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Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Q4 2022 Xenon Pharmaceuticals, Inc. Earnings Conference Call. I would now like to turn the call over to Sherry Aulin, CFO. Please go ahead.

Sherry Aulin: Good afternoon. Thank you for joining us on our call and webcast to discuss Xenon’s fourth quarter and full year 2022 financial and operating results. Joining me are Ian Mortimer, Xenon’s President and Chief Executive Officer; Dr. Chris Kenney, Xenon’s Chief Medical Officer; and Dr. Chris Von Seggern, Xenon’s Chief Commercial Officer. Ian will open today’s call with a summary of progress across our pipeline. Chris Kenny will provide an overview of our XEN1101 Phase 3 epilepsy program, as well as a brief summary of additional supporting X-TOLE data we released in December, and I will summarize our financial results, progress within our partnered programs, and our anticipated company milestone events. Chris Von Seggern will be available during our Q&A session to address questions about our commercialization strategies.

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

Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the risks and uncertainties described from time-to-time in our SEC filings. Our results may differ materially from those projected on today’s call. We undertake no obligation to publicly update any forward-looking statement. Today’s press release summarizing Xenon’s fourth quarter and full year 2022 financial results and the accompanying annual report on Form 10-K will be made available under the Investors section of our website at www.xenon-pharma.com and filed with the SEC and on SEDAR. Now, I’d like to turn the call over to Ian.

Ian Mortimer: Thanks Sherry. Good afternoon everyone and thanks for joining us on our call today. As I reflect on our progress in 2022, I’m extremely proud of reaching a number of key milestone events for Xenon and building significant momentum in our XEN1101 program. In particular, we had a successful end of Phase 2 meeting with FDA and gained alignment on our XEN1101 Phase 3 program as well as the key regulatory elements required for an NDA submission. This was followed by another critical milestone in Q4 with the initiation of our first XEN1101 Phase 3 epilepsy trial. Furthermore, throughout 2022, we presented additional XEN1101 clinical data from X-TOLE and from the X-TOLE open-label extension, supporting our continued confidence in what we believe is a compelling profile for XEN1101, including a novel mechanism of action in what we believe would be the only potassium channel modulator available on the market if approved.

Efficacy data generated in our Phase 2b X-TOLE trial, which demonstrated statistically significant reduction in all seizure reduction endpoints at all doses tested. QD dosing requiring no titration, supporting early onset, and statistically significant efficacy at week one and even greater seizure reduction in the open-label extension with greater periods of seizure freedom. Overall, we believe our XEN1101 efficacy data to-date compares favorably to medicines currently available for focal onset epilepsy patients. Our market research strongly suggests that prescribing physicians are seeking new differentiated therapeutic options that improve upon the existing antiseizure medications and we remain committed to improving the lives of patients with epilepsy.

We enter 2023 in an enviable and clear leadership position in the KV field, with XEN1101 in a broad Phase 3 program supported by our clinical development and existing cash resources required to execute on our ambitious plans. This year, we are sharply focused on advancing XEN1101 in our Phase 3 X-TOLE2 and X-TOLE3 clinical trials in focal onset seizures, while in parallel, evaluating the efficacy of XEN1101 in primary generalized tonic-clonic seizures or PGTCS in our Phase 3 EXACT clinical trial, as well as generating important data from our Phase 2 X-NOVA study in major depressive disorder. Later in the call today, Chris Kenny will outline some of the highlights of the data we presented at AES 2022 in December that continue to support our belief in XEN1101’s highly promising product profile.

We have recently received some questions about the slower-than-anticipated patient enrollment and other headwinds faced by company sponsors of other clinical trials, including studies ongoing in focal onset epilepsy. Although we acknowledge that the current environment for clinical development can still be challenging, we remain confident in our ability to execute on our XEN1101 Phase 3 program. This high level of confidence is based on our experience with our X-TOLE Phase 2b study, which was similar in size to our Phase 3 FOS studies, along with our continued relationships with key investigators, many of whom are already have familiarity and experience with XEN1101. Given that we are still in the initial stages of our Phase 3 trials, we have not yet given specific guidance on enrollment or timing of topline data.

However, in terms of site initiation and patient screening, we are tracking as expected and consistent with our development plan. Turning briefly to our ongoing Phase 2 X-NOVA clinical trial, you will recall that this study is examining XEN1101 in major depressive disorder, in parallel with an investigator-led Phase 2 MDD study being conducted by our collaborators at Mount Sinai. Our decision to examine XEN1101 in MDD was based on encouraging published clinical results be evaluated ezogabine at a 300-milligram TID dose as a treatment for MDD and antodonia, as well as promising preclinical data with XEN1101. It is also important to note that depression is a common co-morbidity within the epilepsy patient population. We are anticipating topline results from our X-NOVA study in the third quarter of this year and this will help guide our future plans for XEN1101 in MDD.

While I am proud of the great progress made by our team in 2022, we are determined to continue to build upon the momentum generated in our XEN1101 program and we look forward to additional clinical inflection points in 2023. I’ll now ask Chris to provide some more detailed comments on our XEN1101 Phase 3 epilepsy program and additional supportive data that we have generated. Chris, over to you.

Chris Kenney: Okay. Thanks a lot, Ian. Today, I’ll briefly review our plans for our XEN1101 Phase 3 clinical trials in epilepsy and highlight some of the data that was presented at the American Epilepsy Society or AES in December. Our X-TOLE2 study, which is now underway, will run in parallel with an identical study called X-TOLE3, which we expect to initiate in the near-term. Each of these studies will enroll approximately 360 patients who will be randomized 1:1:1 with once daily dosing of either 15 or 25 milligrams of XEN1101 or placebo. Our dose selection for the Phase 3 studies was informed by the safety and efficacy data in X-TOLE as well as by PK/PD modeling we completed last year. The primary efficacy endpoint is the median percent change or MPC and monthly seizure frequency from an eight-week baseline through the 12-week double-blind period with XEN1101 compared to placebo.

Using X-TOLE data to support our model, we have greater than 90% power for the primary endpoint of both doses. To support our plans to pursue another epilepsy indication, we’ve also initiated our Phase 3 EXACT clinical trial which will enroll approximately 160 subjects with primary generalized tonic-clonic seizures or PGTCS. Subjects will be randomized 1:1 with a once-daily dosing of either 25 milligrams of XEN1101 or placebo. The primary efficacy endpoint is the MPC and monthly primary generalized tonic-clonic seizure frequency from an eight-week baseline to the 12-week double-blind period of XEN1101 compared to placebo. We’re excited by the opportunity to study XEN1101 in PGTCS in parallel with our trials focused on patients with focal onset seizures.

In our Phase 2b X-TOLE clinical trial, XEN1101 demonstrated broad activity across all focal seizure types, including focal seizures that progress to bilateral generalized seizures. We believe that this parallel path approach to both focal onset seizures and primary generalized tonic-clonic seizures at this stage of clinical development is unique to XEN1101 and may potentially lead to broader use of XEN1101 should be approved. Our team connected with many physicians and key opinion leaders at the American Epilepsy Society meeting where we presented the growing body of supportive evidence gathered to-date for advancing XEN1101 in the clinic, including additional sub-analysis of the X-TOLE data, as well as additional interim data from the ongoing X-TOLE open-label extension in focal onset seizures.

These data suggest that the rapid onset of efficacy for XEN1101 was associated with starting at an effective therapeutic and well-tolerated dose. There was a statistically significant reduction in median focal onset seizure frequency within one week for all doses compared with placebo with a dose-dependent reduction from baseline in median focal — median weekly focal onset seizure frequency. Analysis of the interim open-label extension data shows XEN1101 continues to be generally well-tolerated yielding long-term efficacy at the 20-milligram once daily dose with patients experiencing continued seizure reduction during the open-label extension and extended periods of seizure freedom. During the open-label extension, there was a sustained 80% to 90% monthly reduction in seizure frequency at 12 to 18 months as measured by MPC and from the double-blind period baseline using a data cutoff of September 2022.

Seizure freedom for greater than equal to six months and greater than or equal to 12 months consecutive durations was achieved and 17.5% and 10.5% of patients, respectively. Importantly, XEN1101 continues to be generally well-tolerated in the open-label extension with adverse events consistent with prior results and other antiseizure medications. To-date, two adverse events of urinary retention occurred in the open-label extension, possibly related to study drug, and both patients continued in the study without requiring any intervention. Although not seen to-date, we continue to monitor for the emergence of the tissue discoloration that was associated with long-term exposure to ezogabine. We continue to hear about the significant need for antiseizure medications, and we are driven by our belief that XEN1101 has the potential to significantly improve the lives of patients living with epilepsy.

I’ll now turn the call over to Sherry, who will give us a brief update on our partnered program with Neurocrine before summarizing our 2022 financial results and upcoming 2023 milestones. Sherry?

Sherry Aulin: Great. Thanks Chris. Within our partnered program with Neurocrine, there are currently two separate Phase 2 clinical trials underway. One study is evaluating NBI-921352 in adult patients with focal onset seizures and another study is examining its use in pediatric patients with SCN8A related epilepsy. We’re excited about Neurocrine’s progress and look forward to the data readout from the adult focal study anticipated in the second half of this year. I’ll touch on some highlights from the financial statements and would refer you to our news release and 10-K report for further details. Cash and cash equivalents and marketable securities were $720.8 million as of December 31, 2022 compared to $551.8 million as of December 31, 2021.

The increase was primarily the result of our public offering in June last year. Our strong cash position supported by prudent fiscal management allows us to fund operations, including the completion of our XEN1101 Phase 3 epilepsy studies into 2026. Before concluding our prepared remarks, I’ll briefly summarize some important milestone events ahead. With our Phase 3 X-TOLE2 and EXACT clinical trials underway, we expect to initiate X-TOLE3 in the near-term. Our X-NOVA trial in MDD is ongoing, and we expect to have topline results in the third quarter of this year, while in parallel, we’re supporting an investigator-led study at Mount Sinai. In the second half of this year, our collaborators at Neurocrine expect to have a data readout from their Phase 2 study in adult patients with focal onset seizures.

We continue to advance our EPIC Phase 3 clinical trial in pediatric patients with KCNQ2-DEE with study completion anticipated in 2024. In closing, we’re grateful to all our employees who are committed to Xenon’s mission to deliver new neurology therapeutics to patients in need. I’m excited about our success to-date and look forward to reporting our progress through 2023. We I’ll now ask the operator to open the line for any questions. Operator?

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Operator: The floor is now open for your questions. Our first question comes from the line of Paul Matteis from Stifel. Please proceed.

Unidentified Analyst: Hi, this is James on for Paul. Thanks for taking our question. Just as it relates to the recruitment challenges, some others are facing in the focal epilepsy space, as you mentioned, you previously guided for trial completion around two and a half years from initiation based on the Phase 2b, which will put data around mid-2025. I guess is that still how you’re thinking about it? Can you speak to the possibility of data coming sooner, if possible? Thanks.

Ian Mortimer: Thanks James. So, we haven’t — as I mentioned in the prepared remarks, we haven’t given formal guidance on when we expect topline data for Phase 3 and specifically for the X-TOLE2 clinical trial. The data point that you’re referring to is we often talk about the X-TOLE study, the Phase 2b study that took approximately two and a half years from initiation to topline data. When we compare and contrast that to the X-TOLE2 study, the X-TOLE study was a little bit smaller, 325 subjects. As Chris mentioned in his remarks, the Phase 3 studies are 360 and it’s a 12-week double-blind period in Phase 3 versus an eight-week double-blind period in Phase 2. Other than that, the protocols are very similar. As we’ve talked to many of you about we’re going to a lot of the same investigators, same sites that have experience with the drug from the Phase 2 program.

And we’re prioritizing those investigators and sites in the X-TOLE2 clinical trial. And so when we put all that together, as I mentioned earlier, I think we feel confident in the Phase 3 program and executing on the Phase 3 program. But we really need to get a couple of quarters of enrollment under our belt before we’d be in a position where we can provide more specific guidance on timeline to topline data.

Unidentified Analyst: Makes sense. Thanks.

Operator: Our next question comes from the line of Brian Abrahams from RBC Capital Markets. Please proceed.

Brian Abrahams: Hi there. Thanks so much for taking our question. I’m curious, your latest thoughts on further expansion of the 1101 program. And in particular, if you’re — I guess, your latest thoughts on pursuing a potential pediatric or under 18 label for the drug, what the timing might look like there? How important that is? And if there’s any other areas that you’re looking to pursue in addition to generalized and MDD? Thanks.

Ian Mortimer: Thanks Brian. Chris, I’ll give maybe a few high-level comments and then jump in specifically on some of the pediatric plans. So, Brian, as you mentioned, obviously, we’ve got a broad Phase 3 program going on in focal epilepsy and primary generalized tonic-clonic seizures and a Phase 2 study in major depressive disorder. I think when we think more broadly, there is literature to suggest that the potassium channel mechanism may be broadly applicable to other therapeutic areas, but I would still say epilepsy and depression are the best validated and that’s why we started there. In the future, as we generate additional data, we may go into other therapeutic areas. But I would say the priority and where we’re focused on is really on epilepsy and depression right now.

As we’re in a Phase 3 program, we do have obligations to do pediatric work, both in focal epilepsy and primary generalized tonic-clonic seizures and Chris can kind of walk you through the extrapolation rule and how we get into younger patients in both of those indications.

Chris Kenney: Sure. Sure. Thanks Ian. So, just kind of high level before I do that. I mean I think we’re already doing — we’re sort of already embarking on our fairly ambitious program, right? I mean typically, doing focal onset seizures and primary generalized tonic-clonic seizures is usually done in series, not in parallel. So, we’re doing that. And then plus we also have the proof of concept going on in MDD. So, there’s, I would say, more than an average amount of activity already. To Ian’s point, you the regulators in the US and in Europe will require specific attention to the pediatric population. And so those conversations are ongoing. It’s fairly regulated because — and we have a strong interest. There’s no reason to think that XEN1101 wouldn’t work in the pediatric population of it gets approved in the adult population. So, all those plans are well underway and sort of adhering to regulatory guidance.

Ian Mortimer: And Brian, maybe lastly, Chris Von Seggern can just give a little bit of perspective at least as it relates to focal epilepsy and primary generalized tonic-clonic seizure, the commercial opportunity. As Chris mentioned, we’ll be moving as agreed upon with the regulators, we’ll be moving into adolescents and then into younger populations as we move ahead with the development. But there are patients that are diagnosed with focal epilepsy and generalized seizures, much younger. So, Chris can comment about some of the commercial dynamics.

Chris Von Seggern: Yes, absolutely. So when you think about the total epilepsy opportunity, you always start with 3 million adults in the US. There are about 300,000 to 400,000 pediatric patients that have durable epilepsy that’s going to fall into the same categories with both focal seizures or generalized seizures. And we believe the value attributes that are associated with XEN1101 as they apply to adults being viewed very favorably. What we’ve heard from our market research in the pediatric populations is those same attributes are actually just as compelling in the pediatric population. So, we’re very excited about that opportunity in both focal onset as well as primary generalized tonic-clonic seizures with the opportunity to move the product into those patients when appropriate.

Brian Abrahams: Very helpful. Thanks again.

Operator: Our next question comes from the line of Tessa Romero from JPMorgan. Please proceed.

Tessa Romero: Yes, good afternoon and team, thanks so much for taking our questions. So, one from us on the Phase 2 X-NOVA data that we’re expecting here in the third quarter. So, how should we be thinking about how important the totality of the data is that you gather here? Or with respect to your go or no-go decision? And — or is this really just about hitting stat sig on the primary end point of the MADRS? Are there specific endpoints that you think are more important to a no-go decision here? Thanks so much.

Ian Mortimer: Thanks Tessa. I think it’s an important question because I think we’ve used language similar that we believe the totality of not just the data but the analysis of moving into major depressive disorder is multifactorial, and we’re doing a lot of that work right now. So, obviously, we’re running the X-NOVA study to generate important clinical data on MADRS as the primary endpoint as part of the input to the decision-making. But we’re also doing even more commercial work as we think about the opportunity to do registration work, both in epilepsy and depression. We think a lot about the co-morbid population. We know that 30% to 50% of epilepsy patients have the lifetime co-morbidity of depression. And so generating data through X-NOVA could be really important as we continue to think about 1101 also as an epilepsy drug.

So, there’s lots of inputs. And I think we’ve been clear that there’s a number of different ways that we’d like to think about this and the data just being part of the entire analysis as we think about next steps when we unblind data in Q3 of this year.

Tessa Romero: Thanks Ian. And just as a quick follow-up. I mean, would you lay out for us kind of what the key scenarios bigger picture are for depression following X-NOVA and kind of what those might be for Xenon?

Ian Mortimer: Sure. Yes. I think there’s a couple of big scenarios in terms of where we may take it. I mean I think the one is the work that we do and the data support additional development in the primary indication of MDD. And so then the next steps after this would be additional clinical development in the primary indication of depression. Another option, as I spoke about, is that we’re generating important information in the epilepsy space. I talked about in the prepared remarks, we think there’s a number of properties of 1101 that are clearly differentiating from other ASMs. This could be another one if we had an ability to show differentiation on mood. So, as we think about the prescriber in epilepsy, in the population, that could be important.

And then obviously, the last one that we have spoken to investors about is as a drug discovery organization and deep experience in drug and ion channels and the CNS, we do have other molecules that target KV that have different chemistries and have some different properties than 1101 and those are moving through preclinical studies right now. And so we also have the opportunity to differentiate and maybe a little bit to the earlier question from Brian is I think we’re going to have a number of distinct chemistries as we think about how we may want to differentiate therapeutically moving forward.

Tessa Romero: Great. Thanks so much for taking our question.

Operator: Our next question comes from the line of Paul Choi from Goldman Sachs. Please proceed. Your line is open, sir.

Paul Choi: Thank you. Good afternoon team and thanks for taking our question. My first question is, can you maybe update us on any clinician feedback with regard to the X-TOLE extension data given the longer follow-up there? And any sort of updated thoughts on the potential market — the market potential for 1101? And then my second question is pending your partner Neurocrine’s readout in the second half of this year, from your perspective, what is the bar, I guess, that you would look for to opt in potentially into that program versus allocating additional resources to 1101 development? Thank you very much.

Ian Mortimer: Great. Thanks Paul. I’ll take your second question just on the Neurocrine data. And then, Chris Kenny, if you want to just talk about clinician feedback. I know we had a lot of interaction. We had over 50 one-on-one meetings at AES. Maybe you can just talk about some of the feedback you’re hearing from the community on open-label extension, and then Chris Von Seggern and obviously, from a market point of view, the importance of us continuing to generate long-term data over five years. But Paul, specifically on Neurocrine. So, Neurocrine is running a Phase 2 focal epilepsy study that will read out later this year. What Paul is referring to, just to make sure that everyone understands is that we have — it’s a milestone and royalty licensing agreement.

So, we receive milestones and royalties as that program is successful. This is a drug, a selective inhibitor of NAV1.6 and that we invented and then we licensed to Neurocrine in 2019 after Phase 1. We have the ability to opt in to the Phase 3 program, where we can co-fund the Phase 3 program for an increase in royalties for five percentage points at each tier of the royalty. And so Paul, to answer your question, I think obviously, we’ve got a see the data that they’re generating. It’s a smaller Phase 2 study that they’re running and so we’d like to see what the future development plan looks like, if they’re going to go directly to Phase 3 or if there’s any other work that they’d like to do. But we have the opportunity to have full visibility on all of the clinical data that they’ve generated, including the Phase 3 plans and the budget for Phase 3.

And so we would take all of that information to do a calculus and have that as the inputs into making a decision on whether we’d opt in or not. Chris Kenny, over to you on the OLE data?

Chris Kenney: Yes, sure. Thanks, Ian. I mean I would say that the response has been in keeping with the data that was related in the prepared remarks. In the open-label, we’re seeing pretty substantial reduction in MPC for subjects who are still in the open-label on the order of greater than 80% after a year and really nice seizure freedom data. So, the feedback that we’re getting as we interact with physicians either at investigator meetings or medical conferences, ad boards, steering committees, et cetera, is consistent with that, which is that there’s a fair amount of enthusiasm about how those patients are doing on an individual level and then the numbers that we’re seeing for the overall population are fairly compelling both from a seizure freedom and an MPC perspective. So, yes, there’s no — there’s — it’s going well.

Chris Von Seggern: What I can add from the market research standpoint and the commercial perspective is just as a reminder, this was a very difficult to treat patient population that was enrolled in X-TOLE. And as those patients extend it into the open-label, you have to consider that they’re still very difficult to treat and very different difficult to control. What we hear from our research is that the rates of seizure freedom either as measured at the six-month time point or the 12-month time point are actually quite compelling data in light of the patient population. And this only reinforces the other value attributes that exist with XEN1101, both the potent efficacy, the lack of titration, as well as the rapidity of onset. So, the open-label data from what we’re hearing from a market research standpoint, just reinforced that value proposition, just as Chris had mentioned.

Paul Choi: Great. Thanks for taking our questions.

Operator: Our next question comes from the line of Joseph Thome from TD Cowen. Please proceed.

Joseph Thome: Hi there. Good afternoon and thank you for taking our question. Maybe the first one, I know historically, you mentioned that potentially we’re seeing some increased use of in the field as the generic landscape changes a little bit. And obviously, we’re continuing to see increased penetration of X-TOLE3. So, can you comment a little bit maybe on how this might change the baseline population of the pivotal program versus what you saw in the Phase 2 and if you’re making any adjustments based on that? And then second, just on the urinary retention AEs in the randomized portion and the open-label, were these really urinary retention side effects and I’m talking to KOL, this seems to be a little bit tricky to characterize sometimes. So, any thoughts around that would be helpful. Thank you.

Ian Mortimer: Great. Thank you. Maybe I can start a little bit on the Phase 3 patient population and then add in and then specifically, why don’t we get into a few details on urinary retention and at least what we’re seeing with those two patients in open-label extension, which I think is maybe the more relevant data just because they’ve been on the drug a lot longer. So, on the Phase 3 patient population, actually, if we look at Phase 2 and we’ve published this data, we published it initially at the Ascent Neurotherapeutic conference about a year ago where we published tables of the anti-seizure medicines that these patients had either failed or that they were on study. And you’ll see it’s a really long list. So, I don’t think there’s any kind of standard-of-care of these types of patients that are coming into our study.

And so I think we will see similar in Phase 3 that patients will be on a wide variety of drugs coming into the study, and there’ll be a wide variety that they would have failed prior to coming into study. But Chris, I don’t know if you have any specific comments around BRIVIACT or XCOPRI and then if you want to move to the urinary retention comments?

Chris Kenney: You are referencing Chris Von Seggern for the BRIVIACT or XCOPRI I assume?

Ian Mortimer: No, no, I was — no, I was passing it to you, Chris, Kenny.

Chris Kenney: Okay. Sorry, I misunderstood. Yes. So, I mean, as far as like sort of predicting whether that’s going to cause a change in the Phase 3, I mean, it’s early days with the Phase 3. So I think it’s — it would be too early to say. I wouldn’t be surprised if there’s somewhat of an uptick in XCOPRI in our Phase 3 program relative to the Phase 2 program, but we just don’t have — we haven’t put in enough time to be able to say one way or another. As far as the urinary retention, there were the two patients that you mentioned in the open-label. And I think you were kind of pointing to the fact that it seems like a bit of a misnomer. So, if someone were to have complete urinary retention, then obviously, that would have to be fixed, right, with catheterization or some kind of permanent procedure.

And none of these patients had any issue to the extent that it required catheterization. So, it’s obviously not complete urinary retention. But that’s how it was coded in Phase 2. Now, going forward into Phase 3, we have — we’re going to be following this adverse event very closely in a very systematic way so that there’s — if something like this is reported, there’s an immediate feedback between the sponsor in a site to kind of get to the bottom of well is this really urinary retention or not? Is it urinary hesitancy instead, et cetera? So, yes, we have — we’re actively approaching Phase 3 more systematic than we did Phase 2 for that very reason that you brought up.

Ian Mortimer: And just to add to Chris’ comment, I mean, with the two patients that we saw that were coded to urinary retention, in the double blind and then two different patients in open-label. Obviously, those two patients in open-label, we had talked about those patients quite some time ago, and we haven’t seen any additional coding to urinary retention when we’ve done additional cuts of the data. And just to reemphasize Chris’ point, none of these patients have needed any intervention whatsoever. So, we think that it’s definitely not — even if they have some urinary symptoms, it’s definitely not retention in the sense of not being able to avoid at all.

Joseph Thome: Perfect. Thank you very much.

Ian Mortimer: Yes.

Operator: Our next question comes from the line of from Bank of America. Please proceed.

Unknown Analyst: Good afternoon. Hi, this is Dina on for Jason. Congrats on the progress this quarter and thank you guys for taking our question. So, our first question is on XEN1101IP. Some investors have expressed skepticism over 1101 later expiring 2039 to 40 patents covering polymorph in method of enhancing food effect. Can you explain why you think generics will need to copy the patented polymorph? And secondarily, the extent to which food effect patent claims may intertwine with desired product labeling. And then our second question is — have your thoughts on the competitiveness of Biohaven’s KV7 changed at all after seeing the Phase 1 data Biohaven presented? Does the safety data cast any doubt on Biohaven’s ability to differentiate on dialing out GABA-related AEs? Thank you.

Ian Mortimer: Thanks Dina. Sherry will tackle the IP question, and then I’m happy to provide some commentary on your last question around the competitiveness in KV.

Sherry Aulin: Sure. Thanks Dina. So maybe just by way of background, just to let everybody know on the call. So, yes, we had two important patents that were granted to us or issued in late 2021. The first one that you referenced is our polymorph patent. So, we discovered several novel polymorphs of XEN1101, which were successfully patented, and that patent expires in 2040. So, importantly, there a generic entrant would have to essentially discover a new novel polymorph that doesn’t have any trace of our patented polymorphs to be successful. In addition, the second patent that was issued or granted to us in late 2021 is the food effect, which you referenced. And there, the important point is that 1101 has — there’s a multifold increase in Cmax and AUC when the drug is taken with food.

So, there’s a positive food effect. And that 1101 has been taken or is taken with food, and we do expect that, that will be included within the label. Obviously, that’s pending label negotiations with the FDA. But given that we have been dosing the drug within our clinical studies with food, we do expect that, that will be on label and is an important part of the dosing for the drug to be both safe and effective. So, a generic entrant would need to work around both of those patents. And I think that’s a really important point. And for that reason, we feel very confident in our IP strategy. And maybe lastly, I’ll just mention the food effect patent expires in 2039.

Ian Mortimer: Thanks Sherry. And then just your question on the competitive space. So, we’re not surprised that the competitive space is heating up and it’s increasing given just the strength of our data in Phase 2b in our X-TOLE study. I mean as we’ve mentioned a number of times, I think we have a clear leadership position. Obviously, this is known pharmacology, but I think we also have a molecule that has properties that are performing extremely well clinically and we haven’t seen that from any other drug yet. So, there hasn’t been any efficacy generated with any of the competitive molecules. So, I think from just a leadership position and a time perspective, we feel very comfortable. Maybe another comment we do get some questions just around adverse events as we think about Phase 1 data for these types of molecules.

And every antiseizure medicine that’s being developed that has activity and is active in the CNS has CNS-related adverse events, and we see that with all of these drugs that the drugs that are very active have dose-dependent adverse events in the CNS, things like dizziness, somnolence, fatigue, and headache. So, that’s fully expected. And then when we specifically look at the KV mechanism when we look at drugs like flupirtine, ezogabine in 1101, we see dose dependence and dizziness. And as you push these drugs higher and see significant activity in the CNS, you see the adverse events associated with that. So, those are some of the things that we would be looking for as we’re evaluating competitive molecules and then obviously, the efficacy data when we think about the patient population that we’ve treated, we believe that we potentially have best-in-category efficacy for this molecule.

And obviously, nobody else has generated efficacy data to-date.

Chris Kenney: This is Chris. Just to quickly add to that. I mean one thing we’re definitely confident with XEN1101 is that it’s penetrating the central nervous system. There’s no doubt about that, right? Preclinical experiments, we have clinical data. We know for sure, there’s penetration of the CNS.

Ian Mortimer: Thanks Chris.

Unidentified Analyst: Great. Thank you.

Operator: Our next question comes from the line of Andrew Tsai from Jefferies. Please proceed.

Andrew Tsai: Thanks. Good afternoon. Thanks. Congrats on the progress. So, I wanted to ask more on the MDD program because you have data in Q3. We generally have a good understanding of what we want to see on the primary endpoint. You shared some details about it earlier. But I did want to ask about how you’re thinking about kinetics in terms of the efficacy curve over time. I mean my question is, do you think 1101 could show a rapid-acting effect within weeks one or two, for instance, similar to what the drug has shown in epilepsy. I don’t believe ezogabine has shown it in depression or epilepsy, but you’ve seen in epilepsy. So, I thought I’d ask for compression. Thanks.

Ian Mortimer: Thanks Andrew. Yes, I’m happy to start and then Chris Kenny please add in. So, yes, I mean, what we — I think you actually — you did a really nice job, Andrew, kind of summarizing what we know. We know that 1101 has early onset to efficacy and stat sig in epilepsy in terms of seizure reduction at week one. So, we do know that we are getting enough drug into the CNS and to target to have an impact on seizures very early in treatment with no titration in an epilepsy population. Obviously, we don’t have that information yet in depression. When we look at the clinical data – the placebo-controlled clinical data generated to-date with ezogabine and this is from the cost publication and the Mount Sinai Group is they did start to see separation early on.

So, there’s definite separation in the curves between active and placebo as we look at MADRS and obviously, those separated more over time. We will be looking at that. So, it’s a week six endpoint, but we will look at all of — we do have weekly — we will have MADRS data throughout all of the weeks up to week six. So, we’ll be able to at least see those curves, Andrew, when we unblind data and be able to answer your question more directly when the data are available. Chris, any additional comments?

Chris Kenney: I think you covered it. There was a little bit of separation with the ezogabine MDD early on, but it was certainly more pronounced later on. So, it remains to be seen whether what we’re seeing in epilepsy will translate into depression. We’re certainly looking at that information at weeks one and two.

Andrew Tsai: Very good. And so a second follow-up would be — it’s more of an open-ended question and only to the extent you can — you’re willing to share is in terms of the operational execution of the ongoing study. Again, to the extent you can share, can you kind of discuss what goes into ensuring for instance, the quality of the sites, the quality of patients and so forth. For instance, are you using safer intervs ? Are you seeing high screen failure rates or maybe even a balanced distribution of patients across your sites? Thanks.

Ian Mortimer: Chris, do you want to go through kind of CRO and sites and safer and all the things that were — we’ve added to the study?

Chris Kenney: I just want to be clear, the question pertaining to MDD, not to epilepsy, correct? I just want to be sure.

Andrew Tsai: Correct, for MDD, yes.

Chris Kenney: Yes. So, I mean the key steps to try to maintain the quality to the best extent that we can in that trial is several fold. You mentioned one, we’re using the safer evaluation, so that there’s an external group ensuring that we’re enrolling appropriate patients. We have sites that are solely based in the US and in general, the quality of that data tends to be more reliable. Trying to keep the number of sites limited so that there isn’t a huge number that it contributes to the variability of the data and then we’re keeping an eye on the data and the sites in real-time to ensure that there isn’t anything unexpected ongoing at those sites. To your point about performance, I mean, as with all clinical studies, I think there are some sites that are lagging in recruitment and others that are excelling. It’s sort of a typical kind of distribution that I think one would expect. Do you want to add anything to that, Ian?

Ian Mortimer: The only other thing, Andrew, you ask is just about screen failure rate. We see a screen failure rate that’s higher, obviously, in the depression studies than we see in the epilepsy studies.

Andrew Tsai: Very helpful. Thank you, guys.

Chris Kenney: Yes. And very much in keeping with what we expected and hoped for, right, that we wouldn’t — we don’t want to have a screen failure rate that’s too low.

Ian Mortimer: Yes, thanks Chris.

Operator: Our next question comes from the line of Marc Goodman from SVB Securities. Please proceed.

Rudy Li: Thanks for taking my question. It’s Rudy on the line for Marc. So, I would have a question about the market dynamics for focal onset seizures. So, specifically, can you provide more color or your thoughts on the uptake of both XCOPRI and what feedback you’ve been hearing recently regarding the drug profile versus 1101? Thanks.

Ian Mortimer: Thanks Rudy. Over to you, Chris Von Seggern.

Chris Von Seggern: Yes, absolutely. So, from a market dynamic, XCOPRI is obviously the most recent to launch into this space. And they’ve done quite well. I would say from an observation standpoint, they’re seeing continued uptake in the marketplace and growth that is expected with a profile that is offering some level of efficacy in the marketplace. What we hear from our research is that there is a place for XCOPRI. And for the profile, it tends to be a latter line agent in current clinical practice. And this is based on the fact that it does have a quite difficult and lengthy titration period. And as a result, that does limit some earlier adoption and particularly where we’ve heard the primary positioning for XEN1101 being in the mix for that first-branded agent that’s pulled for.

That’s the primary area where we see some level of drawback for the product. They do offer meaningful efficacy, and they hang their hat on seizure freedom data that have been well-received in the marketplace. But again, placing the product leader in the treatment paradigm. What we hear from our research is both the rapidity of onset, which simply can’t be seen with a product that requires lengthy titration, as well as the other attributes and use of use associated with 1101 and compelling efficacy as mentioned before, reinforce the open-label experience with the data we’re seeing for a six-month and 12-month seizure freedom data. That pushes 1101 earlier in the treatment paradigm. And often, it’s compared to the impact in its positioning prior to loss of exclusivity, which was really that first product you pull for after you have one or two failures of generic medicine.

And that’s really the primary distinction between what we’re hearing from the profile for XCOPRI as well as what we’re hearing for XEN1101.

Rudy Li: Got it. Very helpful.

Operator: Our next question comes from the line of Laura Chico from Wedbush. Please proceed.

Laura Chico: Hey thanks very much and good afternoon. Just two quick ones for me. First, on X-TOLE4, can you remind us the rationale here for this study and I know the data submission package is going to be focused on X-TOLE and X-TOLE2. But how does X-TOLE4 actually fit into a regulatory submission for XEN1101? And then just one question for Sherry on operating expense trajectory into 2023, quite a heavy clinical trial load this year. So, how should we think about the cadence of spend versus 2022? Any further headcount expansion? Thanks very much guys.

Ian Mortimer: Laura, just a point of clarification, X-TOLE4 or X-TOLE23, do you want us to comment on?

Laura Chico: X-TOLE4?

Ian Mortimer: Okay. Yes. So, maybe I’ll just take a quick step back and make sure we’re all aligned on the nomenclature. So, our Phase 2 study that we’ve completed, we call X-TOLE, our two Phase 3 clinical trials in focal onset seizures or X-TOLE2 and X-TOLE3, those are identical and very similar to the design of the X-TOLE study. And then we’ve got the EXACT study, which is our primary generalized tonic-clonic seizure. So Laura, you’re asking about X-TOLE4. X-TOLE4 is open-label extension for the Phase 3 program. So, patients that complete the double-blind period for X-TOLE2, X-TOLE3, or EXACT can all go into open-label extension starting at 25 milligrams, and that’s what we call X-TOLE4. So, as you mentioned, what we believe is a critical path to regulatory filing in the US is the X-TOLE data that we’ve already generated and the data from X-TOLE2.

And then the data that we generate in X-TOLE3 and X-TOLE4, including all of that open-label data, will be important for the safety database as part of the filing.

Chris Kenney: Can I — sorry.

Ian Mortimer: Yes, yes, go ahead, Chris, and then we’ll pass to Sherry.

Chris Kenney: Well, I just wanted to — I mean, that’s purely from the regulatory perspective, which is obviously important. But these patients based upon the open-label extension in X-TOLE they’re doing really well. And we didn’t feel comfortable removing them from study drug. The other thing I’ll add is more back to kind of the regulatory question. The development program for XEN1101 was extremely efficient, right? Go from Phase 1 to this Phase 2b study, very quick. And so as a result of that, there’s a little bit of work to be done in terms of making sure that we have enough unique exposures in order to adhere to ICH guidelines. So, there is a touch of regulatory in there, but we thought it was just the right thing to do. And then on top of that, recruitment, I think, would be a major issue to the point, brought up, I think the very first question was about recruitment rates. That would be–

Laura Chico: Chris can I–

Chris Kenney: Go ahead.

Laura Chico: I guess I was also going to ask, does — X-TOLE4 does not need to be complete to file basically an open-label extension?

Chris Kenney: Absolutely not.

Laura Chico: Okay. That’s–

Chris Kenney: X-TOLE2 is gating for that point in time.

Laura Chico: Got it. Thank you.

Sherry Aulin: And Laura, just to touch on your question about OpEx for 2023. So, as you know, we don’t give specific OpEx guidance, but I’m happy to provide some color directionally I mean, obviously, we’re going to see an increase in 2023 relative to 2022 in overall spend. And in particular, on the R&D side, we’re going to see an increase, and that’s largely driven by the fact that we are now well underway with our Phase 3 1101 epilepsy program, and we’re going to have three studies running in parallel as well as the open-label extension for the Phase 3. And then remember as well that the X-TOLE open-label extension is also ongoing because that continues for a five-year period from start to finish. With respect to G&A costs, I think you can expect that G&A costs will stay relatively flat relative to what we saw for Q4 of 2022, so that you can roll forward the Q4 costs, and that’s roughly what we’ll plan to spend in 2023.

And on the R&D side, maybe another piece to add is that we do continue to — we’ll continue to see probably an increase in our personnel costs as we continue to expand our resources internally to support our ambitious development funds and the rest of our pipeline.

Laura Chico: Thanks very much guys.

Operator: Our next question comes from the line of Mohit Bansal from Wells Fargo. Please proceed.

Unknown Analyst: Hi, this is Serena on for Mohit. Thanks much for taking our question. I wanted to go back to the development path in MDD. Since you guys have talked about having other opacity modulators and preclinical development, potentially entering Phase 1 in early 2024 and was just wondering like what would give you guys the confidence that 1101 is worth developing for MDD versus the preclinical compounds? And then could you have multiple programs going on in tandem for MDD? Thank you.

Ian Mortimer: Yes, I think if we were going to develop 1101 in MDD, and we kind of walked through earlier on the call, some of the scenarios that we’re working through right now. But if we made a decision based on a whole bunch of factors that we were going to move ahead with 1101 in additional clinical development in MDD, then I think, obviously, the backup molecule or another CV molecule, we may still bring into the clinic. I think that’s just — we have a very valuable asset and to continue to build out our development in KV, I think, is important. But I think it would be less about taking another molecule necessarily into running major depressive disorder and not having two KV drugs being developed in MDD. I think if we made a decision that we wanted some therapeutic differentiation based on chemistry, then that will be a situation where we may want to take one of the molecules that we have preclinically into depression or into other therapeutic areas.

Unknown Analyst: Got it. Thank you.

Operator: Our next question comes from the line of Rohit Bhasin from Needham & Company.

Rohit Bhasin: Can you just talk to us about your expectations from the trial with Neurocrine that’s going to read out later this year? And can you also talk about any remaining milestone payments from the collaboration? Thanks.

Ian Mortimer: Sure. I can take the first part and then, Sherry, if you can answer on some of the upcoming milestones. So, I think that’s a better question for Neurocrine than for us. I think I mentioned earlier, the Phase 2 study in focal onset seizures that they’re running is a smaller study than we ran in our Phase 2b X-TOLE study quite significantly smaller. So, I think it’s more of a proof-of-concept study where they’re going to be generating important data over a dose range. But I’m not — where we sit today, I’m not sure there’s a specific kind of go-no criteria or how we think about success. Again, I think it’s good we’re going to have to let Neurocrine unblind that data, obviously share it publicly, and then them to describe what they think the next steps are for the drug.

Sherry Aulin: Yes. And then on the specific study, if it reads out positive, would be eligible for a $15 million milestone payment we are eligible for additional milestone payments through the remainder of clinical development and then obviously, upon certain regulatory-based milestones and the sales-based milestones and royalties.

Rohit Bhasin: Thank you.

Operator: I would now like to turn the call over to Sherry Aulin for closing remarks.

Sherry Aulin: Thank you, everyone, for joining us on the call today. Operator, you may now end the call.

Operator: Thank you, ladies and gentlemen. This does conclude today’s call. Thank you for your participation. You may now disconnect.