Xenon Pharmaceuticals Inc. (NASDAQ:XENE) Q2 2025 Earnings Call Transcript

Xenon Pharmaceuticals Inc. (NASDAQ:XENE) Q2 2025 Earnings Call Transcript August 11, 2025

Xenon Pharmaceuticals Inc. misses on earnings expectations. Reported EPS is $-1.07 EPS, expectations were $-1.03.

Operator: Thank you for standing by. At this time, I would like to welcome everyone to Xenon Pharmaceuticals Second Quarter 2025 Earnings Conference Call. [Operator Instructions]. I will now turn the conference over to Chad Fugere. You may begin.

Chad Fugere: Good afternoon. Thank you for joining us on our call and webcast to discuss Xenon’s Second Quarter 2025 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 Darren Cline, Xenon’s Chief Commercial Officer. After completing their prepared remarks today, we will open the call up for your questions. Please be advised that during this call, we will make a number of statements that are forward-looking, including statements regarding the timing of potential results from clinical trials, 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 those filings and our interactions with the regulators and our ability to successfully obtain regulatory approvals, anticipated timing of the top line data readout for clinical trials of azetukalner and our expectation that we will have sufficient cash to fund operations into 2027.

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

Ian C. Mortimer: Thank you, Chad, and good afternoon, everyone, and thanks for joining our call today. We are excited to share a number of advancements across our pipeline as we have made significant progress over the past quarter. As we reflect on the first half of 2025, we continue to advance against our key strategic priorities. #1, driving towards Phase III data, NDA submission, and commercializing azetukalner for the treatment of focal onset seizures in the U.S.; #2, broadening the azetukalner opportunity across additional epilepsy and neuropsychiatric indications and #3, expanding our product portfolio through the advancement of our promising earlier-stage ion channel programs. Today, we will cover details and milestones relating to these exciting program advancements and momentum we have going into the second half of 2025.

I will begin with a brief review of highlights from this past quarter, starting with our most advanced azetukalner Phase III clinical trial, X-TOLE2. As disclosed in today’s press release, we have completed patient recruitment in X-TOLE2. This is a significant milestone in the development of azetukalner and keeps us tracking to report top line results early in 2026 in anticipation for our first approval and commercial product as a company. We plan to refine our guidance for the timing of top line results after last patients are randomized. We remain highly encouraged by the potential of azetukalner to deliver on the promise of a new antiseizure medication with a differentiated product profile to what is available today. And this could benefit people living with the debilitating effects of uncontrolled seizures.

From the outset, we have prioritized working with high-quality experienced sites to maximize study success while diligently monitoring key metrics throughout the study. As discussed on previous calls, we are pleased that these metrics align consistently with our successful X-TOLE study and continue to have confidence in X-TOLE2 and share the epilepsy community’s excitement as we progress towards Phase III readout. It’s this excitement that drives our scientific leadership and investment in the Kv7 landscape. Azetukalner is the only Kv7 channel opener and the only ASM in development that is backed by long-term efficacy and safety data from clinical studies of patients living with epilepsy. Having demonstrated highly compelling placebo-adjusted efficacy in focal onset seizure patients in our Phase IIb trial in durable and sustained efficacy over time through our open-label extension study.

And approximately 800 patient years of exposure and safety data. There remains a substantial need for new, efficacious and well-tolerated epilepsy therapies, especially for those patients who continue to experience the debilitating impact of focal seizures, even while taking multiple antiseizure medications, and we believe that azetukalner key attributes as seen to date, demonstrate its potential to provide an important new option for the epilepsy community. We consistently hear positive feedback and excitement within the medical community about azetukalner compelling value proposition, which includes a novel mechanism, rapid onset of effect, robust efficacy and multiple ease-of-use attributes, including once-daily dosing, no required titration along with a potential mood benefit.

Azetukalner has the potential to be a best-in-class antiseizure medication that offers significant and meaningful benefits in the future treatment of epilepsy. Chris will touch on more detail shortly as to our continued work with investigators and anticipation building in the field. In addition, we believe there is significant potential for azetukalner beyond epilepsy with initial focus on depression. Within our Phase III MDD program, we have now initiated X-NOVA3, which is the second of three planned studies of the azetukalner in major depressive disorder. Also during the quarter, we initiated the first of two planned Phase III studies in bipolar depression 1 and 2, called the X-CEED study. We continue to execute as planned to expand the clinical development of azetukalner into indications and invest in our neuropsychiatric programs.

This is a good time to turn the call over to Chris, who will share more details on our late- stage clinical development programs. I’ll then provide an overview of our early-stage pipeline programs as well as conclude with a summary of key milestones ahead. Chris, over to you.

Christopher John Kenney: Yes. Thanks a lot, Ian. Starting with our Phase III epilepsy program, which includes our two studies in focal onset seizures or FOS, X-TOLE2 and X-TOLE3 and our X-ACKT study in primary generalized tonic-clonic seizures or PGTCS. I’m incredibly excited to confirm that our Phase III X-TOLE2 clinical study of azetukalner in FOS has now completed patient recruitment and as guided previously, we expect top line data in early 2026. This milestone reflects tremendous focus and execution by our clinical operations, clinical development and field-based medical teams as well as strong commitment from the epilepsy patient community, our investigators and their site staff. As we progress closer to a top line data readout, we continue our ongoing educational and scientific outreach efforts to raise the profile of Z2 azetukalner amongst health care providers.

Our team will have a strong presence at the upcoming 36th International Epilepsy Congress or IEC, taking place August 30 to September 3 in Lisbon, Portugal. Four abstracts were accepted including an overview of 36-month data from the ongoing X-TOLE open-label extension study of azetukalner in patients with FOS, which demonstrated sustained monthly reduction in seizure frequency impressive seizure freedom rates and a consistent AE profile, suggesting long-term efficacy and tolerability of azetukalner. We also intend to highlight data from our X-TOLE study showing the efficacy of azetukalner in certain focal onset seizure subtypes as well as present a targeted literature review outlining the comorbidity burden and focal onset seizures. In addition, our discovery team will present findings from our early-stage Nav1.1 program with data from preclinical models of Dravet syndrome.

Then, of course, we’re also looking forward to the American Epilepsy Society later in the year, having already submitted new 4-year long-term data from our X-TOLE open-label extension study with plans to have a strong presence and opportunities for education and interactions with the various event plans. So more to come as we get closer to engaging with the epilepsy community in Atlanta later this year in December. Turning to Xenon’s efforts to expand azetukalner’s use into neuropsychiatry, I want to first highlight that X-NOVA3, the second of three planned Phase III clinical trials evaluating an azetukalner in patients with major depressive disorder has now been initiated alongside X-NOVA2. As we engage with physicians who treat patients and depression and are involved in the studies, they are eager to explore the differentiated profile of azetukalner versus existing agents.

They are specifically interested in azetukalner novel Kv7 mechanism of action and its potential benefit on anhedonia, rapid onset of effect, along with a potentially differentiated tolerability profile. Echoing Ian sentiments, I’m also pleased to announce that X-CEED, the first of two planned Phase III clinical studies evaluating azetukalner in patients with bipolar depression 1 on and bipolar depression 2 has been initiated. Bipolar disorder is a psychiatric condition characterized by mania or hypomania and depressive episodes and can severely impact a person’s quality of life. As of 2019, approximately 40 million people worldwide were affected by bipolar disorder and nearly 6 million adults in the U.S. On average, patients diagnosed with bipolar disorders spend 3x as many days with depressive symptoms than with mania or hypomania.

And the severity of depressive symptoms has been associated with functional impairment, reduced quality of life and a higher prevalence of attempted suicide. Effective treatments for depression and bipolar disorder are limited and many patients are nonadherent due to intolerability and side effects. In short, there remains a significant unmet medical need for safe and effective therapies to treat patients with bipolar depression. Now expanding into BPD is based on a strong scientific rationale based on preclinical data showing an antidepressant effect of azetukalner, genetic links between BPD and Kv7, evidence of Kv7 down regulation in BPD as well as clinical studies that explore the use of Kv7 potentiators in depression. Considering the treatment landscape for BPD, azetukalner’s novel selected Kv7 mechanism of action, potential benefit on anhedonia, rapid onset of effect and differentiated safety profile are particularly attractive in BPD.

Further, we believe that azetukalner demonstrated safety profile could represent an improvement over commonly used drugs to treat bipolar depression, such as atypical antipsychotics, lithium, valproic acid and lamotrigine. Based on results from our Phase II X-NOVA MDD study, where no study subjects experienced notable adverse effects on sexual function or weight gain. Our Phase III BPD program includes two multicenter, randomized, double-blind, placebo-controlled clinical trials to evaluate the clinical efficacy, safety and tolerability of 20 milligrams of azetukalner, administered orally with food over the 6-week double-blind period as monotherapy treatment in approximately 400 patients per study with bipolar 1 or 2 depression with an opportunity to increase the sample size to 470 based on an interim analysis.

The primary efficacy endpoint is the change from baseline in the MADRS score at week 6 in patients who received azetukalner compared to placebo. Upon completion of the double-blind period, eligible patients may enter an open-label extension study for up to 12 months. We feel it’s important for us to address the use of MADRS in this study compared with the use of HAM-D17 in the Phase III MDD program. Scientific literature suggests that symptom presentation differs in unipolar versus bipolar depression. While HAM-D17 places emphasis on melancholic and somatic symptoms, which are more frequent in unipolar depression. It focuses less on atypical features of depression, thereby limiting its utility in bipolar depression. In a study comparing BPD in MDD patient groups, bipolar patients scored lower on the HAM-D17 despite both groups scoring similarly on the Beck Depression Inventory and also the Global Assessment of Functioning, thereby concluding that the severity of bipolar depression may be understated or underestimated by the HAM-D17 due to the different presentations of depressive symptoms.

Further, since 2010, all clinical studies that led to approved therapies in BPD have used MADRS as the primary endpoint. With this backdrop, we believe that the design of our X-CEED registrational study supports our ultimate goal of seeking approval for azetukalner in bipolar 1 and 2 depression. We’re incredibly excited about the potential of azetukalner and its Kv7 mechanism in neuropsychiatric indications such as MDD and BPD. And I look forward to providing updates as we leverage azetukalner’s pipeline and a mechanism potential across multiple streams of late-stage clinical development. Ian, I’d like to turn the call back to you now so you can provide an update on some of the great work happening in the earlier stages of our development pipeline.

Ian C. Mortimer: Great. Thanks, Chris. There is significant momentum across our early-stage pipeline with multiple regulatory filings expected this year to support the initiation of first-in-human trials across a number of validated ion channel targets. This broadening out of our early-stage pipeline is a direct result of the successful leveraging of our extensive knowledge and development expertise in potassium and sodium channel therapeutics. As our diverse pipeline of early-stage drug candidates continue to mature, I’m incredibly proud of the considerable progress we are making across multiple programs targeting the ion channels that include Kv7 Nav1.7 and Nav1.1. Today, I’ll give you an update on each of these promising programs.

Beginning first with our pain programs, I’m excited to confirm that we now have initiated two Phase I studies within our Kv7 and Nav1.7 programs. Despite a wide range of therapies, many patients still suffer from inadequate pain control poor tolerability or dependence on opioids. The need for new non-opioid treatment options remains significant. We believe Kv7 and Nav1.7 are highly validated targets in pain as both mechanisms are central to pain signaling through their role in regulating neuronal excitability. Recognizing the potential broad applicability of the Kv7 mechanism of azetukalner, we have identified multiple chemically diverse Kv7 development candidates and believe this mechanism may have utility in a broad range of therapeutic indications, including seizures, pain and neuropsychiatric disorders such as MDD and BPD.

Last quarter, we indicated that a clinical trial application, or CTA, was accepted for XEN1120. This is a Kv7 channel opener that we intend to study as a potential treatment for pain and a Phase I study in healthy adult participants is underway. There is preclinical and clinical evidence supporting the development of novel selective Kv7 openers optimized for pain, and we expect to identify a number of other Kv7 molecules in chemistries that will follow XEN1120. We also continue to make substantial progress within our Nav1.7 sodium channel program where we believe we may have addressed the limitations of earlier investigational drugs targeting Nav1.7. A key part of Xenon’s heritage involves our pioneering work that contributed to the strong human genetic validation of Nav1.7 as a pain target, and we believe Nav1.7 could represent a new class of medicines which address the unmet medical need for effective alternatives to opioids.

We have advanced multiple selective Nav1.7 development candidates to date. And we are pleased to report that a Phase I study has recently been initiated for XEN1701. This is our lead Nav1.7 development candidate for pain. In early October, we plan to host an R&D webinar to showcase our early-stage pain programs that will include deeper dives into mechanisms, the underlying human genetics, preclinical results and other supporting data, as well as an overview of disease prevalence and unmet medical needs within certain patient populations. We plan to share additional details as we get closer to the day, and we look forward to hosting a series of these virtual sessions in the future. Work within our Nav1.1 program also continues to progress. Our preclinical work to date suggests that targeting Nav1.1 could potentially address the underlying cause and symptoms of Dravet syndrome.

Data shows that dosing with an orally available small molecule CNS penetrant and highly selective Nav1.1 potentiator suppress induced seizures and improve motor performance supporting the potential for improvements in Dravet patient or function. Further, in these animal models, chronic dosing suppressed 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 we anticipate that a lead Nav1.1 candidate will enter IND-enabling studies later this year. Finally, also coming out of the Xenon Labs is a promising selective dual inhibitor of Nav1.2 and Nav1.6, and this is now in a Phase I study as part of our collaboration with Neurocrine Biosciences.

Neurocrine has guided that this first-in-human study will evaluate the safety, tolerability, pharmacokinetics and pharmacodynamics of the investigational compound NBI-921355 in healthy adult participants to support its development for the potential treatment of certain types of epilepsy. I’ll now turn briefly to our financial results. Cash and cash equivalents and marketable securities totaled $624.8 million as of June 30, 2025, and this compares to $754.4 million as of December 31, 2024. Based on our current operating plans, and this includes the completion of the azetukalner Phase III epilepsy studies as well as supporting late-stage clinical development of azetukalner in 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 continued maturation of our early-stage pipeline. I would refer you to our news release and our 10-Q report filed today for further details around our financial results. Before I offer a few concluding remarks, I did want to take a moment to welcome Darren Cline, who joins our senior executive team as Xenon’s Chief Commercial Officer and will lead our commercial strategy and operations, with an initial focus on azetukalner and our first potential launch in epilepsy. Darren is an incredibly experienced commercial leader with an enterprise-level mindset having led commercial organizations and multiple highly successful companies that include GW Pharma and Seagen.

He brings significant U.S. and global launch experience and was instrumental in the commercialization of Epidiolex, which is considered one of the most successful launches in the epilepsy space. Darren, it’s great to welcome you at this pivotal time and I know we can benefit from your extensive experience in epilepsy and your strong record — strong track record of meeting commercial targets of successful product launches that have brought meaningful medicines to patients. Your addition to our leadership team also underscores the great talent that we’ve been hiring more broadly across the company. So Darren, over to you for a few remarks.

Darren S. Cline: Thank you, Ian, for the warm introduction. I’m thrilled to join Xenon as Chief Commercial Officer at such a transformative moment. My experience in epilepsy has fueled my passion for addressing the unmet need of patients living with seizures. The data from the X- TOLE trial and the open-label extension for azetukalner are truly compelling, showcasing its potential to be paradigm shifting with its novel mechanism of action. I’m eager to connect with the epilepsy community at the International Epilepsy Congress in Portugal later this month and to build momentum towards AES in December. At AES, we’ll have the opportunity to share long-term azetukalner OLE data, which continues to demonstrate impressive outcomes.

Notably, the latest OLE data shows that approximately 1/3 of patients on azetukalner for at least 36 months have achieved seizure freedom for a year or more. This is a meaningful metric as many epileptologists tell us that seizure freedom translates directly into improved quality of life for people living with epilepsy. Joining Xenon at this juncture with the X-TOLE2 database on the horizon and the potential approval of azetukalner in epilepsy is incredibly exciting. Looking ahead, the prospects for additional future indications in MDD and BPD further underscore the transformative potential for the company. I’m excited to engage with the investor community as we continue to make progress towards our goal of becoming a fully integrated commercial stage neuroscience company.

Ian, back to you.

Ian C. Mortimer: Great. Thanks so much, Darren. The entire Xenon team is galvanized and driven by the strong potential of azetukalner and our broad pipeline of innovative neuroscience programs. We are entering a transformational period for Xenon as we evolve from a clinical to commercial stage company. We believe that positive top line results from our Phase III epilepsy program will enable an NDA submission to the FDA with the goal of advancing azetukalner towards commercialization. In addition, a number of our other late- stage neuropsychiatric programs are now underway in recruiting patients. And our deep pipeline also contains multiple promising early-stage therapeutic candidates across a number of ion channel targets supporting our goal to be a premier neuroscience-focused company.

On behalf of everyone on the Xenon team, we are incredibly excited by the advancements in both our late- and early-stage programs, expansion of our pipeline as well as how the team is preparing towards commercialization and remain focused on taking important steps forward to bring us closer to delivering azetukalner to people living with epilepsy. So with that, that concludes our prepared remarks. And operator, we can now open the call up for questions.

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

Q&A Session

Jo Yi Chudy: This is Emily on for Paul. Just two quick questions from us. Just first, can you remind us again how quickly do you think you’ll be able to file on the back of that top line FOS data and then secondly, on the Nav1.7 program in pain, could you talk to us a little bit more about your confidence on why you won’t see safety issues like other drugs that have tried this same mechanism and target [indiscernible].

Ian C. Mortimer: Great. Thanks, Emily. I can comment on both of those. So the first question on timing for filing after the X-TOLE2 data. So although we haven’t given guidance on this, I know we’ve spoken with a number of investors historically, and we will provide more specific guidance as we get closer to top line and between top line and NDA, but we think it’s approximately 6 months from top line data to filing the NDA. And then your second question on Nav1.7, so I think you’re probably referring that we have seen in the literature, some cardiovascular signals with some of the earlier molecules that were in clinical development. So we believe that both the profile of the drug in terms of kind of both central and peripheral exposure as well as the time to TMAX influences that and we believe we have a good handle on it.

We haven’t seen any cardiovascular signals in any of the preclinical safety data. So — and we’ll obviously be monitoring it’s something that we can monitor in human clinical development as well. But we’re excited. I think the big progress is really getting that molecule into the clinic and showing a real leadership position in the Nav1.7 space.

Jo Yi Chudy: Congratulations on the quarter.

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

Tessa Thomas Romero: Congrats on the progress here from us. So for X-TOLE2, when would you expect all the patients to be randomized here? What was your patient recruitment split U.S. versus ex U.S. And can you comment on how many sites you ultimately enrolled at for X-TOLE2? And how many of them you used in X-TOLE.

Ian C. Mortimer: Chris, maybe both of us can kind of tag team these. I can give a little bit of perspective and maybe you can add some more details as you’re super close to the program. We’ve recently finished — so maybe just take a step back in terms of time lines for X-TOLE2. So we’ve recently completed patient recruitment, which is what we’ve communicated today, which is a huge milestone for the company. And now we have a very definitive time line as those patients move through towards top line data. So the last patients will go through a baseline period. As you know that baseline is 8 weeks. And so then we would see the last patients randomized. So we can provide updates there in the future, but there is that baseline period.

And then there’s the 3 months double-blind period after the randomization visit. And then there’s a safety follow-up and obviously database lock and data analysis. That gives you a little bit of a the time line on data. So it will be in the near future that we would have those last patients being randomized. A bunch of your other questions, I think wait and see a little bit on this because we haven’t randomized the final patients. We don’t have specific breakdowns yet because these data are changing all the time in terms of ex U.S. versus U.S., how many sites of enrolled patients and the comparison with the X-TOLE sites. But I don’t know, Chris, if you want to provide any maybe directional guidance on what we saw in X-TOLE and maybe what you may expect to see in X-TOLE2.

Christopher John Kenney: Yes. So I mean I would just say on a high level, the spirit of X-TOLE2 has been to try to stay as consistent with X-TOLE as possible since that study was wildly positive. And as far as the breakdown geographically, U.S. versus ex U.S., I think it’s going to end up being quite similar to Ian’s point, we won’t know the exact numbers for another 8 weeks or so. And then on the total sites, there were a fewer — a little fewer than 100 used for X-TOLE and we’re trying to — we’re randomizing more subjects in X-TOLE2 versus X-TOLE and so we have tapped into a larger number of sites. But we can share all that in detail when the time is right.

Tessa Thomas Romero: Ian and Chris, have you seen any compassionate use interest.

Christopher John Kenney: Do you want me to take that?

Ian C. Mortimer: Yes, we have — yes, Chris, go ahead, if you want to address that?

Christopher John Kenney: Constantly would be my one word response. Yes, there’s interest in this mechanism not just with — necessarily within the central nervous system, within neurology and psychiatry, but beyond. And so we have — on a regular basis, we have incoming questions about using azetukalner in a number of situations. As you can see on our website, we don’t have a compassionate use program going right now. We’ve had a lot of active discussions about when that approach could change, but more on that later as well.

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

Brian Corey Abrahams: Congrats on all the progress. So I realize for X-TOLE2, you still need to finalize randomization. But I’m curious if we should be sort of thinking about this potentially the study size and the end being larger than the 360 originally planned sort of depending on how things go. With the final screens and randomization. And then I guess along those lines, some of our analysis has shown that Phase II to Phase III translatability in focal tends to be pretty good with limited diminishment of the delta in seizure reduction. So I guess I’m curious if you could maybe speak to your latest assumptions for what the delta could be and what the dropout rate could be for the study as we think about powering.

Ian C. Mortimer: Thanks, Brian. Chris, I’m happy to start and give my perspective and then you can add in, especially as you kind of think about the X- TOLE2 readout. So Brian, in terms of your N number, so as you spoke to, the study was designed for 360 subjects, it’s 3 arms, 120 subjects per arm. That’s approximate. So we try to get as close to that as possible. But as you know, we have to stop patient screening at these individual sites before the final randomization numbers and that screen and baseline failure rate can move around a little bit. And so I don’t have a final number yet because we don’t have it internally, but we’ll try to get as close to that 360 as possible. And I think that’s important. I don’t think we have to kind of over enroll and maybe this is a bit of commentary to your second question.

As you’ve mentioned and we agree with, I think, reproducibility and translatability between different epilepsy studies in Phase II to Phase III are generally very good and very high, definitely in the neuro field. And we have lots of power at that sample size, right? We’ve talked about at the high dose of 25 milligrams based on our Phase II data as inputs into the model. We have more than 99% power and at the 15-milligram dose, we have more than 90% power. So very, very comfortable in terms of the statistical analysis, how we’ve designed the study to sample size and the powering. My perspective on what we need to see in terms of X-TOLE2 is this study needs to be adequate for us to file. And we’ve had a very successful readout in X-TOLE. And so the second study, X-TOLE2, we need it to be statistically significant, and we need for that to support an NDA filing because now that X-TOLE is already complete, we have those data in hand.

And as we’ve talked about previously, I think they’re remarkably robust. On a placebo-adjusted basis, it’s the best efficacy we’ve ever seen in a focal onset seizure study. In the most refractory or severe population ever tested at least our review of the literature. So now that that’s already completed, I really think that the bar is we need statistical significance. We expect to see, obviously, some consistency. We’re seeing that in the baseline demographics and the data going into the study, and that would support a filing. But Chris can probably provide his perspective as well.

Christopher John Kenney: Yes. Thanks, Ian. I think you largely covered it. When we — there’s a limitation to what we can see in a blinded Phase III study that’s ongoing. But when we look at the patients that are coming in to the sites that are being screened and then who is making it through the screen failure and the baseline process or some metrics, we can look at during the double-blind and then looking at rollover into the open-label, everything is moving as we would have expected given the limitation that it’s still a blinded study. And when we look at metrics that have historically driven placebo responses like geography, we’ve been pretty careful on that front as well. So it’s hard to imagine that two large studies will have the exact same delta. But when we take a look at the major drivers of that delta from our own data and from other studies, we were feeling like as comfortable as we can, considering that it’s still a blinded study.

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

Brian Peter Skorney: On 1701, can you talk a little bit about the molecules profile? Do the preclinical models in the PK and bioavailability can do so to once daily or more frequent dosing? Can it be developed in an IV formulation? And how are you thinking about the first clinical pain model to serve as proof of concept here as opposed to operative pain, severe pain model or more along the lines of a moderate pain indication?

Ian C. Mortimer: Thanks, Brian. Lots of questions in there. If I don’t get them all, please jump back in and just remind me of any other ones that I may have missed. So on your first question of PK, I mean we’ll be able to answer that question very shortly as we get through the first number of cohorts in humans. Still, we believe one of the challenging parts of drug development is that extrapolation and prediction of human PK from animal PK. So we will — obviously, we’re designing drugs that we believe are going to have appropriate half-life and — but we really need some early clinical data in humans to be able to answer that question specifically. So we’ll get back to you on that as we start to see some data. I think there is — in epilepsy and in pain, I think there’s always an opportunity for — to have an IV formulation as well as an oral formulation.

These — initially, whether we look at azetukalner 1701, these are being developed as oral drugs. Usually, the IV development comes a little bit later, but it’s something that we’re keeping in mind — keeping an eye on. We’re doing that work for azetukalner, and we’ll do that work for 1701 and the other Nav1.7 candidates as well because I think I know where you’re going with that question. I think there’s a good opportunity if you can have an IV drug — an IV formulation of the same molecule and then also the oral pills that the patient can go home with. So more to come there, but something we definitely think about internally. And some of these details, we’ll address in our webinar that we’re going to do in early October, where we’re going to highlight both KV7 and Nav1.7 for pain.

And then in terms of the proof-of-concept study, so this would be — so we haven’t fully designed out the Phase II proof of concept study for either 1120, the KV drug or for 1701. But we are looking at the postoperative setting and looking at things like bunionectomy and abdominoplasty and are trying — really now, now that both of those are in a Phase I study, bringing the team together to best design those proof-of-concept studies and probably thinking a lot of the same things that you’re thinking about in terms of number of doses and controls and a number of other things that we would contemplate into those studies.

Operator: [Operator Instructions] Next question comes from the line of Jason Gerberry with Bank of America.

Jason Matthew Gerberry: Just another X-TOLE2 question now that enrollment is complete. And in terms of like the blinded demographics, I’m just curious to the extent maybe severity, if you’ve had a chance to assess that to look similar to X-TOLE1. I know a competitor in the space ended up enrolling less severe patients. And we’re just kind of wondering if that’s perhaps company-specific or maybe an industry trend. And then with your BPD study, do you anticipate a high degree of site overlap with MDD. I’m just wondering if there’s an opportunity for accelerated enrollment of the BPD study. And then just lastly, I think there was comments that with these healthy volunteer pain studies that there’d be some sort of induced challenge to assess efficacy parameters. I know that there’s some debate around the utility of those, but I’m just kind of curious if that’s something that you’ll be assessing in those Phase I pain studies.

Ian C. Mortimer: Thanks, Jason. Chris, I’m happy to take — maybe the first one and the third one, if you want to comment anything else you want to add on X-TOLE2? And then if you want to address the bipolar, depression, MDD question. So Jason, when you’ve asked just about the baseline blinded demographic data as it relates to patient severity for X-TOLE2. As we mentioned on our last call and we confirmed again today, those — the patient characteristics are looking very much like X-TOLE. And again, we don’t have final data there because patients are still getting randomized. We don’t have the final sample size to be able to get a final answer there, but it’s looking more like the X-TOLE in terms of those main demographics that we look at baseline.

And — I mean my perspective, and I think Chris should provide his as well, is that these studies, the patients are becoming more severe over time, not less severe over time. I know you referred to a recent data set from a competitor that may have had a less severe population. I mean, I think I know the one you’re referring to, and I think that was an open-label study, incredibly small sample size, I wouldn’t draw too many conclusions from that. But I think our experience is that the patient demographics and the severity over the last kind of 10 or 20 years when we go back to some of the earlier generation ASMs that I think those were in a much less severe population. Now we’re the company that has run the two most significant studies in this space over the last 5 years.

And so I think we have a really good perspective on that. But I think Chris can add to my comments. And then your third question just on any kind of pharmacodynamic endpoint in pain studies. Yes, those are highly variable. There’s a number of things that you can do. They’re highly variable. And then they — the question is always whether they’re powered appropriately or not. I think we’re not. So our perspective is really what we’re trying to learn about in Phase I in addition to PK and safety is make sure that we have the appropriate amount of exposure that based on our preclinical modeling, we would believe that we should see an analgesic effect. And then let’s get into a patient population and run a proper proof-of-concept study and be able to measure it that way.

So that’s really been the guiding principle at Xenon. And we believe we can have two of those proof of concept studies for 1120 and 1701 next year. Chris, do you want to add to the first one and then the question on bipolar and MDD.

Christopher John Kenney: Thanks, Ian. Yes, I don’t have anything to add to either one of those two questions that you answered. I think you covered it in its totality. On the BPD and MDD front and site overlap, we’ve built up a really nice, robust relationship with our epilepsy sites, and we’ve moved beyond that within the epilepsy community, we are now starting to do that with the psychiatric community as well, to some extent, particularly the sites. And so I do expect that there will be some degree of overlap with sites between MDD and BPD, and there will be some leveraging of resources there that is sort of analogous to how we’ve done focal onset seizure and primary generalized tonic-clonic seizures in the epilepsy program, where there’s a fair amount of overlap.

The extent I’m not really sure, I think these sites — their availability changes over time. And so a site that was available last year for one of the MDD studies may not now be available for the bipolar. So I don’t think we’re making it a priority necessarily, but there is a huge advantage. And if — and if the site is available and they look like they’re just as good at that study, we are trying to create efficiencies there.

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

Lin Tsai: Congrats on the enrollment completion, and thanks for the update. So on bipolar depression, it sounded as if there is an interim built into the study. So when could that interim occur in your view? And what kind of efficacy separation over placebo do you want to see at that interim? And ultimately, can this study be counted as a supporting pivotal.

Ian C. Mortimer: Thanks, Andrew. I’ll provide a high-level comment, and then, Chris, if you can get into the details on a little bit around the sizing and obviously, this is being designed as a registration program. Andrew, I think although we believe we have really good support for going into bipolar depression, and we talked about that mechanistic rationale. There’s some genetic validation that we’re really excited to get into the bipolar study and get that up and running. We do not have current clinical data in bipolar depression, and that was really the reason behind giving us some flexibility in the trial design. And so an opportunity to be able to increase the size of the study, as we said in the prepared remarks from 400 subjects up to 470. But Chris can walk you through a little bit more detail there.

Christopher John Kenney: Yes, thanks. I mean we don’t know exactly when that interim analysis will take place because it’s based upon recruitment, and we obviously have projections of recruitment, but it’s the early days of the study. I mean, to Ian’s point, the interim analysis will be done in a manner so that if the study is found to have insufficient power at 400 patients that could be overcome by increasing to an intermediate number up to 470, then we’ll do it. And I think I’m just going to leave it at that for now.

Operator: Next question comes from the line of Cory Kasimov with Evercore.

Cory William Kasimov: I guess two from me. First, on the competitive front, curious how you see the potential read-through from Biohaven’s pending MDD readout that’s expected at some point in the second half over to azetukalner’s X-NOVA MDD program. I guess maybe on that front, it would help if you can just remind us of the key differences between the two assets. And then second question is for Darren. Darren, good to be covering you again, recognizing its early days, and I know there’s a lot of excitement about a new mechanism of action with this kind of overall profile in the medical community. But I’m curious how you’re thinking about some of the key headwinds and just general nuances of the epilepsy market that you’ll have to deal with upon approval and launch?

Ian C. Mortimer: Yes, I’ll take the first one, and Darren is up on the second one. So yes, the next readout, I guess, for this mechanism is going to be Biohaven’s MDD study. Obviously, I think we are comfortable with the mechanism in major depressive disorder. We’ve seen a number of studies, two with our molecule, both the X-NOVA Phase II study that we ran that proof of concept as well as the investigator lead study that was announced earlier this year. And then there was some earlier data with ezogabine as well. So I think we feel comfortable in terms of the mechanism as having activity and support in psychiatric disorders. And at the top of that list in terms of validation is definitely MDD based on the clinical data. So I think it will be interesting.

We haven’t seen any efficacy data yet with the Biohaven molecule from a placebo-controlled study. So I still think there’s maybe some molecule specific questions as it relates to that molecule. But I think in terms of the therapeutic indication, we think, obviously, that makes a lot of sense. And so we’ll be looking to see what those data show and can provide our perspective at that time. I’m not sure there’s too much we can say in advance of that. But I know Darren is really excited to be on the call and to start preparing. I think, Darren, your 6 weeks in. So starting to think about prepping azetukalner for the epilepsy market.

Darren S. Cline: Yes. Thanks, Ian. Cory, good to hear from you again. I saw your name and I was very pleased. Yes, I’m super excited to be at Xenon. I think when you look at this epilepsy space, specifically focal seizures, with azetukalner being the first or the latest branded launch in — at the time, it’s going to be 7, 8 years, a tremendous amount of opportunity. And I think you hit on a couple of those. I think the novel mechanism of action, the robust efficacy we’ve seen, the rapid onset of effect, a lot of — and what we hear also the ease of attributes, one daily dosing and no titration. I think it’s a perfect opportunity for us to really make a difference. I think when you think about headwinds it will be. I think we look at these epileptologists and general neurologists.

They’re somewhat set in their ways, and I think we’ll have to overcome some inertia that has been built in there with some therapies that still don’t meet the needs of a lot of patients and a lot of physicians. So very excited. Again, early days, a lot of work to do, but I think we have an asset here and azetukalner can really make a difference in this epilepsy community.

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

Basma Mahmoud Radwan Ibrahim: This is Basma on for Mark. Could you please provide some color on the difference between the Type 1 and Type 2 bipolar depression and whether would you expect that azetukalner will be more effective in one patient population versus the other? And also, can you please let us know if you’re assessing mania as a secondary endpoint of the trials or not? That’s it for us.

Ian C. Mortimer: Right. Thanks for the question. Chris, over to you for these two.

Christopher John Kenney: Yes, sure. So just to be clear, the bipolar depression studies will include a mixture of Type 1 and Type 2 BPD. The Type 1 are the patients that have frank manic episodes, and the Type 2 patients are those who have hypomania. And what we’re doing is we’re stratifying so that in each treatment group, there won’t end up being an imbalance between BPD 1 and 2, depending on whether they receive active or placebo. And that’s being driven by the fact that we don’t really know what the effect will be in one versus the other. We’re going into it with the belief that it should work just as well in BPD 1 and 2, but we don’t know that until we run the experiment. Your question about mania, we are following it. I would view it more as a safety outcome because you — medications that are used sometimes for depression, particularly SSRIs have historically been thought to potentially precipitate mania.

And so it’s something that you want to keep an eye on and make sure that you’re not exacerbating any other aspect of the disease. Biohaven has shared very high-level information on their mania study that it was basically negative. I mean, assuming that they had sufficient exposures and that the drug actually gets into the brain, then that — and assuming that, that meant that placebo was the same as drug, which is a whole litany of assumptions. Then at least it provides some sort of comfort that this mechanism doesn’t exacerbate mania. We don’t think it will, but we’ll kind of keep a close eye on it.

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

Joseph John-Charles Thome: Congrats on the progress. Maybe on the Kv7 for pain, obviously, flupirtine showed some anti-pain activity, but ended up seeing some liver tox signals. So I guess, how confident are you that you can derisk potential liver toxicity preclinically through avoiding any sort of toxic metabolite generation and kind of what have you seen there? And then have any of the quality of life measures that you’ve collected for azetukalner related to pain at all? And last just kind of upkeep question, let me see the top line release, what level of detail will we see? Will we also see seizure freedom rates in addition to reduction in the seizures?

Ian C. Mortimer: Bunch of questions there. If I missed one, just circle back. So I’ll — Chris, I’m happy to take the first one and the last one and maybe you can talk about or at least us looking at migraine and the X-TOLE program as one of the exploratory end points. So Joe, as it relates to 1120 and Kv, as you mentioned in pain, there was this molecule that was developed previously that actually had some really interesting activity in a number of different pain indications, which is this molecule flupirtine. It was commercially available and then it was removed from the market, as you said, for liver tox issues. Obviously, nothing in that we believe, is to suggest that there’s anything that’s on target there. So that’s always a risk in small molecule drug development and so something that we monitor closely, and we think about in terms of all of the criteria in terms of a molecule.

So we have early days, but no concerns right now in terms of XEN1120, but obviously, we need a lot more exposure to make any definitive statements there. But we feel good where we are right now. And then in terms of the X-TOLE2 details, at least historically, and I’m thinking back to both the X-TOLE results we had a few years ago as well as our MDD results in X-NOVA. I think we have a good amount of information in our top line press releases and a nice balance kind of across the board of patient demographics, efficacy endpoint, safety end points to really give you and investors a good handle on the overall profile of the molecule. So I think you can use those as a bit of a template. We haven’t come up with the final CFL and everything that will ask the stats group to do a top line.

Obviously, we can’t get to everything. But I think you’ll see a good amount of information in there. And then always more information will come out at subsequent medical congresses and meetings as well. Chris, maybe you can contact or talk about the quality of life measures question that Joe had and maybe the Phase III epilepsy program as it relates to that.

Christopher John Kenney: Yes. So quality of life on a high level, we have shared quality of life data, which shows compelling improvements in quality of life, particularly in the X-TOLE open label that poster is actually on our website, if you care to look at the details. And then as far as pain goes, yes, you’re absolutely right, flupirtine has been — was used for years and it appears to have been useful for pain. I would just — a little bit of caution that the mechanism of flupirtine it’s not a totally clean Kv7 compound. And so I think that there’s somewhat of a readout there, but I wouldn’t bank everything on that. I think it’s really the preclinical experiments and kind of a vast literature that I think supports that.

But we have — as Ian said in his remarks, like nearly 800 patient years of exposure, and we have no evidence of hepatic toxicity. So there’s nothing to say that, that couldn’t happen tomorrow, but we’re seeing nothing in the safety data, which is getting pretty large at this point that we have that liability. And it’s — typically, those are thought to be more based upon the chemical structure than the mechanism of the drug. So — and then just one last thing. In terms of the Phase III epilepsy program, we are capturing data on mood in that study. We’re looking at depression and anxiety in every patient and every study at every visit, but we’re also capturing data on migraine headache since that’s a fairly common comorbidity in epilepsy. And so yes, I mean, it’s not the most important thing about that study, but we will get somewhat of a readout in terms of pain from the Phase III epilepsy study.

The caveat there is we’re not enriching for migraine headache in the manner that we are for seizures, but — so it will be limited, but there will be some sort of a read out there down the road.

Operator: And our last question comes from the line of Paul Choi with Goldman Sachs.

Paul Choi: Maybe for either Ian or Chris to start. Now that you’ve completed enrollment in the Phase III. Could you maybe give us your latest thoughts on just how you’re thinking about the potential difference in dose response for the 15 milligram and 25 milligram doses versus the dose response we saw in the Phase II. And as part of your filing strategy, is the plan to definitely go with both doses or just maybe the minimally efficacious dose? And maybe that is the first question. And then second, on the Nav1.7 program. Once you establish proof of concept, would you contemplate exploring combinations with the 1.8. I think one of your competitors in the space is examining that, just your thoughts on potentially looking at dual targeted therapies here.

Ian C. Mortimer: Thanks, Paul. Maybe I’ll take the 1.7 question first, and then Chris, I can provide some perspective and — but definitely, give your comments on the dose response and kind of what we’re thinking about, not only from the Phase III program, but in terms of regulatory filing. So yes, I mean, Paul, I think we’re excited. I think we’re in a leadership position in 1.7 to get a molecule now into the clinic and get first to proof of concept. I mean, that’s really what’s driving us there. Your question is a little bit of a broader one, which is ultimately, what are maybe different combinations that we could think about with different mechanisms whether it be Nav1.7, Nav1.8 as you mentioned, but also our Kv mechanism that we’re incredibly excited about.

I think long term, yes, maybe different combinations of these different non-opioid mechanisms may be the best to combine together. We’re not going to see that in one chemistry would be our perspective. And so this would be combining different molecules that may have the best analgesic effect kind of long term, but pretty early to start kind of thinking about that. But I think longer term, you’re thinking about, I think, some really interesting questions from a development perspective. Getting back to epilepsy, which I think is a nice way to finish in terms of the recruitment being complete now. So 15 milligrams was not a dose in Phase II. We saw a clear dose response between 10, 20 and 25 milligrams in the X-TOLE study, we would expect, all else being equal, that we’d see a dose response between 15 milligrams and 25 milligram in the Phase III program.

And our perspective is really and our discussions with FDA so far is to have more doses on label rather than less. And that’s really driven by — we know that there’s going to be a different exposure relationship depending on the individual patients and some of the background medications. And so providing as much flexibility as we can to the epilepsy community and the epileptologists and neurologists we think, is incredibly important here. I know Chris will give you more detail in his perspective as a neurologist, but I think having multiple doses available has been consistent with our discussions with FDA to date and consistent with what we would think about in terms of filing the NDA. Chris?

Christopher John Kenney: Yes. Just a couple of quick things to add. Our PK-PD analysis of the X-TOLE study suggests that we should have an intermediate response between the that we saw in the 10 milligram and the 20 milligram in X-TOLE, we’ll find that out soon. I think Ian’s point about having multiple doses approved is extremely important. And then just I’ll end with a powering comment, which is that you only need about 40, maybe 50 patients per arm to be — to have a 90% power if you’re just assessing 25 milligrams azetukalner versus placebo in a focal onset seizure study. So the study is really powered at 90% or maybe even a little bit more for the 15 milligrams and then overpowered pretty significantly for 25 milligrams. So we think we’re in as good a shape as we can be.

Operator: And that concludes our Q&A session. I’d now like to turn the call back over to Ian Mortimer for closing remarks.

Ian C. Mortimer: Great. Thanks, operator. And I really want to say thanks for everyone joining us today. And I do want to pass my credit to the entire Xenon team. This is an incredibly productive quarter. For the first time, we’ve completed enrollment and recruitment in our Phase III epilepsy program in X-TOLE2, and we’re excited that we’re getting close to top line data but we also initiated two Phase III clinical trials within the quarter, both in the psychiatric program with bipolar being up and running, in our second MDD study and getting our Nav1.7 and real leadership position there into the clinic as well. So an incredibly productive quarter on the Xenon side. I know we didn’t get to all the questions today. I’m happy to follow up with people one-on-one after the call. But thank you for all of your support. And operator, we can now end the call.

Operator: Gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.