Xenon Pharmaceuticals Inc.

Good morning, ladies and gentlemen, and welcome to the Q4 2020 San Antonio Pharmaceuticals Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instruction will follow at that time. If anyone should require assistance during the conference, please press star then zero on their touchtone telephone. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host today, Ms. Jody Rates. Ma'am, please go ahead.

Thank you. Good afternoon, everyone. Thanks for joining us on our call and webcast to discuss our financial and operating results for the year ended December 31, 2020. Joining me on today's call are Dr. Simon Pimstone, Xenon's Chief Executive Officer, Ian Mortimer, Xenon's President and Chief Financial Officer, and Sherry Olin, Xenon's Vice President, Finance. As announced in January, this coming June, at the time of the company's annual meeting of shareholders, Simon will be transitioning to his new role as executive chair of Zenon's board. At the same time, Ian will be appointed president and CEO, while Sherry will be appointed chief financial officer. On today's call, you will hear from both Simon and Ian as they provide a corporate update and overview of our clinical development programs. Sherry will provide some high-level financial commentary, and we will then open up your call for questions. Please be advised that during this call, we will make a number of statements that are forward-looking, including statements regarding the anticipated impact and timing of COVID-19 pandemic on our business, research and clinical development plans, and timelines and results of operations, the timing of and results from clinical trials and preclinical development activities of our proprietary and partnered product candidates, the potential efficacy, safety profiles, future development plans, addressable market, regulatory success, and commercial potential of our proprietary and partner product candidates, the anticipated timing of IND or IND equivalent submissions, and the initiation of future clinical trials for our proprietary products and those related to other partner candidates, the efficacy of our clinical trial designs, our ability to successfully develop our proprietary development programs, the timing and results of our and our collaborators' interactions with regulators, the timing and anticipated enrollment in our clinical trials, the potential receipt of milestone payments and royalties from our collaborators, our expectation of having sufficient cash to fund operations into 2023, and the timing of potential publication or presentation of future clinical data. 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 the results of Zenon's 2020 year-end financial results and the accompanying annual report on Form 10-K will be made available under the investor section of our website at www.zenon-pharma.com and filed with the SEC and on CDAR. Now, I would like to turn the call over to Simon.

Thank you, Jody, and good afternoon, everyone, and thank you all for joining us today. I hope everyone is staying safe and well. I would also like to welcome Sherry to today's call. Over the coming months leading up to her transition to CFO in June, you'll have an opportunity to hear her comments on our business and plans moving forward. For my part, as you know, I'm moving into the new role of Executive Chair of Xenon's Board. In this capacity, I'll continue to be very active in the company as Ian leads the day-to-day operations. I couldn't be more excited in making the transition at this time when Xenon is at the strongest point in our history with a talented and capable management team, a neurology pipeline that is one of the most robust in our industry, and meaningful clinical data readouts in the near term. Ian and I have a shared strategic vision, and we are looking forward to the next stage of growth at Xenon. With two of our most advanced proprietary product candidates, XEN1101 and XEN496, currently in phase two and three clinical trials respectively, and numerous earlier clinical and non-clinical assets in development, I'm excited to provide a progress update today. I'd like to begin with some corporate and partner updates, followed by an overview of our clinical development programs. I will then ask Ian to spend some time focusing on XEN1101 including a summary of the new XEN 1101 preclinical data that was presented recently at the Ascent 2021 virtual meeting and how we are thinking about next steps for this program. Before diving into our program updates, I'd like to take a moment to thank Dr. Ernesto Arcadi, our Chief Medical Officer, who will be moving on at the end of April to lead global development for a pharmaceutical company. Ernesto joined us at a time when we began concentrating our clinical efforts on neurological disorders with a particular focus on epilepsy. Perhaps his most impactful legacy will be his work building up our clinical development organization with an experienced team capable of supporting multiple mid- to late-stage clinical trials, and we are grateful for his contributions. With the XEN1101 Phase IIb XTOL study on track for top-line data readout in the third quarter of this year, and with XEN496 Phase III EPIC study now underway, we are looking forward to a very smooth transition. I'm also delighted to announce that Dr. Kenneth Somerville will serve as our interim chief medical officer. A board-certified neurologist, Ken is one of the most experienced epilepsy drug developers in the pharmaceutical industry today, with over 20 years of experience at companies including Abbott, GW, Pfizer, King, UCB, and Schwartz Pharma. He has led phase two and phase three epilepsy trials in the U.S. and made major contributions to multiple successful NDA submissions. In addition to leading the development of Epidiolex to a successful NDA submission for GW Pharmaceuticals, Ken was highly involved in the clinical development of sodium valproate, tyagabine, and lacosamide. Ken's leadership and development experience will be a tremendous asset as we move our clinical development programs forward especially at a time when we are anticipating important data readouts from the EXTOL study and the continued advancement of our Phase III EPIC study. Turning briefly to the latest guidance from our partnered programs, Neurocrine Biosciences anticipates initiating a Phase II clinical trial for NBI 921352 in adolescent patients aged 12 years and older, who have SCN8A developmental and epileptic encephalopathy, otherwise known as SCN8A-DEE, in the third quarter of 2021, and the trial protocol will be amended to include younger pediatric patients aged 2 to 11 years with SCN8A-DEE as soon as the FDA has reviewed and approved additional non-clinical information. In parallel, Neurocrine Biosciences is advancing clinical plans to develop the molecule NBI921352 for the treatment of adult focal epilepsy and expects to initiate a Phase II clinical trial this year. We look forward to keeping you updated on NBI921352 and its progress. Flexion Therapeutics is developing FX301, which consists of XEN402, a xenon NAV1.7 inhibitor, formulated for extended release from a thermosensitive hydrogel to support administration as a peripheral nerve block for control of postoperative pain. Recently, the FDA cleared an IND for FX301, resulting in a milestone payment due to xenon. Flexion has guided that it anticipates initiating a Phase 1B proof-of-concept clinical trial of popliteal fossa block with FX301 in patients undergoing bunionectomy in the first half of 2021, with top-line results potentially available later this year. Moving to our proprietary programs, XEN007 is a CNS-acting CAV2.1 and T-type calcium channel modulator that is being studied in treatment-resistant childhood absence epilepsy, or CAE, in a physician-led Phase II proof-of-concept study. At AES 2020, we presented promising interim data from a small number of patients with all three CAE subjects having completed their maintenance phase of dosing and exhibiting a significant reduction in seizures as measured by seizure diary and confirmed by EEG. In response to COVID-19's impact on recruitment in the study which is ongoing, we are working with our study collaborator to include additional sites and we have adjusted guidance to expect results from a larger data set in the second half of 2021. While the AES 2020 presentation represents a small data set, we believe we are seeing drug activity and seizure reduction and on EEG that is supportive of a broader development plan for XEN007, and we expect to make a decision this year regarding XEN007 in CAE. XEN-496, a proprietary pediatric formulation of the active ingredient izogavine, is being developed for the treatment of KCNQ2 developmental and epileptic encephalopathy, or KCNQ2-DEE. To provide the regulatory backdrop for this program, Xenon has received fast-track designation and orphan drug designation for XEN-496 for the treatment of seizures associated with KCNQ2-DEE from the US FDA, as well as orphan medicinal product designation from the European Commission. We recently initiated a Phase III randomized double-blind placebo-controlled multicenter clinical trial called the EPIC study, evaluating the efficacy, safety, and tolerability of XEN496 administered as adjunctive treatment in approximately 40 pediatric patients aged one month to less than six years with KCNQ2-DEE. We believe XEN496 may be efficacious and address a significant unmet need in this rare, severe pediatric neurodevelopmental disorder based both on its KV7 mechanism of action as well as published case reports from physicians who used izogabine to treat infants and young children with KCNQ2DEE. Advancing this program into phase three is such an important milestone for Xenon, and we believe it is also significant for the physicians, caregivers, families, and patients with KCNQ2DEE. We look forward to keeping you updated on the progress of this epic study. Before I turn the call over to Ian, I'll provide a few comments on XCN1101. We know that the KV mechanism is important in the CNS, and there has been supportive data in a wide variety of therapeutic approaches, including seizure disorders, pain, motor neuron disease, depressive disorders, and tinnitus. This is very common. Many CNS drugs work in a variety of neurological conditions. Within the KV mechanism, we have also seen strong clinical validation with the approval of fluopatine in pain and izogabine in adult focal epilepsy. And in the near term, there will be published randomized clinical data in the high-impact American Journal of Psychiatry related to the use of izogabine in major depressive disorder and anhedonia. There is tremendous validation of the KV mechanism, but to date, a drug with the right pharmaceutical properties has not been developed. We believe that XEN1101, with this drug, we have an opportunity to be the only in-class drug in adult focal epilepsy with the potential to broaden the opportunity into other neurological disorders given XEN1101's attributes following the strong KV scientific and mechanistic rationale and Isogabine's clinical validation. This is an extremely exciting time for the profile of the KV mechanism and for XEN1101. And Ian will provide more details on our approach and future plans. Ian?

Thanks, Simon, and good afternoon, everyone. XEN1101 is Xenon's proprietary differentiated KV7 potassium channel modulator being developed for the treatment of epilepsy and potentially other neurological disorders. Although we are interested in the potential broad applicability of the KB mechanism, our near-term focus is on our XTOL study, a phase 2B randomized, double-blind, placebo-controlled, multi-center clinical trial that is currently underway to evaluate the efficacy, safety, and tolerability of XCN1101 administered as adjunctive treatment in approximately 300 adult patients with focal epilepsy. The primary endpoint is the median percent change in monthly focal seizure frequency from baseline compared to the treatment period of active versus placebo. This is a well-powered study with approximately 90% power. We remain highly confident in the conduct of the study and in the integrity of the data as captured by electronic diary. To date, dropout rates remain lower than modeled and we continue to see excellent continuation into the open label portion of the study. We are on track to complete patient screening and randomization in the first half of 2021 with top line results anticipated in the third quarter of this year. This data readout represents an important inflection point for Xenon and an opportunity to drive XEN 1101 forward into a pivotal program. Last week, Xenon hosted four presentations related to XEN 1101 at Ascent 2021. the virtual meeting of the American Society for Experimental Neurotherapeutics. When outlining XEN1101's clinical development to date, we highlighted a number of its unique properties and potential advantages. XEN1101 is based on a proven anti-seizure caving mechanism of action, and if successful, will be the only drug in this class available commercially. XEN1101 has been well-tolerated in Phase I clinical studies, and we have reported a low dropout rate and high conversion to open-label extension in the ongoing Phase IIb clinical trial to date. We observed a strong PK-PD relationship in the Phase Ib transcranial magnetic stimulation or TMS study, with TMS results informing dose selection in our Phase IIb trial. And in our ongoing Phase IIb study, Exxon 1101 is administered as a once daily and a low daily dose in the evening with no dose titration. In addition, we presented new compelling data from preclinical studies examining Exxon 1101 in combination with other anti-seizure drugs, including lacosamide, levotiracetam, sinobamate, phenytoin, and valproic acid. We demonstrated that combining sub-efficacious doses of 1101 and other ASMs provided robust efficacy in animal models and was well tolerated in the dose ranges explored. This suggests that Exxon 1101 may be well suited for use as monotherapy or applied in a rational polypharmacy setting to treat seizures. On the whole, taking into account our conclusions from preclinical studies and clinical results to date, along with market research exploring the current gaps in the adult focal epilepsy space, we believe XEN-1101 has key ease-of-use attributes that could meaningfully differentiate XEN-1101 from other anti-seizure medications. We have also been exploring the use of XEN-1101 in other non-epilepsy indications and presented scientific rationale, preclinical data, and clinical work to date supporting the use of KV modulators for the treatment of depression and anhedonia. test animal models support a potential benefit of XEN1101 in mood disorders. Of note, the efficacious doses and plasma concentrations from the preclinical depression, anhedonia, and seizure studies overlap and occur at plasma levels achieved during the multi-ascending dose cohorts of our Phase I clinical trial, suggesting the current doses being used in the ongoing XEN1101 Phase 2B clinical trial to treat epilepsy may have beneficial impact on depressed mood. Supported by our analysis and these promising preclinical data, we expect our academic collaborators at the Icahn School of Medicine at Mount Sinai to initiate a Phase 2 proof-of-concept clinical trial this year examining XCN1101 in major depressive disorder, or MDD. We look forward to updating you with further details in the coming months. Before I provide a brief conclusion of our upcoming milestones, I'll ask Sherry to recap our financial position. Sherry?

Thanks, Ian, and good afternoon, everyone. I'm excited to take on the role of CFO later this year, and I look forward to keeping Zenon's shareholders and analysts updated on our continued progress. As Ian noted on the last quarterly call, we are in a sound financial position today and well-situated to support Zenon's business objectives and the advancement of our clinical development programs. Cash-in-cash equivalents and marketable securities as of December 31, 2020, were $177 million, compared to $141.4 million as of December 31, 2019. Based on current assumptions, which include fully supporting the planned clinical development of XEN 1101, XEN 496, and XEN 007, Xenon anticipates having sufficient cash to fund operations into 2023. excluding any revenue generated from existing partnerships or potential new partnering arrangements. Therefore, we continue to have a lot of flexibility as we manage our business and continue to advance our product candidates. As of December 31, 2020, there were approximately 35 million common shares outstanding and approximately 1 million Series 1 preferred shares outstanding. which are convertible into common shares on a one-for-one basis at the option of the holder subject to certain limitations. I would refer you to today's press release and our 10-K filing for other specific details from this year's financial statements. At this point, I'll turn the call back to Ian, who will summarize the key milestone events we're anticipating this year. Ian?

Thanks, Sherry. Looking ahead, our key corporate objectives include the continued advancement of our EPIC Phase III clinical trial in patients with KCNQ2-DEE, top-line results from a larger data set within the physician-led XEN007 proof-of-concept study, and a decision around future development of XEN007 in CAE anticipated in the second half of the year. Continued support of our partner program with Neurocrine Biosciences, including the anticipated initiation of two Phase II clinical trials, with MBI 921352 in 2021. The anticipated Phase 1B trial initiation by our partner, Flexion Therapeutics, with results potentially available in late 2021. In coordination with academic collaborators at the Icahn School of Medicine at Mount Sinai, initiation of a Phase 2 proof-of-concept clinical trial examining XCN1101 in major depressive disorder and anhedonia. And importantly, within our XEN 1101 Phase IIb EXTOL clinical trial, we expect patient randomization to be completed in the first half of 2021 with top line data anticipated in the third quarter of 2021. Adding this all up, we could potentially have up to seven clinical trials ongoing with five different molecules led by us, our corporate partners, and academic collaborators in 2021. In summary, to echo Simon's earlier comments, We believe Xenon has one of the most promising neurology pipelines currently in development, and we have the resources and talent in place to support the continued advancement of these promising therapeutics. On behalf of the Xenon team, we look forward to updating you on our progress over the coming months. At this point, we can open the call up for questions. I'll hand it back to the operator.

Thank you. Ladies and gentlemen, if you have a question at this time, please press the star and then the number one key on your touchstone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the ask key. First question comes from the line of Paul Mattis from CFO. Your line is now open. You may ask your question.

Hey, thanks so much for taking the questions. I wanted to ask you a couple quick ones on the 1101 depression program and some of the recent Zogadine data and then one question on 07. On 1101 in depression data, Can you just tell us any more about this investigator study that's going to start? And, you know, based on the Azogabine trial that was run at Sinai, how long do you think that study will take to complete? And then second on 1101 and depression, just curious, I don't know if you have a sense of this, but from looking at the population you've enrolled in the focal seizure study, What percent of patients do you think may have comorbid depression in this trial, and is there anything we could kind of glean from that subset in this study? And then I have one follow-up on 07, but I'll save it. Thanks.

Sure, Paul. Simon here. Let me start with your second question, which is comorbid depression in XTOL. Of course, we didn't randomize subjects with that in mind, so comorbid depression will be – you know, is not an endpoint per se, primary or secondary. We do have a 31-point questionnaire survey, which is a quality of life in epilepsy or QOLIE31 survey, which is delivered to the subject in the study at baseline and at the end of study. I think it's just two time points baseline and then study end. That is not a Madras or SHAPS. It's not a sort of specific depression score, but it is a good questionnaire list to give us a sense of emotional well-being of patients in the study. So that will, of course, be interesting. We'll have that data at, whether it's at top line or beyond, I can't say today, but certainly we'll have that data this year. Again, not strictly an MDD endpoint or an anhedonia endpoint, but we certainly will get a sense of patients' quality of life and emotional well-being, and you can look up that. It's a well-recognized scoring system. In terms of the depression study, What I would say is that when the study comes out, as Ian referenced, we probably are weeks away from a publication, or at least our collaborators weeks away from a publication. Our investigator-led study with Sinai will look very similar in design. So not to preempt the publication, which is an assurance we've given them, So stay tuned. We'll have that publication soon, and I think you could expect a very similar design. In terms of time to complete, tough to know at this point. We're not guiding on that. I think we'd like to see how things go in the near term. You know, it's not 2021, but we certainly hope it could be a 2022 timeframe, but we'll see. Okay.

And then just maybe one question on 07, Simon. That was really helpful. On the data coming later this year, I guess what's kind of the hurdle for you moving forward? Is this one of the first three patients? How are you thinking about that? And then if you do decide to move forward, you know, because flunarizine was, I guess, XUS, largely an adult drug, is there additional preclinical work you need to do to get the FDA comfortable for you to move I guess, right into mid-stage trials in pediatrics. Thanks.

Ian? Yeah, I can take that. Thanks, Paul. So, you know, we think we're seeing a real signal right now in a small number of patients. And with the caveat, it's open label and it's a small N. But given the seizure reduction and given the confirmation on EEG and that these were highly refractory patients with high seizure burden and and had had the disease for quite some time, we feel that we're getting a signal. I mean, some of these, a couple of these patients had quite material reductions, kind of in the 80 to 90% range. I don't think we have to see that to feel comfortable about moving forward, but I think we do have to get above where we would just be concerned that it's noise. So it's probably, you know, if we're anything kind of in the 50% range or greater, I think we would feel comfortable But we're really parallel processing this. You know, we have less control over the current 007 study, but what we do have control over is our own development planning and also having some regulatory interactions. So we can't answer your question today on if we need more preclinical data. There's a lot known about this drug in pediatrics. We expect to have regulatory interaction with the FDA later this year once we have our development plan sorted and get that feedback. If there was a situation where we had to produce some additional data before getting into a study in the U.S., the other option here is given the widespread use of the drug is we could always start a study ex-U.S. and then bring it to the U.S. So I think we have some flexibility on the development plan, but we need that regulatory interaction to give us precise feedback.

And just one additional comment is just a reminder, we do have a license to data that could support a submission using data that has been generated ex-US. The one caveat being some of that data is old, and so hard to know which of that is up to required ICH standards. But that review is well underway, and as Ian said, we expect an engagement with the FDA this year. There are other alternatives, as Ian said, so, you know, at least to get the study going.

Got it. Thank you, guys. Appreciate it.

Not at all.

Thank you. Next question comes from the line of Andrew Chai from Jeffreys. Your line is now open. You may ask a question.

Thanks, and congratulations, Simon, Ian, and Sherry, on your new roles. First question is really just about the market opportunity for 1101. I mean, based on my conversations, investors seem to be doing a lot more work about the market potential in focal epilepsy. So can you help us understand why I guess, some of these approved drugs out there are doing, for example, over $1 billion in sales. What would be some of their more favorable attributes? And, you know, would 1101 have similar or even better attributes? Thanks.

Yeah, thanks, Andrew. Yeah, I mean, we've talked about for some time that we believe that the commercial opportunity for 1101 is sizable. You know, there's 3 million epilepsy patients in the U.S. The majority of the of the phenotype is adult focal epilepsy, and then you've got still a large proportion that aren't currently well controlled. And so, you know, in the U.S., we're in hundreds and hundreds of thousands of patients that currently aren't well controlled and have a need for new drugs and new mechanisms. You know, some of the drugs that you've been referring to, we agree, I think, these kind of ease-of-use attributes or the the really totality of the package of a drug is really important. You know, the two drugs that have done extremely well, Keppra and Vimpat. You know, Keppra was a novel mechanism and the first SV2A drug that was launched. And now Keppra, even as a branded generic, there's over 2 million patients globally that are on Keppra. And Vimpat was a drug that even as a BID drug was very well tolerated. And has, you know, the peak sales as guided by UCB I think is approaching closer to 2 billion than 1. So yeah, there's a large commercial opportunity and where we think 1101, and this is some of the data that we've confirmed both through market research as well as we presented at the assent meeting recently, is that we think 1101 would fit really nicely in terms of it will be an only in class drug. It will be adding a new mechanism for physicians to use. And then, as we've talked about in terms of QD evening dosing, so far no titration. We think low risk of DDI from what we've seen to date really gives it a good opportunity to be a successful drug and a really important drug for patients.

Yeah, I'll just add to that, Andrew. I don't think, you know, as we look at this, there are very few properties of the drug that we could consider changing in terms of ease of use. it's as easy as it gets in terms of what we're seeing today. Once a day, no titration, no DDI, no QT prolongation. Whether we're able to show, for example, benefits in depression will be a massive differentiator in addition. So, you know, as Ian says, we're very bullish on this. We think there's huge opportunity still, and we think this drug can be very, very favorably positioned within the market today.

Great. Thank you. And second question is, I'm actually curious, how are you guys thinking about sharing the open label data for EXTL, the open label extension? I mean, should we expect you to share it at the one-year mark or when patients have been treated at six months? Or could you actually potentially share the OLE data at the time of the top line readout in Q3, just a segment of it? Thanks.

Thanks, Andrew. Yeah, so for the top line results in Q3, obviously the focus is going to be on the double blind portion. And we'll obviously provide top line data in primary and secondary endpoints. We'll have commentary on safety and tolerability. The open label extension, we may be able to give kind of some qualitative directional information. It is being used. It's not via an electronic diary. We use a paper diary for the open label extension. And so I think to collect and clean that data as efficiently as we can in the double-blind portion, that's really not our goal. I mean, we have patients that have hit the 12-month mark already, and our guidance remains that we've had extremely high rollover to open label extension from the double-blind portion. But I would really focus the top line results in Q3 on the double blind portion and probably less information at that time on open label extension. And then that will probably come out over time, as you say, as we have kind of a critical mass of patients going through certain time points like six months or 12 months.

Thank you.

Operator, any other questions?

Yes, we do have a question from Mark Goodman from FDB. Your line is now open. You may ask your question.

Yes, hey, guys. Can you just tell us, for 007, you've decided to wait until later in the year to kind of give us the data. Just tell us again, is that because you're trying to increase the number of sites and you're trying to make it more robust? I mean, what was the rationale there? And secondly, at 007, are you considering... additional indications to look at besides absence epilepsy? Any other type of epilepsies? I guess that's first. I'll wait a second.

Sure. I'll talk about the indications and Ian can talk about guidance. You know, there are a number of potential indications, Mark. We've talked about those previously. alternating hemiplegia, hemiplegic migraine, where the drug is used, both of which indications of the drug is used widely off-label. Just as a reminder, at this point, we'd be relying primarily on orphan exclusivity, and so while the drug has been approved for larger indications, XUS, such as migraine and vertigo, I think the focus will be at least initially on orphan exclusivity. I think CAE is to date is the standout opportunity. It doesn't mean there won't be others but that's really where the bulk of our focus is and primarily because I think the firstly fits in very well into our epilepsy basket but secondly we do see an important need. These are patients that are generally adolescents so from a toxicology and nonclinical perspective probably a bit easier than a very early infant population which may be alternating hemiplegia for example. And they're a good number, 40,000 to 50,000 CAE patients in the U.S., of which 30% to 40% are either refractory or intolerant of existing agents. So that's really what I think are some of the key. Plus, I would just say that, again, if our larger cohort provides similar comfort to what we've seen in the first few subjects, I think strong validation for that indication. Ian, just on timing. Thank you.

Yeah, so I mean the simple answer to your question, the answer is yes, Mark. We're, you know, this started as a single center locally and that's where the first amount of data was generated from. And to accelerate and get some more patients in this study, we are going to expand to at least a couple additional sites to increase enrollment. and get some kind of a larger data set that we can share. We will need to coordinate with the investigator. It's her study as the PI in terms of how we release that data, so we'll be working closely with her in order to be able to release it. And obviously, she'd like to release it likely at an upcoming medical meeting. And then, as we mentioned in parallel, we'll be working on our own regulatory strategy to get some feedback on moving this into a company-sponsored study.

And then just on 1101, the enrollment, I think your comment was pretty positive. The enrollment, we haven't really missed a beat on COVID in the past, you know, two, three months. It's gotten okay, and no urinary issues are popping up.

So, yeah, I'll tackle the first one. And obviously, we have blinded data, so all we can say overall is that, yeah, that, you know, tolerability has been good and kind of at that macro level, dropout rates have been lower than we modeled and we've had very high rollover to open label extension. Yeah, you know, I think many people know the history here. This was a challenging study during the first wave of COVID and where a lot of clinical sites were completely shut. And we did a number of things. We obviously worked to ensure that we could get drugged to subjects, that we could, with the electronic diary, we could capture all of the data, make adjustments in terms of telehealth, and even having caregivers go to homes in order to collect samples. So, you know, we've done everything we can for the study, and we feel very positive in terms of the integrity of the data. You know, enrollment started to pick up again last fall. And yes, I think your comments, you know, interpretation is correct. We feel very confident where we sit today that we've had consistent enrollment over the last number of months and we're on track to finish screening and randomization first half of this year and on track for top line data in Q3.

Mark, in terms of the urinary issues, I mean, all we can say is, and Ian and I don't have visibility on every A and every patient, but we've not had any reports of issues of concern, any drug-related issues of concern. So we're not seeing any signals that we're aware of as of today. Again, blinded, unscrubbed data just as a caution and caveat. So, you know, again, knock on wood, the study as we've reported on a few times now appears to be going very well. We're very much on track. And, you know, to Ian's point, we now, I think, finally do have visibility where we've had a few months of very, very consistent screening and randomization, and it's looking very good

Thank you. And as a reminder, to ask a question, you will need to press star 1 on your telephone keypad. We will limit each participant to ask one question to give other participants on the queue to ask their question respectively. You may also re-enter to the queue for a follow-up question. Next question comes from the line of Laura Chico from . Your line is now open. You may ask your question.

Hi. This is Kenneth on for Laura Chico. Thanks for taking our question. So on 1101, and realizing it's still a little premature here, but it's still a study on track to report, top line, and 3Q21, we're just wondering if you could revisit here what would be necessary to demonstrate on the reductions in seizures, and also on the safety and tolerability profile, and I have a follow-up.

Sorry, is the question what would we consider successful, or what is the study modeled on?

Just can you... Or what is necessary to demonstrate on the reduction in seizures?

Okay. Do you want me to answer? Yeah. So, Kenneth, I think as we've talked about before, but just to remind everyone, we have close to 90% power to the null hypothesis is that there's no change between, remember this was a forearm study, we have placebo and then three active doses, and then the alternative hypothesis is that there is a dose response trend, and so it's a linear, what we call a linear trend test as the primary endpoint, and it'll be positive if at least one dose is better than placebo. The real power of the study is being driven by the high-dose 25-mig arm because that's where we have 100 subjects. We have 100 subjects in placebo and then 50 subjects in the two lower doses, 20 milligrams and 10 milligrams. And then the assumptions in terms of the model and the simulations we run for our power calculations is, and obviously these will change, but just to give you an idea that we've spoken about in the past, is that the placebo rate would be around a 20% reduction, and then there'd be a dose response with 10 milligrams at a 25% reduction, 20 milligrams at 30, and 25 milligrams at a 35% reduction. So that's the way that the study is designed from a powering perspective. And then in terms of safety and tolerability, I mean, obviously, you know, we're going to have to wait and see. What is going to be important is how does this stack up in comparison with other anti-seizure medicines, and knowing that all of these patients are on con meds, and so obviously we're going to need to take into consideration what that looks like when we're looking at an active group versus placebo.

Okay. Thank you. And then a follow-up.

to just get disconnected from the queue, kindly press star one again for a follow-up question. Again, we will limit each participant to ask one question to give other participants on the queue to ask their question respectively. You may also re-enter to the queue for a follow-up question. Just simply press star one on the telephone keypad. Next question comes from the line of Yatin Sonoha from Guggenheim. Your line is now open. You may ask a question.

Hey, guys, this is Eddie on Friyat, and thanks for taking my question. So for late... Are you there, Eddie?

He just got disconnected from the queue. Kindly press star 1 again to queue in for questions. Operator, I think we can just go to the next one in the queue. All right. Next question from the queue comes from the line. Oh, we have the line from . Your line is now open. You may ask a question.

Hey, can you hear me?

Yeah, that's good, Eddie. Thanks.

Great. Thanks. So, yeah, so given that you've opened some additional European sites for the 1101 study to speed up enrollment, is there any sort of major differences we should think about in terms of baseline criteria or background medications that are sort of more prevalent in Europe there? And then just, like, if you could sort of let us know for the 496 study if you're going to give enrollment guidance at all or sort of as the study proceeds, let us know when we should think about top line data there. Thanks.

So on 1101, Eddie, so yeah, about half of the clinical sites are in the U.S. and about half are in Europe. And we've seen so far in patient screening randomization, it's actually been almost even between the two jurisdictions. So in terms of most, when we look at the anti-seizure medicines, the drugs that are approved in the U.S. or approved in Europe, we don't expect much imbalance or concerns in terms of background meds depending on the jurisdiction. We get sometimes questions about Sinovimate that was recently approved. But I think there'll be probably a small number of patients in this study, given the timing, that would have had Sinovac-made exposure coming into the 1101 study. So we don't have a concern that there's going to be some type of imbalance based on geography. But obviously when we get into the detailed statistical analysis, we're always looking at any of those things. But we don't expect any concerns coming into the study or as we've moved through it. In terms of 496 enrollment, So you're right, we haven't yet given guidance on enrollment and or when we would see top line data. You know, we'd like to get the studies up and running initially in the U.S. It will be in other jurisdictions as well. We're looking later this year when we get a critical mass of sites up and running and we can start to see what those enrollment curves look like. This is obviously a rare condition. And so hopefully later this year we'll be able to provide some guidance on where we are. You know, normally we don't give specific enrollment guidance, but at some point we'd like to give guidance in terms of when we would expect to see top line data.

Thank you. Next question comes from the line of Serge Ballinger from Needham and Company. Your line is now open. You may ask a question.

Hey, good afternoon. First one on 1101. So, I mean, I think in your prepared comments you mentioned the KV channel had some data supporting its potential in additional non-epilepsy indications. I think you mentioned pain and tinnitus. Should we expect to see depression as the first of other non-epilepsy indications for 1101?

Yeah, right now the focus is on MDD. I think, as we've said, that's a investigator-led study we're looking at now, which should initiate soon. We're certainly looking at other indications, but we don't have budget allocated for other indication studies at this point, and we haven't made any decisions on any new indications at this point. That being said, as you've correctly pointed out, lots of interesting areas for KV7. We like MDD as an option of all of those for two reasons. Well, three, validation obviously of the target, and you'll see more of that in an academic publication near term. Number two, massive commercial opportunity. And number three, a very, very important comorbidity with epilepsy. And so I think taking those three into consideration, I think this is where you should expect to see the company focus most of its efforts and resources going forward in non-epilepsy indications for the KV7 mechanism.

Thank you. Next question comes from the line of Tim Ludo from William Blair. Your line is now open. You may ask your question.

Thanks for the question. For following up on depression, I know you don't want to go into too many details, but broadly, are you looking at randomized placebo-controlled studies for the next proof of concept study? And 1101 obviously combines well with anti-seizure medications, but do you have data where it combines well with kind of the depression therapies, or are you thinking of it as a monotherapy in this indication?

Yeah, I mean, right now we're thinking of it as monotherapy, and certainly we'll be looking at combination work as time moves on. But in terms of... The high-level study design elements, yeah, I think what we can say is we'd expect to see a randomized controlled study with an active placebo arm and with typical blinding. So, you know, expect to see that. And then more details around endpoints, size, number of sites, et cetera, will be made available as the study kicks off. I'll just remind you, as I said to Paul earlier, Tim, when the publication comes out, I think there'll be very similar elements in the study that we'll be launching as a next study to what is published in the upcoming manuscript that you should see over the next few weeks.

Thank you. There is time remaining for one more question. And we had a question from the line of Antonia Borovina from Bloomberg. Your line is now open. You may ask your question.

Hi, Simon and Ian. Thank you for taking my question. I'm just wondering, have you compared azogabine to 1101 preclinically in terms of the mood and depression symptoms? And can you rule out that the other subtypes, like 7.4 and 7.5, play any role in mood symptoms?

That's a good question, Antonio. We don't think the other subtypes do. If you go to the literature, in fact, collaborators at Mount Sinai have published quite widely on the non-clinical chronic social defeat model, etc., where really KV7-3 is stands out as the primary KV channel in this anhedonic and or depressive phenotype. We feel pretty confident that it is the KV73 primarily and 723 heterotetramer, which is acted upon by both izogabine and 1101. Of course, 1101 being more active on the target compared to izogabine. So we really don't think it's a distinct KV7 mechanism. But a very good question. We haven't yet done the head-to-head work. That's something we would like to do and will plan on doing. But similarly, we expect to start the study with 1101 in humans soon, which obviously we've committed to. So we think it's the right mechanism. We think there's a good amount of non-clinical genetic and pharmacological mechanism for this in animals, and we think it's KV7-3 predominantly.

Okay. Thank you.

Yeah.

Thank you. I'm showing no further questions at this time. I would now like to turn the conference back to Ms. Jody Wright. Ma'am, please go ahead.

Thanks, everyone, for joining us today. Operator, we will now end the call.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participation and have a wonderful day. You may all disconnect.