked at life cycle management, there are a lot of different options. This is a mechanism that really should work in all types of epilepsy, which is what gave us the confidence to go into focal onset seizures and primary generalized tonic-clonic seizures in parallel; there are a number of psychiatric indications of interest. I think we would probably put bipolar at the top of that list, but there are several others of interest and then pain. So I think it’s an interesting target, and we have lots of different options with these backup compounds. Chris?

Chris Von Seggern: Yes. Thanks, Chris. I think the only thing that I can add here is just reiterating that the extent of work that’s been done, both from a commercial perspective, gathering input from potential prescribers in the future as well as on the scientific side where we’ve looked in-depth at level of genetic validation and now emerging clinical validation based on the backbone of the azetukalner profile really just creates a range of potential options that we’re incredibly enthusiastic about, in part driving the decision for us to advance multiple products into the clinic.

Dina Ramadane: Thank you so much.

Operator: [Operator Instructions]. Your next question comes from the line of Brian Skorney with Baird. Please go ahead.

Luke Herrmann: Hi, this is Luke on for Brian. Thanks for taking the question. On Nav1.7, can you talk about your biggest learnings from legacy challenges with the mechanism in the past? And then apologies if this is something you’ve discussed before, but can you remind us whether you intend to conduct non-human primate studies to get a better idea of the profile before entering the clinic, given it seems there’s been challenges with translation utilizing rodent models in the past. Thanks.

Ian Mortimer: Sure, Luke. Yes. Your — and when you’re talking about non-human primate models, you’re talking specifically with Nav1.7?

Luke Herrmann: Yes, yes.

Ian Mortimer: Okay. Sure. Yes, I can take this and then others can add. Yes. So I think what you’re referring to is that Nav1.7 or the gene, which is SCN9A, was sequenced quite some time ago, and there’s been a number of companies, us included, that have tried to prosecute against the target, and we just haven’t made it into late-stage clinical development. There’s kind of a number of reasons. There’s not one reason. I think a lot of the drugs that other companies called selective 1.7 inhibitors were not actually selective. They were much more ion sodium channel inhibitors. And so I think selectivity matters, and we’ve made really great progress on a selectivity profile and therapeutic index and selectivity across the other isoforms. There were definitely some toxicity issues related to certain chemistries on the target historically. And so I think we’ve learned a lot there. And then excuse me, I would say, the last thing is around the pharmaceutic properties. I think we’ve learned a lot about the expression patterns and distribution and really where we need to get these molecules to be successful. So I think we’ve learned a ton from the field and our own work that we’ve done over the past 15 years or so internally where we have molecules that meet all of our criteria that we’re really excited to run the human clinical experiment. In terms of translatability, translatability is hard for this target because the human Nav1.7 is different than in other animal species. We do use some genetic models and human knock-in models to help us with that. But really, I think we need to run the human experiment. What we can do in animals is really understand the therapeutic index and ensure that we have — we run the appropriate tox species from a regulator point of view. But we really need to run the human clinical experiment to be able to answer that question. Nice thing as you know about pain is there’s an opportunity to run this earlier in human clinical development than proof-of-concept in some of the therapeutic indications and the early studies run quite quickly as well. So I think we’ve made tremendous progress on this target and I don’t think we’re actually far away from being able to run the human experiment.

Luke Herrmann: Awesome. Thanks.

Ian Mortimer: You’re welcome.

Operator: Your next question comes from the line of Andrew Tsai with Jefferies. Please go ahead.

Andrew Tsai: Hey, good afternoon. Congrats on the execution. Thanks for the updates. I wanted to ask on PGTCS this time. Could it be possible we get data in 2025? Or should we be assuming 2026 at the earliest? And I think you guys have mentioned before how the study is powered to show what other drugs show within this indication. So would it be fair to assume a 30% to 40% type placebo-adjusted separation, seizure reductions could be the bar here? Thank you.

Ian Mortimer: Thanks, Andrew. I can maybe talk about timelines. Chris Kenney, do you want to talk about power and kind of expectations for moving from FOS to PGTCS and some of the changes there in terms of what our expectations are. And maybe actually just baseline seizure burden coming in as well, I think, would be helpful to put that into context. But Andrew, in terms of timeline, so we haven’t guided yet on X-ACKT, which is our Phase 3 clinical trial in primary generalized tonic-clonic seizures. I mean, if we look at the literature and the most recent studies that have been run, cenobamate, they’re still running their PGTCS study even though that drug is approved, if you look at lacosamide, where they had data very late in the commercial life of that product. These are more challenging studies to run. They run much slower than the focal onset seizure studies. So the — although we haven’t yet given guidance on it, I just want to set expectations that these studies are slower than what we would expect in the X-TOLE program given PGTCS is less common and the studies take longer than the focal onset seizures. And at the appropriate time, we’ll be able to update in terms of guidance to top-line data. But Chris, maybe you can just give — because we did in today’s prepared remarks, a little bit of background on the study design and the powering assumptions.

Chris Kenney: Yes. Sure. Thanks, Ian. I mean, one of the — there are a few differences going from focal onset seizures to primary generalized tonic-clonic seizures. One is that the PGTS — PGTCS population in general has a lower seizure burden, and it’s difficult to find those patients. And so that’s why you end up seeing the duration of the study take a little bit longer. Now fortunately, when the drugs work, they work really well and you need fewer patients to show efficacy. So as you look at the spectrum of what’s been done in the past on the low end, the study that was done with topiramate just had about 40 patients per group, so 40 times two. And I think lamotrigine had 60 patients per arm, so 60 times two for the total size. And then there are three examples of studies, PGTCS studies that had about 80 patients per arm so a total of about 160 patients. Two examples are include perampanel and levetiracetam and that’s what we’ve anchored to sort of on the higher end of that spectrum of between 40 to 80 patients. I mean the one exception that included even higher patients was the lacosamide study, but that was a time to event study with a different entry criteria. So it’s sort of comparing apples to oranges. So we’re on the higher end of that. We don’t — I mean, compared to focal-onset seizures, we don’t have preliminary data. And so our study was simply powered compared to those three examples of previous studies that used about 80 patients per arm.

Andrew Tsai: Thanks.

Operator: Your next question comes from the line of Paul Choi with Goldman Sachs. Please go ahead. Excuse me, Mr. Choi, we cannot hear you. Kindly check your line, please. Thank you.

Ian Mortimer: Operator, we can move to the next question and then we can come back to Choi.

Paul Choi: Hi, sorry. Can you hear me?

Ian Mortimer: Hey Paul, yes, we can hear you now.

Paul Choi: Sorry about that. I just wanted to ask a follow-up on Nav1.7 with regard to development in pain. And can you comment, pending any of the animal model work, what you see as the most logical development focus for that area, whether you focus on an acute development clinical strategy or focusing perhaps on the larger chronic opportunity for us to prosecute them in parallel. Thanks, Ian.

Ian Mortimer: Yes, Paul, I think it’s really a question I would say it’s probably a bit premature for us. We haven’t fully fleshed out what kind of a late-stage clinical development plan would look like. Obviously, we would do healthy volunteer work initially; make sure that we believe we’re getting appropriate exposure where we can do some modeling and predictability that we have enough receptor occupancy from an efficacy point of view. So that would be the early work. And then as I was mentioned earlier, the nice thing about pain is we would likely run a bunionectomy study, right? And those studies can be run very quickly. At reasonable size in terms of powering as well, we haven’t designed a study like that yet. So there’s a whole lot of questions there in terms of number of active doses and potentially active controls and other things, and we’ll get to all of that in advance. But you’re really asking a question more about kind of the acute and chronic longer-term studies, which I think are both on the table, at least based on the mechanism. There’s nothing to suggest with the genetics or the mechanism that we should necessarily lean one way or another. But so I would say today both are potentially on the table. We do want to really monitor how the Nav1.8 program is doing and how they’re doing in terms of accessing the commercial market in terms of the acute market to start. So I think that’s going to be an interesting data point for to inform us as well. So I don’t have a really good, definitive answer for you today because I think it’s just too early and too premature, but more to come on that over the next year or two.

Paul Choi: Okay. Thanks, Ian.

Ian Mortimer: You’re welcome.

Operator: Your next question comes from the line of Peyton Bohnsack with TD Cowen. Please go ahead.

Peyton Bohnsack: Hi guys, thanks for taking our questions. I guess, could you talk a little bit more about the design of the MDD total program? I guess, in terms of just initiating studies and enrollment and the data releases, are you planning on staggering initiation one, two, three? Or are you going to initiate them all at once? And then for the data releases, basically the same question, can it be released all at once? Or will it be done when the study analysis is completed? And then just secondly and real quickly, I apologize if I missed this, is MADRS still being measured in these studies? Thanks.

Ian Mortimer: Thank you. Yes, I’ll take the first part of on the staggering. And then Chris Kenney, I think it’s probably helpful maybe just to go through some of the entry criteria into the study because we learned a lot from Phase 2 as we’re moving into the Phase 3 program. I think we can kind of review some of that. We didn’t have time to do that in the prepared remarks and then maybe you can address the specific question on MADRS. So we’re going to — we’ll be staggering these studies. So just naturally, they won’t start at all at the same time. So our first study, we filed with — filed the protocol with FDA and that should start later this year, as we’ve guided. And then we would expect a natural stagger for the second and the third studies. And that would be our expectation on the release of data as well. As the when the first study is complete, and we’ve unblinded those data will provide those data publicly, and then the second study and the third study would follow soon after that. So expect to stagger, not from a perspective that we’re waiting for a readout on the first one before we start the second one. But so at some point, they will all be running near about the same time, but we would definitely start the first one and finish that and unblind those data and provide them. But Chris, maybe you can go through some more of the entry criteria because I think that’s important for this program and then answer the question around MADRS.

Chris Kenney: Sure. Thanks, Ian. Yes, I would say three things about study design that should work in our favor. The first is that as we go from Phase 2 to Phase 3, we’ll just have one treatment group versus placebo. So that, if you look at other studies, that definitely helps in terms of placebo response. The other thing is that the size of the study in the prepared remarks, we talked about a study size of 450 patients, so 225 per arm. So that’s three, fourfold higher than what was used in the Phase 2 study, X-NOVA. And there were some imbalances, not dramatic but subtle imbalances that occurred in the X-NOVA study, so that larger study design, I think it’s guaranteed to iron those things out. And the other thing more specifically directed to the question, we’re still going after moderate to severe depression. What we learned mirrors what other studies have learned, which is that if you have patients that, that slip in with that are slightly on the more milder end of the spectrum, even though they meet the criteria for being more moderate to severe. But if they’re on the milder end of the spectrum, then they can skew the data a bit. And so we’re just going to be more strict in terms of the cutoff that we use for the HAM-D and then there are some other criteria is that we’re, just in general, going to be more strict about making sure that, that nobody comes in the study on the milder end of the spectrum. Those are the big changes. In terms of the MADRS, I mean, one of the guiding principles in depression is keep it as simple as you can. And that worked well with X-NOVA. I mean, we did actually use two scales, as you know, which is fortunate because it allowed us to choose the HAM-D to go into Phase 3. But we went back and forth about whether MADRS should be included and ultimately decided not, that assessing depression to the least amount that still led to a successful outcome was the best approach. So we’re going to focus on HAM-D, which we saw in our study had dramatically less variability, and we’ve seen the same in other studies. And that’s what we’re focused on.

Peyton Bohnsack: Great. Thank you very much.

Operator: Your next question comes from the line of Laura Chico with Wedbush Securities. Please go ahead.

Dylan Shindler: Hi, can you hear me?

Ian Mortimer: Yes. We can hear you.

Chris Kenney: Yes.

Dylan Shindler: Thank you very much for taking my questions. This is Dylan on for Laura Chico. And I’m not sure if this is a question for Chris Kenney or Ian. But we noticed within the SCNA — SCN8A program partnered with Neurocrine. You’re also looking at next lead candidate, that’s Nav1.2 or Nav1.6 inhibitor for focal epilepsy. And we were wondering if you see positive outcomes with 352. Would this also run through to the broader seizure-related indications?

Ian Mortimer: Yes, I can take that, Dylan. Yes, there’s a little bit of history here, which is probably helpful in — in going through. So 352 is the molecule that, so these are sodium channel inhibitors that came out of Xenon’s laboratory is and were licensed as part of the transaction with Neurocrine and Neurocrine is doing the development and paying for the development. So it’s a milestone and royalty transaction for Xenon. So 352 is in the SCN8A Phase 2 clinical trial, as you mentioned right now. They did run that in a focal-onset seizure study. That was a small proof-of-concept study around 100 subjects that readout last fall, and they’re not moving 352 forward in focal onset seizures. The molecule that we referred to today on the prepared remarks has a little bit of a different profile, so although it’s highly potent on Nav1.6, it’s also potent on another sodium channel called Nav1.2, whereas 352 was much more selective for Nav1.6. So we would consider this a dual inhibitor that has potency on both channels. Both channels are involved in excitation in the brain. So both well-validated targets. This next molecule is still pre-clinical. And as it goes into clinical development, Neurocrine at that point would guide in terms of what types of studies it would go into, but it would be into epilepsy studies as well. Is that background helpful?

Dylan Shindler: Yes. Thank you so much for taking the questions.

Ian Mortimer: Yes, no problem.

Operator: Your next question comes from the line of Marc Goodman with Leerink Partners. Please go ahead.

Basma Radwan: Hi, this is Basma on for Marc. We have a question on X-ACKT. Could you please remind us what we should expect in terms of the efficacy of XEN1101 in the primary generalized seizures? Should we expect an efficacy in line with what we’ve seen in the focal onset seizures? We also had a question about the dose, the 25 milligram. What kind of work you’ve done to actually feel comfortable about the use of this dose in this indication and whether you believe this dose will be efficacious or not? Thank you.

Ian Mortimer: Great. Thanks for the question. Chris Kenney, over to you.

Chris Kenney: Yes. Thanks. Thanks for the question. So as I sort of said earlier, we — one of the differences between the focal onset seizure population and the primary generalized is that we don’t have preliminary data. And so we powered the X-ACKT study based upon a few different examples of studies that were successful with other anti-seizure medications, and we took on the higher end of the number of patients, just to be cautious. I mean, in general, what the drugs that do work in primary generalized tonic-clonic seizures, when they’re effective, they’re pretty darn effective. Its — judging whether it’s going to be as effective in focal onset seizures, I think is anybody’s guess. I would just say that when we look at the Phase 2b data and we look at the subset of patients who had focal seizures that then generalized, the data is incredibly robust. I mean there’s well over 80% reduction in those types of seizures in the high dose. And that’s what gave us confidence to run the two indications in parallel. But it remains to be seen what’s going to happen. As far as the high dose, why choose 25 milligrams, again, that goes along with what’s been learned in the field with the other drugs that first worked in focal onset seizures and then worked in primary generalized tonic-clonic seizures. And the path that’s been laid down is that others have chosen the dose that was on the higher end of the spectrum and functional in focal onset seizures, and then brought that forward, and they’ve been successful. And so we did the same.

Basma Radwan: Thank you.

Operator: That concludes our question-and-answer. Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.