Title

Presentation

Xenon Pharmaceuticals Inc. beats earnings expectations. Reported EPS is $-0.84, expectations were $-0.89.

Operator: Hello and thank you for standing by. At this time, I would like to welcome you to the Q4 2024 Xenon Pharmaceuticals, Inc. Earnings Conference Call. All lines has been placed in mute, to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Chad Fugere. Please go ahead.

Chad Fugere: Good afternoon. Thank you for joining us on our call and webcast to discuss Xenon’s fourth quarter and full year 2024 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 Sherry Aulin, Xenon’s Chief Financial Officer. After completing their prepared remarks today, we will 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, including the anticipated filing of INDs and NDAs, 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 fourth quarter and full year 2024 financial results and the accompanying 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. Thanks for joining our call today. I’ll begin with a brief review of our accomplishments in 2024, and then look ahead to what promises to be an exciting year in 2025, highlighted by our first Phase 3 epilepsy readout, and the continued progress of our growing neuroscience focused pipeline. After that I’ll turn the call over to Chris, who will share more details on our clinical development programs, and then later Sherry will comment on the potential of azetukalner in the bipolar depression treatment landscape, and close with a summary of our financial results. Looking back at this past year, I am proud of the numerous advancements across our pipeline, including the advancement of azetukalner in our broad Phase 3 epilepsy program, the launch of our Phase 3 MDD program, considerable planning around further indication expansion of azetukalner in bipolar depression, and significant progress in our discovery portfolio.

With several molecules across multiple targets poised to enter the clinic this year. 2024 was a year of execution for Xenon, and the progress made across our business has positioned us well, to deliver on our three key strategic priorities. Number one, driving towards Phase 3 data, NDA submission and commercializing the use of azetukalner in focal onset seizures in the U.S. Number two broadening the azetukalner opportunity across additional epilepsy and neuropsychiatric indications, and number three expanding our product portfolio through advancement of our promising early stage ion channel programs. We believe Xenon’s leadership in the Kv7 landscape is unmatched, and our lead asset azetukalner is the only Kv7 opener in development. Backed by long-term efficacy and safety data from clinical studies of patients living with epilepsy.

We now have amassed over 700 patient years of exposure in focal epilepsy patients. There remains a substantial need for new efficacious and well tolerated epilepsy therapies, especially for those patients, who continue to experience the debilitating impacts of focal seizures even while taking multiple anti-seizure medications. Based on the significant body of compelling clinical evidence that we have generated to-date along with azetukalner’s other important attributes such as once daily dosing without the need for titration, a rapid onset of effect, novel mechanism of action and potential mood benefit. We believe that azetukalner represents a potentially best-in-class anti-seizure medication that could be paradigm shifting in the future treatment of epilepsy.

As we near the completion of our first Phase 3 epilepsy readout, which will enable the completion of an anticipated NDA filing, we are excited about the potential for Xenon’s first commercial launch. Over the last 12 months, it culminated in a strong presence at the American Epilepsy Society Meeting or AES, which took place in December. This is the marquee Medical Congress in epilepsy that hosted over 6,000 attendees, and we were able to present new long-term azetukalner data from our ongoing X-TOLE open-label extension study showing a sustained monthly reduction in seizure frequency, impressive seizure freedom rates in patients with epilepsy, and improved quality of life measures. Xenon has led some of the latest surveys and research, to understand in more detail the high burden of illness within the epilepsy community, and AES provided us with an opportunity to highlight some of these findings, around the mental health burden and comorbidities of epilepsy.

We believe that an enhanced understanding of the burdens of focal onset seizures, and the association between these comorbidities, particularly mental health comorbidities like depression, may enable better treatment options, and help in improving patient outcomes. Chris will provide more detail about our AES data, presentations and activities in his prepared remarks. Within our Phase 3 MDD program, we are pleased to be enrolling patients in our X-NOVA2 study and we expect that the second of three plan studies, X-NOVA3, will initiate around midyear. Further, we’re in an incredibly fortunate position in that azetukalner’s attributes may enable significant utility beyond epilepsy, and we believe that azetukalner has broad potential in neuropsychiatric indications, supported by strong scientific rationale.

Today we announced our plans to initiate a registrational program studying the use of azetukalner in bipolar depression. Both Chris and Sherry will provide further details on the current unmet patient needs, and market research that supported our decision to pursue this new neuropsychiatric program. This is an exciting opportunity for azetukalner with the launch of this new program, azetukalner will be in registrational trials, across four distinct epilepsy and neuropsychiatric indications. Truly a pipeline and a product opportunity. We also continue to expand our pipeline, by leveraging our extensive discovery knowledge and expertise in developing potassium and sodium channel therapeutics. This past year, we made significant progress within our early stage portfolio, progressing multiple drug candidates targeting Kv7 and Nav1.7 into IND enabling studies.

Recognizing the – potential broad applicability of the Kv7 mechanism of a azetukalner, we have identified multiple chemically diverse Kv7 development candidates, and we believe that this mechanism may have utility in a broad range of therapeutic indications, including seizure disorders, pain as well as neuropsychiatric disorders such as MDD and bipolar depression. Further, I’m incredibly excited that we continue to make meaningful progress within our Nav1.7 sodium channel program. Our pioneering work around the Nav1.7 target has formed a core part of Xenon’s heritage given its importance as a pain related target with strong human genetic validation, we believe Nav1.7 could represent a new class of medicines without the limitations of opioids.

We are now in a position, where we expect multiple regulatory filings in 2025, coming out of our early stage portfolio, to support the initiation of first in human trials across multiple targets. We also expect a lead candidate within our Nav1.1 program will enter IND enabling studies this year. We presented some of our preclinical findings at AES this past December. Briefly, these results showed that dosing, with an orally available small molecule CNS penetrant highly selective Nav1.1 potentiator suppressed induced seizures, and improved motor performance, supporting the potential for improvements in Dravet patient motor function. Further, in these animal models, chronic dosing suppress spontaneous seizures protected against sudden unexpected death in epilepsy or SUDEP, and increased long-term potentiation, a potential cellular correlate of learning and memory.

These preclinical data are incredibly exciting, and suggest that targeting Nav1.1 could potentially address the underlying cause and symptoms of Dravet syndrome. Later this year, we are planning to host an investor webinar, to showcase various Xenon early stage programs, including deeper dives into the mechanism, underlying human genetics, preclinical and other supporting data generated to date, as well as an overview of the unmet medical needs, and commercial opportunity and more details to come at a later date. Finally, we’re pleased to confirm that as part of our collaboration with Neurocrine Biosciences, a promising selective inhibitor of sodium channels Nav1.2 and Nav1.6 that was discovered in Xenon’s labs, has progressed into a Phase 1 study, and this triggered a milestone payment to us.

This important achievement is a testament to our world class discovery team, and a direct result of Xenon’s deep expertise in pioneering work in the sodium channel space. With our research work contributing to the discovery of new molecules, and a further understanding of how mutations in the genes that encode for both Nav1.2 and Nav1.6 cause irregular neuronal activity, associated with several forms of epilepsy. Neurocrine has guided that. This first in human study will evaluate the safety, tolerability, pharmacokinetics and pharmacodynamics of investigational compound NBI-921355 in healthy adult participants, to support its development for the potential treatment of certain types of epilepsy. Looking ahead, we expect the next 12 to 24 months, will represent a catalyst rich period for Xenon.

As we continue to advance our deep and expanding pipeline of promising late and early stage programs, we anticipate a number of important milestones, most importantly the first Phase 3 top line readout of azetukalner in focal onset seizures expected in the second half of 2025, representing a major inflection point for Xenon, as we evolve from a clinical to commercial stage organization. This is an incredibly exciting time at Xenon, and I look forward to keeping you updated on our progress. So I’ll now turn the call over to Chris, to provide some additional detail around our development programs. Chris, over to you.

Chris Kenney: Okay. Thanks a lot Ian. Appreciate it. To build on your comments, it was inspiring for the team to connect with a broad range of healthcare providers, advocacy groups and patients at AES where awareness of Xenon and azetukalner has grown since we first presented X-TOLE data in 2021. In addition to our five peer reviewed presentations, we hosted a well-attended scientific exhibit, and expanded our presence within the exhibit hall. This year at AES, we also focused on the mental health burdens associated with epilepsy at our mental health OASIS booth, where the team engaged in meaningful discussions about the under detected and undertreated depression symptoms associated with epilepsy. In our discussions with healthcare providers, they directly witness this high burden of illness, within the epilepsy community and support our goal to better understand the mental health comorbidities of focal onset seizures, like depression in order to offer more personalized treatments, and improve patient outcomes.

The patient reported survey data that, we collected further illustrates the substantial burden of illness for people living with epilepsy, with reduced quality of life, high seizure frequency and fatigue as well as other comorbidities such as anxiety and depression, further underscoring the need for new treatments to help people living with epilepsy. Now, the momentum from AES has carried through into the New Year, and I’m pleased to report that our clinical development programs for azetukalner continue to progress as planned. Our late stage epilepsy program includes our Phase 3 X-TOLE studies in focal onset seizures or FOS, and our X-ACKT study in primary generalized tonic-clonic seizures. As Ian noted, we are anticipating the first FOS top line data readout in the second half of this year, which combined with the existing data package from our X-TOLE clinical trial, and additional supporting safety data we expect will support our NDA filing for FOS.

In parallel with the considerable progress made across our Phase 3 azetukalner clinical development programs, our medical affairs team continues to engage with the broader medical community, to highlight the robust scientific evidence generated to-date. We are in an enviable position as not only can we showcase the positive results from our completed X-TOLE clinical trial, but we have our ongoing seven-year open-label extension study providing further long term data from patients living with epilepsy, which we believe is a key differentiator from other molecules currently in development. The most recent interim data from the ongoing X-TOLE open-label extension study presented at the American Epilepsy Society shows impressive sustained monthly reduction in seizure frequency approximately 85% at month 36, while importantly maintaining a consistent safety profile that suggests azetukalner continues to be generally well tolerated.

Additionally, approximately one in three patients on a azetukalner for at least 36 months achieved 100% seizure reduction or seizure freedom for a period of one year or longer, giving both us and the epilepsy community tremendous confidence in a azetukalner’s potential to address the significant need for new anti-seizure medications. These data are particularly impressive given that the literature supports the likelihood of achieving seizure control once a patient has failed three anti-seizure medications is less than 5%. This is a meaningful metric for epileptologists who tell us that seizure freedom translates directly into improved quality of life for people living with epilepsy. Turning now to our clinical programs outside of epilepsy, over the last year we’ve been exploring the applicability of a azetukalner in additional potential neuropsychiatric disorders based on scientific rationale, unmet medical needs and strategic fit for Xenon.

Today, as Ian mentioned, we are outlining our plans for a Phase 3 program in bipolar depression with the goal of initiating the first of two azetukalner clinical studies in bipolar 1 and bipolar 2 depression by midyear. Briefly, bipolar disorder is a psychiatric condition characterized by mania or hypomania and depressive episodes that can severely impact a person’s quality of life. As of 2019, approximately 40 million people worldwide were affected by bipolar disorder. In the U.S. it is estimated that bipolar disorder affects nearly 6 million adults, or about 2.6% of the U.S. population. Of note, on average, patients diagnosed with bipolar disorder spend three times as many days with depressive symptoms than with manic or hypomanic symptoms.

The severity of depressive symptoms has been associated with functional impairment, reduced quality of life, and a higher prevalence of suicide. Effective treatments for depression and bipolar disorder are limited and many patients are non-adherent due to intolerability and side effects. Polypharmacy is common in the treatment of bipolar depression and there remains a significant unmet medical need for safe and effective therapies to treat patients with bipolar depression. Our expansion into bipolar depression is based on strong scientific rationale from preclinical data showing an antidepressant effect of azetukalner genetic links between bipolar disorder and Kv7 evidence of Kv7 downregulation in bipolar disorder, as well as clinical studies that explored the use of Kv7 potentiators in depression.

Considering the treatment landscape for BPD, azetukalner’s novel selective Kv7 mechanism of action potential benefit on anhedonia, rapid onset of effect, and favorable tolerability profile are particularly attractive in BPD. Further, we believe that azetukalner’s current safety profile could represent improvements over commonly used drugs used to treat bipolar depression such as atypical antipsychotics, lithium, valproic acid and lamotrigine. Given our MDD study where no study subjects experience notable adverse effects on sexual function, or weight gain. We look forward to providing more details around the BPD registration program once our first trial is initiated midyear. Later in this call, Sherry is going to review some of the learnings from market research with prescribing physicians that further support our expansion into BPD.

Turning now to our MDD program, I wanted to highlight that X-NOVA2, the first of three planned Phase 3 clinical trials evaluating azetukalner in patients with MDD, is currently enrolling patients and the next study, X-NOVA2, is expected to initiate midyear. We continue to engage with physicians who treat patients with MDD to educate their about our ongoing clinical studies and the potentially differentiated profile of a azetukalner versus standard of care agents. Of note, physicians are interested in azetukalner’s novel selective Kv7 mechanism of action and its potential benefit on anhedonia, rapid onset of effect as well as its potentially favorable tolerability profile. With data supporting no notable adverse effects on sexual function or weight gain.

We have the additional benefit of being able to reference not only the Phase 2 X-NOVA efficacy data, but also the long term tolerability data gathered from our ongoing X-TOLE open-label extension study. Staying within MDD, patient enrollment is now complete in the Phase 2 proof-of-concept study of azetukalner in MDD led by the Icahn School of Medicine at Mount Sinai and Baylor College of Medicine. Top line results from that study are anticipated in the first half of 2025. Looking ahead, we have a number of near term opportunities to highlight azetukalner and engage in scientific exchange at upcoming medical congresses including the American Society for Experimental Neurotherapeutics, ASENT and the American Academy of Neurology or AAN, taking place in the first half of this year.

I look forward to updating you on our efforts during our next call. As we continue to build upon the foundation of strong azetukalner clinical results, amass a growing amount of supportive data from the ongoing open-label extension FOS study and drive towards a Phase 3 readout later this year. We believe that azetukalner provides the promise of a much needed anti-seizure medication to people currently living with the burdens of epilepsy. I’d like to turn the call over to Sherry now, who will begin by providing some additional detail around our bipolar disorder market research before summarizing our financial results. Sherry?

Sherry Aulin: Thanks so much Chris. Building upon strong mechanistic clinical and genetic rationale for our expansion of a azetukalner into bipolar depression, we have enhanced our understanding of the current unmet medical need, based in part on our own primary research with U.S. based prescribing psychiatrists. Similar to our approach when assessing the potential opportunities in epilepsy and MDD, we believe that market research is an integral part of our planning process. To better inform our clinical development and commercial plans. We surveyed high volume prescribing psychiatrists and key opinion leaders in the U.S. to test a product profile of the azetukalner that was reflective of our clinical findings to date. Similar to our epilepsy and MDD research, physicians were interested in a drug profile that included attributes such as once daily dosing with no titration.

In addition, many of the attributes of azetukalner that are attractive in MDD were also viewed as favorable in BPD, including physicians are interested in new agents with novel mechanisms of action, especially given current unmet need of those patients who have already failed antipsychotics. Physicians are also looking for new therapeutics that do not have the liabilities of commonly used agents such as sexual dysfunction and significant weight gain. There’s also a keen interest in products that have the potential to deliver rapid relief of symptoms given the delayed therapeutic response with the current standard of care. And lastly, physicians also identify the ability to address anhedonia, a common comorbidity of both MDD and BPD, as another potential differentiator.

In summary, azetukalner’s novel mechanism of action safety profile and potential benefit on anhedonia were identified as key strengths in support of a profile that compares favorably against the latest generation of antipsychotics and could support a compelling product fit in the future BPD treatment landscape. We’re incredibly excited by the potential of the azetukalner and its Kv7 mechanism as we pursue multiple streams of late stage clinical development in key epilepsy and neuropsychiatric indications. Now I’ll briefly turn at our fourth quarter and full year results for 2024. We had cash and cash equivalents and marketable securities of $754.4 million, compared to $930.9 million as of December 31, 2023. Based on our current operating plans, which include the completion of the azetukalner Phase 3 epilepsy studies and supporting late stage clinical development of azetukalner in both MDD and BPD, we anticipate having sufficient cash to fund operations into 2027.

Given our proven track record of strong fiscal management, Xenon is in the fortunate position of having a strong balance sheet to support multiple registrational programs for azetukalner and the continued maturation of our early stage pipeline. I would refer you to our news release and 10-K report filed today, for further details around our financial results. Before turning the call back over to Ian for concluding comments, I wanted to take a moment to reflect on the news in today’s press release that I intend to step down as CFO later this year. While this was not an easy decision, it is solely for personal reasons, and for the benefit of my family. I will remain in place as CFO through to June 30 and I’m committed to ensuring there’s a smooth transition.

It has been an honor to serve in this position and I’m proud of what we have accomplished over my 10 plus years with the company. With multiple Phase 3 programs underway for our lead program, an exciting preclinical pipeline of assets, and a balance sheet that supports the continued advancement of these programs, I’m confident that Xenon is positioned for success. Ian?

Ian Mortimer: Thank you, Sherry. As many of you on the call know, Sherry has made invaluable contributions to our organization over the last decade, and was instrumental in helping build Xenon as we evolved from a drug discovery organization to what is now a late stage clinical organization readying for our first potential drug approval, and launch. Not only was Sherry key in our capital raises over the years, but she has been instrumental in the growth of our organization, working to build out specific functions and systems for clinical development, and then in the anticipation of commercialization. I know that Sherry did not take this decision lightly, and I’m grateful for her commitment to a smooth transition, and multi month lead time as we search for her successor.

Sherry, on behalf of the Board and our entire Xenon team, I want to sincerely thank you for all of your significant contributions. I know we will continue to successfully collaborate through this transition period, and we wish you all the best as you embark on your next chapter. As we drive towards the significant first data readout from our Phase 3 epilepsy program that is expected in the second half of this year, we are entering a truly transformational period for our company since positive results from our Phase 3 program could enable the submission of our NDA with the goal of advancing azetukalner towards commercialization. By the second half of this year, we plan to have two of three planned X-NOVA trials in MDD underway as well as a registrational study in BPD initiated.

We are also anticipating top line results from the investigator sponsored Phase 2 study in MDD in the first half of this year. In addition, the continued maturity of our early stage pipeline could result in multiple INDs or equivalents in 2025 with the goal of initiating first in human trials across multiple targets, consistent with our goal to be a premier, fully integrated, neuroscience focused company. To everyone who has been with us on this journey, we appreciate your support and we hope you join in our excitement as we take these important steps forward that brings us closer to delivering azetukalner to people living with epilepsy. So with that we can now open the call up for your questions. Operator, over to you.

Operator: Thank you. We will now begin the question and answer session. [Operator Instructions]. Our first question comes from the line of Paul Matteis from Stifel. Please go ahead.

Paul Matteis: Hi, thanks for taking my questions, and Sherry, sorry to leave Xenon, wishing you all the best. A couple of quick questions from me. One, as it relates to the first Phase 3 in epilepsy, I was wondering if you can share anything more on just how close you are to full enrollment. Is it still realistic the data could come in 3Q or does it look more like 4Q now? And then on bipolar, as you guys move full steam ahead here, how are you interpreting the results from other Kv7 readouts this year? If those data were negative, would that impact your enthusiasm at all? Thank you.

Ian Mortimer: Thanks Paul. I’ll take the first one and maybe make a Couple comments on Kv7 in bipolar depression and then Chris definitely provide your perspective on the scientific rationale. So Paul, we’re comfortable with the guidance that we have right now, which is Phase 3 epilepsy data in the second half of the year that hasn’t changed. As we get closer, we will narrow that. So, we’re not there today, but we will narrow that guidance as we get closer to the second half of the year. In terms of bipolar depression, I think you’re referring to there is a competitive company that’s doing a Kv7 in bipolar mania. We think bipolar depression is the stronger scientific rationale, mechanistic rationale, some of the genetic data that’s in the literature as well.

So our focus is on bipolar depression in terms of the expansion of a azetukalner outside of epilepsy in MDD. So nothing’s going to change kind of our confidence in going into bipolar depression and the work that we want to do there. And maybe Chris, you can just provide your perspective on moving into BBD as well.

Chris Kenney: Yes, happy to do so, Ian, thanks. Hi, Paul, so, I mean, if you take a look at the attributes of this drug that are appealing for depression, they’re very similar for bipolar. It’s the unique mechanism of action, the improvement in anhedonia, the rapidity of onset and the tolerability. And if you think about the landscape of opportunities for patients for pharmacologic treatment in depression relative to bipolar, there’s quite a bit more there. So the competitive landscape is anemic and bipolar relative to MDD. So I think all of that, there’s clearly an unmet need there. As far as the rationale, I think that the reason why MDD made the most sense is because there was clinical data already gathered and so that’s where we started.

If you take a look at the genetic work that’s been done, there’s just as strong, or actually I would argue maybe a stronger association between the genetics of KCNQ2 and KCNQ3, which are the genes that encode for KB7.2 and 7.3, which is what our drug targets. And I would argue that that association appears to be even stronger in bipolar than in MDD. So we’re pretty interested. I think there’s a really strong rationale across the board for going forward into bipolar. When I look at the difference between mania versus depression in these patients, there is an open label extension study that was done with another Kv7 drug where I felt that the results, we felt that the results were pretty lukewarm in terms of its improvement of mania. So I think that the story for depression in bipolar is far more compelling than the story in mania.

So suffice it to say that whatever, obviously we’re quite interested in what those results will be in terms of the mania study that should read out imminently with the other Kv7 compound, but it’s not going to change our plans.

Paul Matteis: Thanks so much for the thoughts.

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

Caroline Pocher: Hi, team, this is Caroline Poacher on for Tessa Romero with JPMorgan. Thanks for taking our questions. Just a couple from us. So just a quick housekeeping question, but can you just clarify that enrollment in X-TOLE2 is not yet complete? And then on bipolar depression, can you just provide any additional insight into the design of the Phase 3s that you intend to initiate in terms of patient population and endpoints you might assess? Thank you.

Ian Mortimer: Sure. Yes, Caroline, I can take both of those. So the first one, So yes, our guidance right now we’ve just committed to talking about top line data in the second half of the year. So we haven’t specifically commented on the completion of enrollment. Both the completion of enrollment and narrowing of the guidance we’ll do as the year progresses. Specifically on bipolar depression, more details to come. So we’re committed to. This is going to be a registration program, so a Phase 3 Study in bipolar depression. But the real details of trial design, we’ll be disclosing that in subsequent quarters as we move forward. I mean we’ve made great progress in terms of planning the study, interacting with regulators, choosing CROs. Like a lot of the work that we need to do that you would expect where we would be to get the study initiated by mid-year.

But just hold off on some of the details in terms of trial design and endpoints and some of the statistics, more to come on that in the coming quarters.

Chris Kenney: Ian, can I just build? I just want to build on one thing because I want to make sure that it’s clear. In the prepared remarks we talk about the first of two studies beginning middle of the year in bipolar, which is accurate. And we also talk about containing both patients with bipolar I and bipolar II. And I just want to be clear that that’s a combination. Both studies will have a combination of bipolar I and bipolar II. We’re not doing one study in bipolar I and one in bipolar II. I just want to make sure there wasn’t anything confusing about the prepared remarks, Tessa.

Ian Mortimer: Okay. Thanks Chris.

Caroline Pocher: Awesome, thank you.

Operator: Our next question comes from Andrew Tsai with Jefferies.

Unidentified Analyst: Hello. This is [Matt Barkas] for Andrew. First of all, congrats, Sherry, on your time at Xenon and our team wishes you the best for the Phase 3 Epilepsy Study. Can you just talk a little bit about what the minimum efficacy threshold is for azetukalner that you want to see for best-in-class status in your view? And then also for the Phase 2 study from Mount Sinai, the data set in MDD, how granular of a data set can we expect to see on the secondary measures like MADRS, JT, SHAPS, et cetera? And can we expect to see efficacy kinetics there as well? Thanks.

Ian Mortimer: Thanks, Matt. Yes, I’m happy to go first and then Chris, if you have things to add as well. Yes. The first question just on what does success look in the Phase 3 epilepsy program? Maybe to take a step back, we haven’t reviewed the details of the Phase 2 X-TOLE program in some time. Obviously we focused a lot on the open label extension. But when we look, we often think about really, is azetukalner in focal onset seizures, really from a pretty broad lens, meaning we’ve talked about the novel mechanism, the no titration, the rapidity of onset from the X-TOLE study. In the short term, it was the best placebo efficacy, placebo adjusted efficacy ever seen in a focal onset seizure study in a very severe or refractory patient population.

And then we’ve talked a little bit today and at AES about some of the long term efficacy and safety as well that we’re feeling really comfortable about. So what we know today is I think, an incredible profile and that’s why we’ve talked about this as potentially being really paradigm shifting in terms of bringing a new therapy forward for patients that are still suffering with seizures. In terms of the Phase 3 program for later this year, we are looking for a successful study to be able to file an NDA and be able to have this drug available more broadly to patients. And so I would say, the bar really is to show statistical significance to support our plans going forward. As we get deeper, when we unblind the data and we get deeper into the data, then I think we can talk about it more broadly.

But I would say, given everything we know about the molecule and the mechanism and the long term data and short term data that we’ve generated to date, it’s really about statistical significance. And a path forward is the most important thing from the Phase 3 study. In terms of the Phase 2 IST [ph] MDD Mount Sinai study, your question there? Yes, we’re working closely with the two PIs from Mount Sinai in Baylor. As Chris mentioned in his prepared remarks, the study is complete in terms of patient enrollment and that study still needs to be in terms of all the data analysis. We would expect when we’re able to provide data publicly that we would have those key secondary endpoints that you’ve mentioned in terms of the clinical scales of depression and anhedonia as measured in that study by MADRS and SHAPS.

Obviously the primary endpoint is a functional endpoint. It’s a functional MRI endpoint. So that would be available as well. But we’re working closely with Mount Sinai in terms of a communication strategy to provide all of the information that you’ve suggested in terms of providing that publicly in the first half of this year. Chris, anything that I missed that you wanted to add to?

Chris Kenney: No, you covered it. Thanks Ian.

Ian Mortimer: Great. Thank you. Thanks for the question.

Operator: Our next question comes from Brian Abrahams from RBC Capital Markets.

Unidentified Analyst: Hi everyone, this is [Nevan] on for Brian. Thanks for taking our questions and Sherry, just wanted to extend our best to you on your next steps as well. So just a couple questions from me. I guess how are you guys seeing Xcopri doing on the ground? And based on its current uptake, can you tell us a little bit about how a Kv7 might fit into the treatment paradigm? And relative to kind of the sales that you’re seeing with Xcopri since launch and other competitors like Brivaracetam. How do you kind of see the sales for azetukalner relative to them on its potential launch? Do you see this as a potential comp for the initial launch or are there reasons to think that it could be even better?

Ian Mortimer: Great, thanks Nevan. Good question. Sherry can start just with some of the commercial dynamics and what we’re seeing from Xcopri and what we’re hearing and then Chris and I can add in any perspective, I think kind of core to your question is how do we believe is that azetukalner is going to differentiate from the branded medicines that are both currently available as well as how the branded medicines have done historically.

Sherry Aulin: Yes, so just a little bit about Xcopri. I mean I think their year-end results were interesting. Q4, they had strong results and their 2024 sales exceeded the upper end of the guidance. As I’m sure most of you are aware, so they ended up closing the year north of $320 million which was a 60% growth over 2023 and really great given the profile of that drug. Their 2025 guidance is strong as well. They provided a range of sort of the mid-400s. So it does seem like they are on track to hit their longer term goal of reaching a billion in sales before the end of the decade, which I Think really tells us that there is an unmet medical need in the space and there’s a commercial opportunity for a drug that provides a better profile than what’s currently available on the market.

I mean, we do know Xcopri, of course, has some liabilities associated with it. That drug does have to be titrated slowly over many, many weeks in order to manage a severe, but rare risk of a drug allergy. And for that reason, I think has been a little bit slower at launch in combination with the fact that the drug was launched during the pandemic. And given that profile, I think was a little bit challenging for physicians in light of just some of the challenges with the pandemic. Our perspective as you look at the profile of azetukalner, and of course we’ve talked a lot about this, that the novel mechanism, the rapidity of onset, the lack of titration, the tolerable safety profile and the potential benefit on mood, as we bring that all together and we look across every aspect of the drug, we really feel that it sits above others.

And as we look forward to the dynamics when azetukalner will launch, we will be likely the only branded agent with Xcopri. And so we feel very strongly that given the profile we’ve described, azetukalner should really be the first branded drug of choice. So we would expect that as patients cycle through one or two generics that they would then be eligible for azetukalner and that physicians would reach for azetukalner in those situations.

Ian Mortimer: And maybe, thanks, Sherry. I think that was an excellent overview. Maybe just to add and zoom out a little bit. UCB had Briviact results out this morning. Those were very strong in terms of growth this as well. And then if we kind of really look back, right, there’s been some incredibly important anti-seizure medicines over the years, including Keppra and Lamictal and Vimpat. And as Sherry mentioned, if we kind of think about the profile of azetukalner in the profile of all of those drugs, I think we have tremendous confidence in what the commercial opportunity is for azetukalner in epilepsy. Chris, anything to add from your perspective?

Chris Kenney: Well, maybe just a couple things. I mean, obviously Xcopri is doing pretty well. It has a really good reputation as being robustly efficacious. If you take a look at the seizure freedom data that they frequently talk about, it’s usually at a dose 400 milligrams a day, which isn’t really used that much. When you take a look at our seizure freedom data that we’re talking about and our open label extension study, those patients are on 20 milligrams. So our go to dose in Phase 3 is 25 milligrams. So it’s in the range of a dose that we expect to be used down the road. Sherry made a comment to the allergic reaction. We haven’t had any cases of DRESS. So I think that we have more to learn about this drug and to get it approved.

Based upon the data so far, I think that we stack up pretty well from a seizure freedom perspective. We don’t have the titration which Sherry mentioned. We haven’t had DRESS and then there’s this potential to take care of the mood issues which I think is one of the advantages that azetukalner really provides to the armamentarium for epileptologists.

Unidentified Analyst: Great. Thank you so much. Thanks, Chris.

Chris Kenney: You’re welcome.

Operator: Our next question comes from the line of Brian Skorney from Baird.

Brian Skorney: Hey, good afternoon guys. Thanks for taking the question. I’m sorry. Also, let me express my gratefulness for all the work you’ve done at Xenon and wish you the best in the future. So there’s just another sodium channel modulator approved for acute pain. And I know we’ve talked about the merits of NAV 1.7 versus NAV 1.8, but as we kind of get to the end of IND staging here and start looking forward to the kind of proof-of-concept. I’m just wondering where you’re currently thinking kind of the initial indication target would be like, what’s the quickest way to kind of determine how your NAV 1.7 modulator might address pain indications? Is it in sort of like a post operative pain setting? Is it in sort of a more chronic setting? And I know pain studies are generally done both against placebo and active control. With this approval, would you look to actually use that as an active comparator in a study?

Ian Mortimer: Thanks, Brian. I think some really important questions there that we talk a lot about internally and we haven’t quite come to final decisions on many of them. Maybe I’ll make a couple of comments though. I think later this year we want to do an investor, call it like a webinar or mini kind of R&D Day where we’re going to be able to share a lot more data with you. So I think it’ll be nice to be able to kind of have a more holistic view of the program and why we think we really like the NAV 1.7 target and why we think our chemistries have addressed some of the challenges historically. Early on we’re thinking about obviously a traditional Phase 1 study and then quite traditional on the Phase 2 proof-of-concept study.

So things like bunionectomy or abdominoplasty, I think longer term is really where your question is. There’s nothing specific either in the genetics or any of the data that we’ve generated preclinically that suggests that this should only work in kind of postoperative acute or has the opportunity to work in the chronic setting. So as we think about it today, I think all those options are on the table including you asked a question around just how would we even design the proof-of-concept studies in terms of placebo or active control? We are working through all of that right now. Haven’t made final decisions, but as we do we’ll be able to communicate them publicly. But I think many people know we’ve had a long experience on this target and personally I’d really want to see as broad a development program as possible.

If we believe that we’re seeing analgesia in a human in some of the early proof-of-concept studies, then I think there’s an opportunity to try and test the mechanism broadly.

Brian Skorney: Great, thank you.

Operator: Our next question comes from the line of Jason Gerberry from Bank of America.

Jason Gerberry: Hey, good evening guys. Thanks for taking my questions and Sherry started to see you go, but best of luck in future endeavors. So I guess firstly with the BPD program, I know there’s, you’re going to hold off on giving details. I’m just curious if you plan on looking at this drug as an adjunct to lithium or valproate and are the most recent approval in the space looked at this both from a monotherapy and an adjunctive basis. And then secondly with the second gen Kv7, is the focus there going to be novel indications or do you believe that the molecule may offer advantages over azetukalner and that there can be opportunities for this follow on there?

Ian Mortimer: Thanks Jason. Yes, on the first one detail to come. So in terms of the trial design and specifically mono versus adjunctive and just the sizing of the study and endpoints, all of that will be in a position to disclose just in advance of the initiation of that study around mid-year. Your question on Kv7 in terms of backup molecules or next gen molecules? Yes, I think it’s a really important one. What’s really interesting about is azetukalner, when we just look at the profile of azetukalner and the data we’ve generated so far, there isn’t anything obvious that we’re trying to solve for in the next generation of molecules. So although we have chemical diversity, novel intellectual property, all the things you would expect in a de novo kind of drug development or drug discovery program, and there’s nothing specific that we’re trying to solve for.

So many of these molecules, when we look at all of the attributes preclinically in terms of choosing a candidate to move into toxicology studies, a lot of them are going to look more like azetukalner than not, because I think we have real success there and we want to build on that. In terms of where we would go therapeutically. I think the answer is both. So we think we can fully answer the question on whether there’s going to be differences between these next gen molecules and azetukalner until we run some human clinical development. So I think some of these attributes and differentiators may show up as we do human clinical development. We still think that we want to do continued work in epilepsy and neuropsychiatry. I also mentioned in my prepared remarks we like pain for the mechanism as well.

So I think there’s an opportunity to continue development of the mechanism in indications where we’ve shown data with azetukalner as well as broadening outside of this.

Jason Gerberry: Thanks guys.

Operator: Our next question comes from the line of Sarah Schram from William Blair.

Sarah Schram: Thanks for taking our questions and just want to add my thanks and congratulations to Sherry. I have one quick clarifying question and then one additional. So first, understanding that the focus is on bipolar depression, would you expect to see or could we see benefits on mania as well or are you guys only looking at depression? And then secondly, for the preclinical NAV 1.1 program, do you see this as a development opportunity in Dravet only or would you look to kind of position this for other types of epilepsies? And if only in Dravet, how do you see the treatment landscape evolving over the next three to four years?

Ian Mortimer: Thanks, Sarah. I’m happy to — Chris, why don’t I start on the NAV 1.1 question and then if you want to address the bipolar depression mania question.

Chris Kenney: Yes. Our initial focus for our NAV 1.1 will be in Dravet, because the Dravet children is as you know, are haploinsufficient in the proteins. So they have 50% NAV 1.1. And we’re potentiating current through the wild type channel. We’ve shown, I think, an incredible preclinical data package that we were able to share at AES a couple of months ago where in these Dravet animals we can protect from spontaneous seizures, we can protect from [sudap], and we can have an impact on long term potentiation. So I think where, and this is maybe a little bit to the core of your question, I think where the field is going, especially for a lot of these genetically identified epilepsies is we need to get past seizure control into disease modification.

And I think there’s an opportunity to do that both with the approach with an antisense oligonucleotide as well as our small molecule approach. And so, we’re really excited, I think, to have an oral small molecule that you can do. Weight based dosing and titration I think would be incredibly valuable for the field and for physicians and for their families. I mean, given the approach, it does potentially have broader utility than just Dravet syndrome in other forms of epilepsy. And potentially there’s some ideas even outside of epilepsy as well in the literature. So I would say our focus at least initially will be on Dravet syndrome, but there may be an opportunity to broaden out as we move forward. Chris, do you want to make a comment just on the bipolar question?

Chris Kenney: Sure, I’ll make the comment from two perspectives. So if you — our intention is to conduct a study in bipolar depression. And in those studies the patients aren’t manic. So you can’t really go into a study like that and expect to show that there’s going to be any improvement in mania because the patient shouldn’t be exhibiting those symptoms at baseline. You might follow mania just to make sure that you’re not exacerbating it. But expecting a readout with mania with patients in that stage of the disease, which is with depressive symptoms, isn’t realistic. And the flip side of that is also true for the mania study that we’ll be reading out soon with the other Kv7 compound. Those patients come into the study with minimal depressive symptoms.

I think the MADRS score is like 10 to 12. It’s quite low. So expecting a readout in that study with depressive symptoms I think is probably unlikely as well, so kind of coming from it from both angles. But we’re excited about, I mean, I think that you look at the genetics, it’s A pretty compelling story for bipolar. So we’re excited about this, this opportunity.

Sarah Schram: Great. Very helpful. Thank you.

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

Laura Chico: So, for one, for azetukalner. So at launch, what type of patients are most likely to be the early adopters? Will this be driven more by patients seeking better seizure control, or could this be more from patients who are experiencing mood disorders on their current ASMs?

Ian Mortimer: I can start and then, Chris, please do add your perspective. I mean, I think one, I think we need to see the totality of the package that we’re generating in Phase 3 to kind of better answer your question. And why I say that is obviously in the Phase 3 focal onset seizure program, we’re looking at the reduction in seizures, the primary and key secondary endpoints of the study. But we also have exploratory endpoints on some of the comorbidities, including depression and anxiety. We’re not powered for those and there aren’t entry criteria that it needs to be an impaired population coming in. But we should have some indication of data in epilepsy patients with the psychiatric comorbidity. So I think that’s going to be an interesting part of kind of the overall package.

But we’re definitely, when we speak with epileptologists in the epilepsy community, and we talked about in our prepared remarks, I think we’ve done a lot in terms of survey work and really understanding the complete burden of illness for these patients, not just the seizures, but a number of other things that are impacting their quality of life. So I think you’re going to have patients that — the patients that are still having breakthrough seizures are often looking for both new medicines that will help on their seizure control, but also addressing some of the psychiatric comorbidities, such as mood. But Chris, you should provide your perspective as well.

Chris Kenney: It’s a great question. I think it’s challenging without, as you’ve said, the Phase 3 results without the final label and all these things that we need to still work on in the coming months and so forth. The only thing I’ll say is that one thing that we have learned about this field is that prescribing patterns are largely dictated by the prescribers and their perspective rather than by the patient’s needs. So when you talked, you asked about early adopters. I think that would be just to make it clear that will certainly play a role, but it will be more from the prescriber perspective of wanting to be an early adopter than probably the patient perspective.

Operator: Thank you. Our next question comes from the line of Joseph Thome with TD Cowen. Please go ahead.

Joseph Thome: Hi there. Good afternoon. Thank you for taking my question and adding my best wishes to Sherry. Maybe on the bipolar depression study, I saw that you’re looking to launch two with MDD. You have three plan Phase 3 studies. I guess, is there anything behind that decision? Is it a little bit easier to manage placebo response or anything in the bipolar depression population? And then maybe jumping over to PGTCs? Can you just comment a little bit on how enrollment is going there? Obviously quite a bit of competition in FOS, maybe not as much in PGTCs, I guess, what are you finding maybe easy or challenging when enrolling that study? Thank you.

Ian Mortimer: Thanks, Joe. Yes, Chris, why don’t I, I’m happy to take the second one and then you can provide your comments on PGTCS as well and then your perspective on the bipolar versus MDD. Yes, I think, you know, when we’ve had these discussions with investors, we recognize that, yes, there’s probably more clinical studies, you’re right, Joe, going on in focal onset seizures. But those patients are more prevalent and easier to recruit into a clinical study. Often with the primary generalized tonic-clonic seizure studies, these are often done post approval, so after the label and FOS. And they can often take quite a number of years. If we use Vimpat or Xcopri as an example, those have taken multiple years to complete and there’s a wide variety of ethnic reasons for that.

It’s a left less prevalent patient population. They’re having fewer, generally fewer seizures. But those seizures can be really significant and have an impact. And due to that, often physicians want intervention immediately, which would make those patients, or at least a subset of those patients, not eligible for a clinical study. So there’s some challenges that are very specific to that therapeutic indication. And I think it’s really important for the community for us to develop azetukalner broadly. We were the first company or first sponsor, at least in our knowledge, to commit to doing both FOS and PGTCS pre-approval and in parallel. So I think we’re proud of that. I think it’s the right thing to do. But we do know that the PGTCS study will take longer.

Chris?

Chris Kenney: Yes. So going back to the question about three studies in MDD and two in bipolar, so what we’re hoping for is that by the time those bipolar studies roll out, we will have had two positive studies in MDD. We’ll be talking about an SNDA for MDD. And so in that context, having one positive study or two positive studies in bipolar depression, the threshold to get the drug approved in that context will be somewhat lower, particularly in the setting of the new FDA, relatively new FDA guidance about the sufficiency potentially for a confirmatory study to be enough to yield an approvability package. But for right now even bipolar.

Joseph Thome: Thank you very much..

Chris Kenney: You’re welcome.

Operator: Our next question comes from the line of Douglas Tsao from H.C. Wainwright.

Douglas Tsao: Hi, good afternoon. Thanks for taking the questions. And first, I just want to wish Sherry all the best and say, enjoyed working with us. Maybe two things. First, I want to start with the point that you sort of briefly touched on Ian in terms of the focal onset epilepsy study and the benefits for mood. Obviously you’re not powered for endpoints for patients with mood disorders, but I’m just curious if you could provide some detail or perspective on how, what endpoints there will be to help us characterize the mood benefits for patients with FOS. And even though they’re not necessarily powered, is there any chance that perhaps some of them could end up on the label? And then the second sort of follow up question I did, I just wanted to touch on or get some perspectives on just your R&D spend, just given the significant acceleration in terms of your pipeline expansion, both with azetukalner in terms of new indications, but as well as additional molecules entering the clinic?

Thank you.

Ian Mortimer: Thanks, Doug. I will — let’s we’ll split this up and just for the entire call. This will be the last question. We’re over time, but we’d be happy to follow up with everyone else later today and over the next few days. So yes, I’ll make maybe a couple of comments, Chris, and then if you can share kind of the patient reported outcomes on the psychiatric comorbidities in the epilepsy program, I think that’d be helpful and then Sherry on the OpEx side. So in terms of the label question, Doug, I think it’s just premature, right? I think we need to see the data, but it’s premature to make a comment on whether this would be something that we would publish or it would be something that we would have a discussion with a regulator on.

And just to be clear, as I said, that we weren’t powered for these exploratory endpoints. We’re also not stratifying. So there may be some imbalances between the different groups as well. And we’re not exactly sure just how impaired the population is. And so what we will be looking at is there a subpopulation there that does have elevated depression or anxiety and being able to measure that and how they’re doing? So that’s kind of been our approach to it. I think it’s an important exploratory endpoint. But I just want to make sure that we’re managing expectations with the caveats and limitations that this is really driven as a registration study with seizure reduction as the critical endpoints. But, Chris, maybe you can just talk about how we’re measuring those and then Sherry, on the expense side.

Chris Kenney: Sure. Happy to do it. So within the Phase 3 Epilepsy Program, in every study, at every visit, for every patient, we’re evaluating both depression and anxiety, and the anxiety is being assessed with the GAD-7 scale, and the depression is being assessed with the Beck Depression Inventory. So we’ll have a lot of data, but there are a number of caveats which Ian I think highlighted nicely. Sherry?

Sherry Aulin: Yes, Doug, on the OpEx side. So, I mean, one thing is we’ve reinforced our Cash Runway guidance into 2027, which is great. Of course, we’ve been thinking some time now about indication expansion in Neuropsych. So that has been on our radar and factored into our models, which is why our Cash Runway hasn’t changed. But we are going to see a meaningful increase, in particular on the R&D side. Of course, as you noted, it’s because we now are going to have many Phase 3 studies ongoing through 2025 and 2026 with the addition of bipolar disorder or depression, in addition to the fact that we now have our MDD Phase 3 program up and running with X-NOVA2 initiated at the end of last year and X-NOVA3 starting mid this year.

So that program’s going to be in full swing in 2025 and continuing to incur expansion over 2026. We are going to have our first Phase 3 FOS readout later this year, but there are going to continue to be costs across the epilepsy program, because, of course, we’re going to have a second FOS study ongoing, as well as our X-ACKT study and the important open label work that we’re doing, both as part of the X-TOLE study as well as our open label for the Phase 3 epilepsy program, so all of that is factored within our runway. And then, of course, we’re making significant progress on the preclinical side, and we’re expecting multiple molecules to move into Phase 1 this year. And so we have factored those expenses in as well and that’ll drive an increase in 2025 and 2026.

All that being said, we’re comfortable with our cash runway position, we feel like we’re in a really good place financially and have done a really nice job managing our capital with such a robust pipeline. We’ll see an increase in G&A as well, not as much as on the R& D side. And that’s really driven by a continual expansion of our corporate functions to support the significant growth on the development side, but also to support pre-launch but also to support pre commercial activities that we are embarking on in advance of what we expect to be the commercial launch of azetukalner in FOS. So I’ll just wrap up the call now. Thank you everyone for joining us today. I appreciate all of the kind words about my departure. If we didn’t get to your question, as Ian noted, we will reach out to you directly to connect.

Operator, you may now end the call.

Operator: Yes, this concludes today’s call. Thank you for joining. You may now disconnect.