Xenon Pharmaceuticals Inc.

Good day, ladies and gentlemen, and welcome to the Q2 2021 Xenon Pharmaceuticals, Inc. Earnings Conference Call. At this time, all participants are in the listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touchtone telephone. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. O.D. rates. Thank you. Please go ahead.

Thank you. Good afternoon. Thanks for joining us on our call and webcast to discuss our second quarter 2021 financial and operating results. Joining me on today's call are Ian Mortimer, Xenon's President and Chief Executive Officer, Simon Pinstone, Executive Chair of Xenon's Board, Sherry Ollen, Xenon's Chief Financial Officer, and Chris Von Seggern, Xenon's Chief Commercial Officer. 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 the 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 profile, future development plans, addressable market, regulatory success, and commercial potential of our proprietary and partnered 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 our other partnered candidates, the efficacy of our clinical trial designs, our ability to successfully develop our proprietary development program, 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. Four of the 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 statements. Today's press release summarizing Zenon's second quarter 2021 financial results and the accompanying quarterly report on Form 10Q will be made available under the investor section of our website at www.zenon-pharma.com and filed with the SEC and non-FEDAR. Now, I would like to turn the call over to Ian.

Jody, and good afternoon, everyone, and thanks for joining us today. We continue to make strong progress across our portfolio of proprietary and partnered neurology-focused therapeutic programs. Importantly, we remain on track to report top-line data from our XCN 1101 Phase IIb XTOL study in late September to mid-October. In anticipation of this important milestone, we will focus the majority of our attention on XCN 1101 today. I will, however, begin with a brief overview of the rest of our proprietary and partner programs. I'll then ask Simon to provide an update on our XCN 1101 XTOL clinical trial, and then I'll provide some commentary on the study design and statistical assumptions. And Chris will provide an overview of the work we've done on the commercial assessment of XEN 1101 and where XEN 1101 could fit into the treatment of adult focal epilepsy. Sherry will provide a financial update, and then we'll open the call up for your questions. So I'll start with an update on our non-XEN 1101 programs and partnered assets. Briefly, in our XEN 496 program, site initiation as well as patient identification and enrollment continue in our Phase III randomized double-blind placebo-control parallel group multicenter clinical trial called the EPIC study to evaluate the efficacy, safety, and tolerability of XCN496 in approximately 40 pediatric patients aged one month to less than six years with KCNQ2 developmental and epileptic encephalopathy. Based on its KV7 mechanism of action, as well as published physician case studies, we believe that XEN496 has the potential to address an important unmet medical need for these young patients. And we look forward to keeping you updated on the progress of the EPIC study. Patient enrollment also continues in the investigator-led phase two proof of concept study examining the potential clinical efficacy, safety, and tolerability of XEN007. as a treatment in pediatric patients diagnosed with treatment-resistant absence seizures. This study has enrolled different conditions with absence seizures, including Javan syndrome, childhood absence epilepsy, or CAE, and juvenile absence epilepsy, or JAE. Based on the initial data and promising signs of drug activity in three patients with CAE, which we presented at AES at the end of last year, the goal is to focus future enrollment on childhood and juvenile absence seizures. The lead investigator has also expanded the study to include an additional Canadian site which is currently screening patients and is also evaluating the addition of other sites. Additional results from a larger cohort are anticipated by the end of this year, which will help inform our decision regarding the future development of XEN007. In addition to the clinical progress, we have also recently received both orphan drug designation and rare pediatric designation for CAE, and these are important milestones for this program. Moving to our partnered programs, where we also expect important milestone events in 2021, Neurocrine Biosciences is anticipating the advancement of MBI 921352 into Phase II clinical development with two efficacy studies expected to initiate this year, one in adult focal seizures and second in patients older than 12 years of age with SCN8A developmental and epileptic encephalopathy. In addition, Flexion Therapeutics is expecting top-line results from its Phase 1B FX301 clinical trial in bunionectomy later this year. We look forward to keeping you updated on our collaborators' progress. So now let's turn our attention to XCN1101, which is a novel next-gen KV7 modulator being developed for the treatment of epilepsy and potentially other neurological disorders, where we're looking forward to our top-line data from our Phase IIb EXTOL clinical trial, expected in late September to mid-October. We are encouraged by the compelling product profile that is emerging for XEN1101. Last month, we hosted a webinar with two leading key opinion leaders in the epilepsy space to discuss the focal epilepsy landscape, the XTOL clinical trial, and the important attributes of XCN 1101 and its potential in the treatment of adult focal epilepsy. We also disclosed in our quarter today an update on our strategy to continue to expand the intellectual property protection of XCN 1101. We have recently received allowance of a U.S. patent application with claims directed to four distinct crystalline forms of XCN 1101. And any patent issued from this allowed application is expected to expire in 2040. In addition, we have a number of pending patent applications, which we believe will continue to provide added protection to XCN 1101. So overall, we're very pleased with the progress we've made on our XCN 1101 intellectual property portfolio. So at this point, I'd like to turn the call over to Simon, and he'll provide an overview of our clinical experience to date and the trial design of our Phase IIb EXTL study and what we can expect in our top-line data press release. Simon?

Thank you, Ian, and hi to everyone. Ian, as you noted, in the near term, our focus is on the upcoming data readout from our Phase IIb EXTOL study. Today, I'll provide a brief overview of some of the clinical development highlights to date that have led us to this important readout, and I'll also discuss our plans regarding the EXTOL study top-line data release. Our Phase I studies with XEN1101 showed a promising drug profile. Results from Phase 1 SAD and MAD studies demonstrated favorable PK, supporting one's daily dosing. XCN1101 was well tolerated in Phase 1 studies, including at the doses currently being tested in our Phase 2B clinical trial, with the majority of AEs being reported as mild and CNS-related. These dose-dependent AEs provide additional support of drug activity in the CNS. In addition to the Phase 1 SAD-MAD cohorts, we also completed a Phase 1B transcranial magnetic stimulation, or TMS, pharmacodynamic study that showed Exxon 1101 reduces corticospinal excitability with a strong PK-PD relationship. Although not analyzed head-to-head, the effect was more robust when compared to that of izogabine in the literature. Data from the Phase 1 SAD-MAD and TMS studies together with numerous non-clinical in vivo studies informed dose selection in the Phase IIb EXTOL trial. EXTOL is designed as a double-blind, placebo-controlled, multicenter Phase IIb clinical trial to evaluate the efficacy, safety, and tolerability of ExCN 1101 administered as adjunctive treatment in adult patients with focal epilepsy. The primary endpoint is median percent change, or MPC, in monthly focal seizure frequency from baseline to the eight-week double-blind treatment period for ExCN 1101 compared to placebo. I'm pleased to report that we have completed the randomization of 326 patients in late June. Patients have been randomized in a blinded manner to one of three active treatment groups or placebo in a two-to-one-to-one-to-two fashion, that being exein 1101 25 milligrams, exein 1101 20 milligrams, exein 1101 10 milligrams, and placebo in a two-to-one-to-one-to-two fashion. With randomization now complete, we anticipate top-line results from the Phase IIb Extral Clinical Trial as guided in late September to mid-October. I would also like to provide a little more detail in what, at minimum, we expect to include in the top-line press release. Firstly, we will include the median percent change, each of the four arms of the study, and the p-values associated with different statistical analyses that Ian will walk through. In addition, we will present the 50% responder analysis for the four arms of the study, as this is a key secondary endpoint. We will also provide commentary on the overall safety and tolerability, and given the history with izogabine, discuss any observed urinary AEs and pigmentation. So overall, we expect that we will be in a position upon receipt of top-line data to provide information on the key efficacy and tolerability measures in the study and provide our perspective on these data in the context of the opportunity for exin 1101 to be a novel mechanism for the treatment of refractory focal epilepsy. I'll pause here. I'll ask Ian to comment further on the study design and our modeling and powering assumptions, as well as the statistics.

Ian, back to you. Great. Thanks, Simon. I will begin with how we designed the EXTOL study and our powering assumptions. As we have discussed previously, placebo rates have been going up over time in adult focal epilepsy clinical trials. And in this study, we've modeled a 20% reduction in the MPC in the placebo arm. For the active arms, we have modeled a dose response and used the historical azogavine clinical data as our guide. And we've modeled a 25% reduction in MPC for the 10-milligram arm, a 30% reduction for the 20-milligram arm, and a 35% reduction for the 25-milligram arm. Our primary statistical analysis takes into consideration all subjects in the study in a monotonic dose response, where the null hypothesis is there is no change between placebo and the active dose groups. and the alternative hypothesis is there is a positive dose response. The rejection of the null hypothesis and a statistically significant outcome would conclude one dose is better than placebo. Under these assumptions in our modeling, we have good power in the 88% to 90% range. After this analysis, we will then run pairwise statistical analyses, comparing 25 milligrams to placebo for both MPC and the 50% responder analyses, and then we'll move to the other two dose groups. So overall, we feel the study is well-conducted and well-designed, with good power, and we're looking forward to the top-line data. I'd now like to introduce Chris Von Segern, Xenon's Chief Commercial Officer. Chris joined Xenon last year as our first CCO. Previously, he was a partner at Clearview Healthcare Partners, where he oversaw a number of commercial engagements, as well as strategic due diligence on in-licensing and M&A opportunities. Chris has done an immense amount of work, analyzing the commercial opportunity for XEN 1101, both from primary and secondary market research sources. So he'll share some of those insights today. Chris?

Thanks, Ian. I'm pleased to share some more information from our market research on XEN 1101 on the call today. By way of background, we conducted market research in a blinded fashion with 50 clinicians, ranging from academic epileptologists to high-volume prescribing neurologists and epileptologists across the U.S., with the goals of pinpointing the drivers of their clinical decision-making, understanding the unmet medical need and focal onset seizures, and identifying the key attributes desired for future anti-seizure medications. Today, I'll briefly summarize some of the key findings. First, at a high level, our findings indicate that an enduring unmet need remains despite the availability of numerous ASMs. Physicians emphasize that high clinical unmet need exists, particularly among patients who are not well-controlled despite being treated with multiple drugs and a polypharmacy approach. Looking at the XEN 1101 profile opportunity, XEN 1101 is based on a previously proven KV mechanism of action with validated anti-seizure activity and, if approved, would be the only drug in its class available on the market. From our research, we understand that the efficacy of many anti-seizure medications is perceived to be roughly equivalent and that other ease of use and tolerability attributes are important in prescribing decisions. Therefore, if we obtain efficacy measures that are within the range of other anti-seizure medications, there are a number of other positive attributes of XEN-1101 that we believe could further differentiate it within the adult focal epilepsy market. From our discussions, we believe that this unique mechanism of action and currently apparent low DDI risk may be leveraged in rational polypharmacy approach. We believe XEN-1101's one pill, once daily regimen may be attractive to both physicians and patients, with a forgiving PK profile that may provide coverage for misuse. Additionally, no drug dose titration is anticipated, which compares favorably to the majority of other therapies used to treat adult focal seizures. Further, given that ASMs are generally perceived as having non-differential efficacy, the safety and tolerability profile is another key treatment driver. XEN-1101 was reported as well-tolerated in Phase I clinical studies. When taken as an evening dose, the drug Cmax is reached during the sleeping hours, which may blunt potential Cmax-related CNS AEs. Another very important differentiator might be the potential mood benefits of XEN-1101. We have strong scientific rationale to further explore a major depressive disorder based on preclinical data and clinical work to date that supports the use of KB7 modulators for the treatment of depression and anhedonia. If XEN-1101 could present a mood benefit beyond its impact on seizures, this added positive effect would be a striking differentiator given that many ASMs are associated with negative mood symptoms and depression is a common comorbidity in focal onset patients. The focus provides a succinct snapshot of some of our important findings where XEN-1101 is clearly differentiated based on its novel mechanism of action, apparent low DDI risk, one pill once a day, no titration, potential mood benefits, and evening dosing. We believe these combined attributes stack up well against other ASMs currently available to treat adult focal epilepsy, and we are looking forward to our top-line Phase IIb XTOL data in the near term. Ian, I'll turn things back to you.

Thanks, Chris. On the whole, taking into account our findings and conclusions from preclinical studies and clinical results to date, along with the market research exploring the current gaps in the adult focal epilepsy space, we believe XCN 1101 has a product profile that could be meaningfully differentiated from other anti-seizure medications. I'll now ask Sherry to recap our financial position. Sherry?

Thanks, Ian. Today I will focus on some highlights from this quarter's financial statements and would refer you to our news release and 10Q report for further details. Cash and cash equivalents in marketable securities as of June 30, 2021, were $260.5 million compared to $177 million as of December 31, 2020. Based on current assumptions, which include fully supporting the XTN-1101 XTOL trial, and company-sponsored MDD proof-of-concept study, the XCN496 EPIC trial, the XCN007 investigator-led proof-of-concept study, as well as funding our preclinical and discovery activities, we anticipate having sufficient cash to fund operations into 2023, excluding any revenue generated from existing partnerships or potential new partnering arrangements. We plan to revisit our cash runway guidance post EXOL data with increased visibility on our spend in 2022 and beyond. We expect to have more clarity on partnership milestone revenue in the coming months as well. Bolstered by our strong balance sheet, we continue to have a lot of flexibility as we manage our business and continue to advance our product candidates. As of June 30th, 2021, There were 41,117,568 common shares, 1,081,081 pre-funded warrants, and 1,016,000 Series 1 preferred shares outstanding. I would refer you to today's press release and our 10Q filing for other specific details from this quarter's financial statements. At this point, I'll turn the call back to Ian, who will summarize the key milestone events we're anticipating for the remainder of this year. Ian?

Thanks, Sherry. As we look ahead, our key corporate objectives include, importantly, within our XEN 1101 Phase 2B XTOL clinical trial, we anticipate top-line data in late September to mid-October. The continued advancement of our EPIC Phase 3 clinical trial in pediatric patients with KCNQ2-DEE, a development decision and results from a larger patient cohort by year-end from the investigator-led XEN 007 proof-of-concept study in absence seizures, continued support from our partner programs with Neurocrine Biosciences, including the anticipated initiation of two Phase II clinical trials with MBI 921352 in 2021, and results from Flexion's FX301 Phase 1B clinical trial anticipated in late 2021. And we anticipate the initiation of an investigator-led Phase II proof-of-concept study, as well as ongoing planning for a company-sponsored clinical trial examining XEN1101 in major depressive disorder. We're incredibly proud of the breadth and depth of our neurology pipeline and equally excited about our upcoming release of top-line data from our XCN 1101 Phase IIb XTOL clinical trial. I'll now ask the operator to open the line for questions. Operator?

Thank you, sir. Ladies and gentlemen, if you have a question at this time, please press the star, 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 pound key. We ask you to limit yourself to one question and one follow-up. Your first question is from Paul Matys from Stifel. Your line is open.

Great. Thanks so much. Two statistical questions for me, if you don't mind, and thanks again for all the color. For the primary analysis, for the linear regression analysis, can you speak a little bit qualitatively to some of the scenarios there? I guess... If the 10-meg dose ends up being subclinical or having no effect versus placebo, does that mess up the powering if the highest dose looks good? And then second, I was wondering if you could comment on the powering specifically as it relates to a pairwise comparison for 25-meg versus placebo. Thanks so much.

Thanks, Paul. I can take both of those. You know, what we know about anti-epileptic drugs is generally for other drugs that we've looked at, including azogabine, they have a dose response. And so overall, that's our expectation going in, and we can take advantage of that in, as you call it, kind of this linear trend test or monotonic dose response where we can take advantage of including all of the patients in the analysis. But that said, if the lower doses are not, as you say, you know, they're sub-therapeutic from a clinical perspective, we can still show statistical significance. So as long as one dose is better than placebo, the analysis holds and works to show a positive p-value of .05. So we still feel comfortable that it's the right statistical analysis to do, and we can still show the differentiation between the high dose and placebo. I think your second question is a good one. As a reminder, and Simon went through this in his remarks, because we have a 2 to 1 to 1 to 2 randomization, that means we have more subjects in the high-dose group and in placebo. And that's really where the power of the study is coming from. And although I don't have the numbers directly in front of me, if we look at the same analysis on a pairwise comparison for MPC, we will have more than 80% power to detect that separation for 25 milligrams in placebo. Great. Thanks, Ian.

Your next question is from Mark Goodman from SVD Lyric. Your line is open.

Yes, can you give us a sense of how to think about the 50% responder analysis, kind of how you're expecting it, and maybe what some of the competition is at that level, just so we have a sense of when the data comes out, you know, thoughts about it. And second of all, the EPIC study, can you just give us a sense of where you are? I know you mentioned that... that you're into it, patient enrollment continues, but are we talking about getting data next year, or is this probably 2023? Thanks.

Okay, great. Simon, do you want me, I'm happy to handle, give my perspective on the EPIC study, and then maybe both of us can give our perspective on the 50% responder analysis. So why don't I start with EPIC? Um, so Mark, you know, our goal for this year, given, um, you know, we were really getting the study up and running, uh, during COVID, um, was to get a critical mass of sites up and running. And, you know, we continue to work with our collaborators at Invitae as well as academic centers where we, um, are, where the, um, many of these children with these developmental and epileptic encephalopathies are now being genotyped and an opportunity for us to identify, um, patients to enter into the study. So this year is about getting sites up and running and additional countries. So we started in the U.S. and getting our IND approved and working with sites in the U.S., and then we've already expanded outside of the U.S. So we said give us until the end of this year when we have a critical mass of sites and we see where we are for patient enrollment. before we give guidance to top-line data, and we'll be able to give you, you know, some better information and guidance towards the end of this year. In terms of kind of, you know, where we are directionally, you know, I don't expect top-line data in the next 6 to 12 months. Where it is outside of that is really going to be on how aggressively we can get sites and patients into the study, you know, over the next number of quarters. in our Q3 results in November would be a great time for us to give you an update there. Simon, I don't know if you want to talk about the 50% responder analysis, and I'm happy to provide my perspective as well.

Yeah, Mark, thanks. I mean, you know, obviously these vary a little bit from study to study, you know, but generally, you know, what was seen with Izogamine, at least in pooled analyses in terms of the 50% responder was, you know, generally in that kind of 35, 40% range. So I don't, you know, we haven't really set a threshold. I don't know what, you know, what specifically to expect. And of course, you know, as we've said many times before, I mean, look, obviously we have to have a certain degree of efficacy in the study, you know, that has to be competitive. But the added benefits of this drug, I think, are extremely important. you know, in terms of, you know, in terms of ease of use characteristics and some of the things that Chris mentioned. But generally, I think if you look at drugs in the space, like Vimpat and others, the previous experience with isogabine, where you have in an adjuvant therapy, not monotherapy, but current therapy plus added agent, you're generally in and around that. you know, in terms of the 50% responder rate in and around the 35 to low 40% of the cohort. Generally, placebo is seen at around high teens to low 20s.

Yeah, and the only thing that I would add is, at least when we've analyzed all of the ASMs in adult focal epilepsy, is there's remarkable consistency. So, drugs that, you know, in the U.S., we look at the MPC, And in Europe, from a regulator point of view, they're looking at the responder analysis. But one of the things that's really nice about epilepsy is we generally see good consistency and concordance across efficacy endpoints, but we also see that across studies as well. A drug that works in phase two generally works in phase three, and you have that consistency within a range of efficacy across studies. Thanks.

Your next question is from Andrew Tri from Jefferies. Your line is open.

Okay, thanks. Good afternoon. First question is, you know, as investors think about what 1101 could show on safety, you know, obviously CNS-related side effects are naturally to be expected. But, you know, based on the Phase I, you know, can you talk about if you think vision, musculoskeletal, cardiovascular, AEs could happen, and if they were to happen... would that be totally fine to you because the big picture thinking is, you know, we should be putting 1101's overall safety profile in context with what the other existing drugs show. So basically my question is, you know, what do you think is relevant for the street to kind of focus on in the safety aspect of this hotline release? Thanks.

Sure. Simon, do you want to take a first crack at that? I'm happy to add to it.

Ian, why don't you and I'll add.

Okay. Sounds good. Yeah, Andrew, I mean, you've touched upon the CNS adverse events, which we will see. Drugs that get into the CNS and have a dampening of electrical activity and have an impact on efficacy and on seizures, you're going to see some CNS adverse events, things like dizziness, insomnolence, fatigue, headache, and even things like blurred vision. So we expect to see that and likely in a dose, you know, our anticipation going in would be on a dose-dependent manner as well. And so, you know, we always think about this really in the totality of the data. So we need to see kind of where we are in terms of the overall AE profile and where we are from an efficacy point of view. You did mention some other adverse events that would be outside of CNS. Obviously, we would be looking at those and seeing at what rate they are and whether it's anything concerning. As a reminder, I think we've discussed this previously, we haven't seen, although there are potassium channels that are expressed in the heart, we haven't seen any cardiac issues to date and through phase one, and we haven't had any concern with any of the other adverse events. We did mention in our remarks earlier, just given the history with azogabine. We will be looking at urinary adverse events, and we'll also be looking at pigmentation, and we're doing high exams both at baseline and throughout. So all of those we're tracking, and we'll be able to give information when we're at top line data.

Great. As a follow-up, second question is, can you just remind us what drives your confidence? You know, placebo response will, in fact, be in line or better than what you've modeled, I guess. In what ways are you trying to control for your placebo response? Thanks.

Thanks, Andrew. So on placebo, obviously, we've, as we said in our remarks, we've modeled a 20% reduction, which we think is kind of more a contemporary placebo rate that we've seen in studies. Obviously, the placebo rate will be an actual rate and so what we're really looking for is the separation between active and placebo and ensuring that we believe that the efficacy for the active drug is clinically and medically relevant. So we're really looking for that separation. In terms of managing placebo rates or at least doing what we can for the study, there's been a few things. One, obviously, the quality of sites that we go to, the jurisdictions we go to. When we analyze, we recognize that placebo rates have gone up in certain non-Western jurisdictions, so we don't have any clinical trial sites in those jurisdictions where historically have seen higher placebo rates. We also know, or there is a hypothesis, that using an electronic diary for seizure capture has an opportunity to at least ensure that the patient is filling in their diary on a more regular basis, and if they have missing data points, we can follow up on that almost through the CRO and the study coordinators essentially real-time, whereas with a paper diary, you have a lot less control there. So I think we're doing what we can to ensure we can manage the placebo rate as best we can, but I also think that the size of the study and the powering gives us some confidence there.

Very good. Thank you. Wishing you guys all the best on the top line data. Thanks, Andrew.

Your next question is from Yatin Sunija from Guggenheim Partners. Your line is open.

Hey, guys. Thank you for taking my question. One clarification question regarding the powering. So for the dose response, it's about 88 to 90% power, but for the first pairwise, it's about 80% for the 25 milligram dose, just confirming that?

No, I, yeah, so yeah, and the question, the answer I gave earlier is I don't have the powering right in front of me right now. I said it would be, if you do the same analysis pairwise versus the monotonic dose response, I said that the pairwise with 25 milligrams would have more than 80% power. I don't know the specific number off the top of my head. I can follow up post-call. But there's good power for the 25 milligram arm for that separation with placebo also.

Okay. Very good. Thank you. And then do you also plan to look for two-sided p-values or that's more like a post-hoc analysis for pairwise?

So the first analysis under the statistical analysis plan, as we've talked about, is the monotonic dose response. Mm-hmm. that is done on a one-sided .05. And then when we, if that is positive and we go to the pairwise analysis, we're still finalizing the SAP that'll be submitted to the FDA in the near term, but the current thinking is then we would move to a one-sided .025 because you've now hit your primary statistical analysis and then you would move to the 0.025 for the subsequent analyses, starting with pairwise 25 milligrams, MPC and responder analysis, and then moving to the other doses. I didn't mention this earlier, but I think it's worth noting, is that because we have a 2 to 1 to 1 to 2 randomization, we have really good power in the 25 milligram arm, but obviously we have much less power in 20 milligrams and 10 milligrams, really based on the sample size in those two arms.

Got it. Very helpful. Then can you also talk about, you know, your expectation? Is this trial, could this be one of the pivotal trials, I mean, especially in the U.S., given that, you know, that's the endpoint that you're going to be doing in a follow-up study in the future? Just talk about your expectation.

Yeah. It's a good question. We get it quite a bit right now. So that would be a discussion that we would have with the FDA at an end of Phase II meeting. I mean, obviously, the stronger and the more robust signal, I think the better our arguments are in that discussion with the agency. We have had regulatory input that if we have a robust signal and p-value in terms of our discussions with the FDA, I think we have a shot at it on whether this can be one of the two registration studies or a confirmatory study with one more phase three. The input we've had is that from in Europe we'll require two additional studies. So it's likely that we're going to be running two more studies. The real question is will we need to have one of those complete for an NDA filing and then there may be a stagger for the second study that would be required in Europe.

Got it. One more question, and I probably know how you feel about this, Ian, but I'll still ask. So, I mean, one question that we have recently gotten from investors is regarding the protein binding properties of 1101, which might be a little bit different than azacobine. Can you just help us understand if there are any implications of that and what they might be?

Sure. Yeah, we've had some questions recently. I mean, every drug has different protein binding, and quite frankly, every drug has a whole bunch of different pharmaceutical properties, and when we're designing a drug preclinically in our discovery group, we're tracking a number of different attributes of a drug kind of across the board when we're looking at not just target engagement and tolerability, but also how we may predict what the metabolic fate may be and the PK and other things. So every drug is a little bit different. We do know that 1101 has a higher protein binding than azogabine, but we also know that that likely provides better PK for the drug as we have higher protein binding and it's metabolized more slowly in comparison to azogabine. Obviously, we feel super comfortable with all of the data that we've generated, and so I think focusing on protein binding is just one piece of information and not something that we pay you know, particularly a lot of attention to as a single data point. We're getting drug to target. We have very robust activity preclinically in a number of different in vivo models. We're seeing a very robust effect in the TMS PD assay in healthy volunteers and humans. We're seeing an AE profile that's consistent with drug getting into the CNS. So overall, the profile and the attributes, the pharmaceutical properties of 1101, we think are very, very good.

very good thank you so much Ian good luck with the results thank you your next question is from Tim Lugo from William Blair your line is open thanks for taking the question can you

comment on the baseline characteristics that you know of as of now are the background ASMs across all arms relatively well balanced. And can you also maybe talk about how much X toll will influence the company-led MDD study and maybe how many doses you're looking at in that study?

Sure. I will, yeah, I can go through the baseline characteristics or at least give you a little bit of more detail there. And then Simon, do you want to talk a little bit about how we're thinking at least today on the MDD study? Sure. So in terms of the baseline characteristics, just a reminder, patients are on background therapy. They need to be on stable background drugs. They'll be on one to three anti-seizure medicines coming in, but that needs to be stable as they come into screening and into baseline. Then they go through a baseline period where they need to have a minimum of four seizures on a monthly basis, and they can't have any three-week period of seizure freedom. And so we have an eight-week baseline. We look at the total number of seizures. They fill it in via electronic diary on how many seizures they have during that time period, and then we normalize it to a 28-day number, and it has to be more than four. When we've looked at the literature and what we expect from this study is the mediums are going to be obviously higher than that, And the medians for the baseline characteristics coming in will be kind of high single digits to low double digits. So think it, you know, kind of upwards of 10 or just above 10 in terms of the median monthly seizures coming into the study before randomization. In terms of what ASMs they're on, I mean, they'll be on a variety of different anti-seizure medicines. We haven't gone or I haven't gone and kind of looked at the blinded data But we expect, again, that, you know, we'll see a lot of the drugs, obviously, that are highly prescribed would be the types of drugs that these patients will be on coming into the study. So maybe I'll pass it to Simon on the MDD, and then, Tim, if you had any more detailed questions on baseline, we can come back to that.

Yeah, thanks, Tim. I mean, I guess the MDD study, obviously, will be a completely distinct design, but and a very different patient population. I think probably where it'll be most helpful in ultimately setting dose for our sponsored study will be waiting to see what the effect size is at different doses and what the tolerability looks like from the study at different doses. So while we're making very good progress on the sponsored study design, we will wait until we've really got that important top line data to finalize key elements of the MDD trial in terms of the sponsored study. So I think that's probably going to be where it will have its greatest effect. Other than that, I think we will employ a pretty standard MDD design just to make sure that there is an ability to benchmark this against other agents in this controlled study. So I hope that answers your question.

Sure, that's fine. I understand MDD is kind of a work in progress. And I guess going back to the baselines, remind me, I thought that there was in the preclinical data suggestion of synergistic responses depending on the ASMs. Can you just kind of refresh us on that?

Yeah, so we've done a battery of in vivo pharmacology studies where we've looked at the combination of of 1101 with other what we would consider highly prescribed or well-used ASMs with different mechanisms. So we've looked at, you know, a combination of 1101 as the only potassium channel modulator being combined with a sodium channel blocker or an SV2A drug like levitiracetam. And in all circumstances, when you combine 1101 with another drug, you get what looks like at least additive efficacy. And so when you dose kind of sub-therapeutically for both and then you add them together, you get a very, very robust signal. And that's not explained by changes in plasma concentrations of the drug. So it's not like we're having one drug, at least in these preclinical models, is having a DDI effect and changing the concentration of the other drug either way to 1101 or the drug that we combined it with. We haven't done, actually, to run a study that elucidates synergy are quite large studies. Some of the effects look very, very robust and look like they may be better than additive, but we haven't designed those preclinical experiments to show synergy per se. But there were no drugs, I think, maybe this is more to the point, there were no drugs, regardless of mechanism, that didn't have this beneficial effect when combining them with 1101.

Okay, great to hear. Thanks.

Your next question is from David Wong from SMBC. Your line is open.

Hey, thanks for taking the question. So I was just refreshing myself with these slides from your R&D day, and I'm just looking at the current therapeutic landscape. I get where 1101 fits in or where you think it fits in, but I do see a few other branded products in third-line plots So I think Exopri I understand well, but I also see Aptium and Briviac here. I'm a little less familiar with the profile of those agents. So, you know, I guess my question is what gives you confidence that you'd be able to differentiate against these other branded products?

Yeah, thanks, David. It's a good question. I'll pass it to Chris. He can give his perspective. And, Chris, maybe we can talk not just today and specifically, but we should think forward about the time and when 1101 would be launched today. and what the branded market would look like at that point.

Absolutely, and it's a great question. When we look at the marketplace, there are clearly products that are used early in lines of therapy, and levotriacetam and lamotrigine are commonly used as first line. But the majority of patients actually pass through what would be a first or a second line agent and then end up into this broader paradigm that requires additional ASMs to manage the seizure burden. The key component within this consideration is that clinicians are looking for alternative mechanisms in order to add to the backbone of therapy to provide additional seizure benefit. So when you think about Briviac, Briviac is a second generation of levotiracetam, and patients who do well with that product but have mood-related issues tend to move on to Briviac as an example because they want to keep the same mechanism of action. Aptium is a different mechanism of action and often is added as part of the management profile to try and get patients under control. We feel that Xeon 1101 fits in nicely in this future paradigm where clinicians are looking for additional medicines to add on to the backbone in order to provide a greater seizure control for the patients. And typically what they're looking for are easy to use products that offer alternative mechanisms of action. because if you've not responded to one mechanism of action or you're maintaining therapy on a different mechanism of action rather than switching, the ideal approach is to go to a different product. And that's one of the real key components of this marketplace. An important consideration, as Ian had mentioned, is this landscape will evolve. VenPAT is commonly used in this marketplace today. It is the leading branded agent in the marketplace. If that product loses exclusivity, it likely will continue to be used quite widely, but it doesn't provide sufficient benefit that all patients will end up being seizure-free. So we imagine that that actually opens up a space for another branded agent as patients continue to require additional anti-seizure medications.

Great. Thanks so much. That's really helpful. And then just a follow-up. With the new IT that you're pursuing, can you just talk a little bit about with the current, I guess, prior or current IT, what the assumptions are there in terms of length of exclusivity? And then with new IT, how much of an extension do you anticipate that would give you?

Thanks, David. So just as a reminder, we brought 11.0.1 in from another company. We weren't the company that did the original composition of matter filings that took place kind of in the late 2000s. And so with Median Hatch Waxman, you know, under the original IP that we had acquired with the asset, it took us into probably kind of the early, maybe up to kind of the mid-2030s. And so when we brought the molecule in, we wanted to continue to build out the IP estate. We've been doing that over the last number of years. And we've just had, as we mentioned today, a really nice notice of allowance on some claims that, you know, we kind of think about them as polymorph claims. They look at different crystal forms of the drug, which we now have the allowance of claims. And so, you know, it's really administratively that we'll get the passion patent issued, which would take us out to 2040. And then behind that, as we've talked about often with investors, methods of manufacturing and methods of use, and also around the food effect, which was something that was not predicted before we got into humans and something that was identified in phase one, and we've also filed on that. So we're continuing to layer on intellectual property that pushes out that exclusivity quite materially.

Got it. Thanks. Take any questions.

Yep.

Your next question is from Serge Ballinger from Needham and Company. Your line is open.

Hey, good afternoon. First question is related to the open label study post-excel. Just curious if you have any updates on the rollover rate, if it has changed. And I think during the investor webinar last month, you mentioned that it had been extended from 12 months to three years. I'm just curious about the thinking behind that. And secondly, I'm jumping ahead here, but assuming we get positive Excel results over the next 60-ish days, when you think about the Phase III trial, either a single one or two, do you expect to have just one dose or you'll still be evaluating multiple doses in the next Phase III trials? Thanks.

Thanks, Serge. So we haven't given kind of specific numbers on OLE rollover. What we have said is that for those patients that get to the end of the double-blind portion, we have a very high rollover rate, much higher than we had predicted or expected going into the study, and that's been consistent throughout the study. Earlier this year, we had patients that were coming up against, I think it was towards the end of last year or early this year, patients that were coming up to the 12 months, so they'd been on drug for the entire open-label extension, and we were getting requests to extend it. And so we made a decision to extend it from 12 months to three years, as you mentioned. And I think one of the reasons we've done that, obviously, we want to continue to generate long-term data, both from an efficacy point of view where we can have a bit of an indication of how patients are doing in terms of longer-term exposure, but also from the safety and tolerability. And we still get questions around pigmentation, given the liability with izogabine that we don't believe has any extrapolation to 1101. But I think the more data that we can collect there and continue to share publicly, both with the medical community and with Wall Street, is important. So that was the thinking behind the extension of the OLE. In terms of phase three and trial design, the phase three studies would look very similar to this study in terms of the endpoints. In terms of the number of doses, I think it's too early to say today until we unblind XTOL. Generally, we see companies take more than one dose into phase three, so I think that would be the working hypothesis based on what we know today. And generally, there's more than one dose on label when you look at anti-seizure medicines.

Thank you.

Your next question is from Antonia Borovina from Bloombergton. Your line is open.

Hi, hello. Thanks for taking my question. So I just have one regarding XTOL. So I know that they're not formal outcome measures, but just wondering, in the electronic diary, if you're also recording seizure severity or seizure duration?

Simon, I don't know if you know these details a little bit better than me. I know we're collecting the types of seizures. Focal seizures can manifest themselves differently. They can either have awareness or not. They can have a motor component or not. We're definitely collecting the type of focal seizure that the patient is having. But I don't believe we're collecting data because I think it might be challenging for the patient to estimate exactly how long an individual seizure is. So I don't think we're asking that question as part of the electronic diary. Simon, I don't know off the top of your head. Otherwise, I'm happy to follow up.

Yeah, I think we should follow up. I'm not certain. I know there are challenges. I know it's an important question. you know, measure just from a, at least a patient perspective, a caregiver perspective as well. Um, you know, actually, interestingly, Antonia, it's not often even reported in randomized clinical studies. I think there are many measures that are relevant that probably are not, um, you know, generally reported on that probably should. And I think seizure frequency obviously is, is key, but, um, severity and duration of seizures are, uh, I mean, you know, the point Ian made is given the subjectivity around this, actually quite hard to measure. I mean, typically patients do not time their seizures. They'll tell you if they had a seizure or not, but they won't time it.

Yeah, okay.

So that's the challenge. Measuring it becomes very, very tough.

I'm showing no further questions at this time. I would now like to turn the conference back to Jody Rates.

Thank you. On behalf of the Xenon leadership team, we look forward to updating you on our progress over the coming months. Operator, we will now end the call.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. Have a wonderful day. You may all disconnect.