Xenon Pharmaceuticals Inc. (NASDAQ:XENE) Q4 2022 Earnings Call Transcript

Xenon Pharmaceuticals Inc. (NASDAQ:XENE) Q4 2022 Earnings Call Transcript March 1, 2023

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Q&A Session

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

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

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

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

Unidentified Analyst: Makes sense. Thanks.

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

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

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