Xenon Pharmaceuticals Inc.

Well, thank you for standing by and welcome to Xenon Pharmaceuticals Incorporated third quarter 2023 earnings conference call. I would now like to turn the call over to Sherry Olin, our CFO. We now begin the conference.

Thank you. Good afternoon, everyone. Thank you for joining us on our call and webcast to discuss Xenon's third quarter 2023 financial and operating results. Joining me are Ian Mortimer, Xenon's President and Chief Executive Officer, Dr. Chris Kenney, Xenon's Chief Medical Officer, and Dr. Chris Von Segern, Xenon's Chief Commercial Officer. Ian will open today's call with a summary of our progress. Chris Kenney will provide an overview of our ongoing XTN 1101 clinical programs, and Chris Von Segern will summarize key findings from our market research around the potential of 1101 in major depressive disorder, or MDD, treatment landscape. I will summarize our financial results, progress within our partnered programs, and anticipated company milestone events before opening the call to your questions. Please be advised that during this call, we will make a number of statements that are forward-looking, including statements regarding the timing of and potential results from our and our collaborators' clinical trials, the potential efficacy, safety profile, future development plans, addressable market, regulatory success, and commercial potential of our and our partners' product candidates, the efficacy of our clinical trial designs, our ability to successfully develop and achieve milestones in our XTN 1101 and other development programs, the timing and results of our interactions with regulators, our ability to successfully develop and obtain regulatory approval of XTN 1101 and our other product candidates, anticipated enrollment in our clinical trials and the timing thereof, and our expectation that we will have sufficient cash to fund operations into 2026. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the risks and uncertainties described from time to time in our SEC filings. Our results may differ materially from those projected on today's call. We undertake no obligation to publicly update any forward-looking statements. Today's press release summarizing Xenon's third quarter financial results. And the accompanying report on Form 10-Q 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'd like to turn the call over to Ian.

Thanks, Sherry, and good afternoon, everyone, and thanks for joining our call today. I'm excited to share with you the progress that we have made this past quarter across our neurology pipeline. To begin, we remain confident in our ability to execute on our ambitious XCN 1101 Phase III program, and this includes our XTOL II and XTOL III clinical trials in patients with focal onset seizures, or FOS, and our exact clinical trial in patients with primary generalized tonic-clonic seizures, or PGTCS. We believe our experience with our Phase IIb XTOL study which was similar in design to our ongoing XTOL-2 and XTOL-3 trials, provides us with a solid foundation of operational experience and strong existing relationships with leading clinical investigators in the epilepsy space. As a reminder, we aligned with FDA on key elements of our Phase III program, including plans to submit an NDA upon the successful completion of XTOL-2, our first XEN-1101 Phase III clinical trial. along with the existing data package from our Phase 2b XTOL clinical trial and additional safety data from other clinical trials to meet regulatory requirements. In XTOL, we screened patients over a period of 26 months, from the first quarter of 2019 through the first quarter of 2021. And in XTOL 2, we initiated our first clinical site late last year, with our first patient being randomized in Q1 of this year. And we expect patient enrollment to complete in the second half of 2024. So this would be in line or faster than XTOL based on our current assumptions and expectations. And as a reminder, XTOL 2 will recruit more patients than XTOL. So overall, we are pleased with the progress our team has made so far this year. In addition to ongoing execution in our phase three epilepsy program, we also continue to showcase XCN 1101 and connect with leading epileptologists and neurologists, including at the 35th International Epilepsy Congress, or IEC, that took place in Dublin in early September. We presented data from the ongoing open-label extension study from our Phase IIb EXTOL trial, showing the long-term efficacy of Exxon 1101 as demonstrated by patients experiencing continued seizure reduction during the OLE and extended periods of seizure freedom and this is translating into overall improvements in patients' quality of life. Chris Kenney will provide some more details around the significance of these findings later in the call today. We are also pleased to report that the peer-reviewed results from our Phase IIb EXTOL study of ExCN 1101 in adults with focal epilepsy were recently published in the prestigious JAMA Neurology Journal. Turning now to our program in major depressive disorder, We remain on track to see top line results from our XCN 1101 Phase II Ex Nova study in late November to mid-December. Given the high unmet need in MDD and the fact that depression is the most common comorbidity in epilepsy, we are keenly interested in these data. In September, we hosted a well-received webinar with leading MDD clinicians, Dr. James Murrow and Dr. Sanjay Mathew. who provided their commentary on the mechanistic rationale supporting potassium channel modulation as a potential treatment for MDD. Before turning the call over to Chris Kenney, I would also like to remind everyone that we have planned for a significant presence at the annual American Epilepsy Society meeting, or AES, next month with multiple posters and presentations alongside our booth and scientific exhibits. And so for those of you who are planning to attend, we look forward to connecting with you in Orlando next month. So I'll now pass the call over to Chris. Chris?

Thanks a lot, Ian. Let me begin by echoing Ian's acknowledgment of the publication of the Phase 2b XTOL data in JAMA Neurology. The compelling efficacy and safety data from this clinical trial supported further clinical development of ExCN 1101 in epilepsy and the ambitious Phase III program that we're pursuing today. We also continue to gather data from our ongoing Extol Open Label Extension Study with a cohort of patients now on ExCN 1101 for more than four years. To date, we have amassed several hundreds of patient years of safety and efficacy data, further supporting ExCN 1101's compelling profile and differentiating from other molecules in development for epilepsy. We look forward to presenting additional long-term data from the Extol Open Label Extension at the American Epilepsy Society next month. As noted by Ian, we recently hosted posters and presentations at the International Epilepsy Congress in Dublin that included interim results from the Extol Open Label Extension study. Newly compiled interim data focused on quality of life measures as assessed using a validated tool called the Quality of Life in Epilepsy Inventory 31. in the overall open label extension group, as well as the subgroup that was seizure-free for at least 12 consecutive months at the time of the interim data analysis. Clinically important improvements in the QALY31 subscales of seizure worry, social functioning, and medication effects were seen across all patients, with even greater improvements in the seizure-free group, which saw clinically important improvements in all quality of life subscales assessed by the QALY31. As a clinician, it is encouraging to see these quality-of-life data, which are consistent with the compelling clinical results generated to date and contribute further to the growing evidence that support the promise of Exxon 1101 as a novel, differentiated potential treatment for patients with epilepsy. Turning to our work in major depressive disorder, as noted by Ian, we remain on track to report Exnova top-line results in late November to mid-December. While our original trial design plan for 150 subjects with 50 subjects per arm of 10 milligrams XEN-1101, 20 milligrams XEN-1101, or placebo. Based on patient randomization rates, the ExNova top-line results will include data for more than 160 patients. As a reminder, within the top-line results, we expect to report out on the primary endpoint, which is to assess the efficacy of 10 milligrams and 20 milligrams of XEN-1101 compared to placebo, on improvement of depressive symptoms using the Madras score changed from baseline to week six. We also intend to report on the secondary objective, which is to assess the efficacy of 10 milligrams and 20 milligram doses of Exxon 1101 compared to placebo on improvement of anhedonia symptoms using the SHAPS score changed from baseline to week six. In addition, we will provide data on the overall safety and tolerability seen with Exxon 1101 in these patients diagnosed with MDD. With that summary of our near-term data announcement, I'd like to turn the call over to Chris Von Sageren, who will share some of the primary market research conducted by Xenon in support of our MDD program. Chris.

Thanks, Chris. I'm pleased to share information from our market research efforts that have helped us better understand the drivers of clinical decision-making, the unmet medical need in MDD, and key attributes desired by clinicians in future treatments. Our research efforts involve U.S. key opinion leaders and high-volume prescribing psychiatrists with the intended goal of understanding how XEN1101 would fit into a future treatment paradigm. We tested the potential product profile consistent with the adverse event profile seen in XTOL to understand physicians' perspectives pertaining to various product attributes, including efficacy, tolerability, mechanism of action, and ease of use attributes. Given that antidepressant medications are generally perceived as having non-differentiated efficacy, we learned that there are several other key unmet needs that create an opportunity for future products in the MDD space. First and foremost, physicians are interested in new agents with novel mechanisms of action. Given the heterogeneity of depression, products with novel mechanisms of action could be used in patients who do not respond initially to generic therapies. And while the first and second line therapies of choice, SSRIs and SNRIs, were seen to offer reasonable efficacy, certain safety liabilities were identified as a concern for many patients. Physicians consistently pointed out challenges with common adverse events such as sexual dysfunction and significant weight gain when treating patients with MDD. In testing the adverse event profile of XEN1101 seen in XTOL, we gathered feedback that CNS adverse events such as dizziness would be acceptable at levels observed in XTOL. We also heard interest from physicians about the potential for products that can deliver more rapid relief of symptoms given the delayed therapeutic response with the current standard of care. Because currently approved therapies do not address anhedonia, which represents a common comorbidity of depression, this was another dimension of interest. Given that there is preclinical support for the KV7 mechanism to play a role in addressing anhedonia, The unique mechanism of action of XEN-1101 could be viewed as an important differentiator in the eyes of these prescribing physicians. Finally, the ease of use attributes identified in our epilepsy market research, such as once daily dosing with food and no titration, are also important to psychiatrists. In summary, we believe that if approved, XEN-1101 can play a significant role within the MDD treatment landscape. It's novel KB7 mechanism of action coupled with a differentiated adverse event profile that lacks the same liabilities as other MDD therapeutics, such as sexual dysfunction or significant weight gain. Ease of use attributes and the potential to address anhedonia results in a compelling product profile. Importantly, if XEN1101 shows efficacy in MDD, this could be a striking differentiator in epilepsy, given that certain anti-seizure medications are associated with unwanted mood symptoms, and depression is a common comorbidity in epilepsy patients. I would now like to turn the call over to Sherry, who will give us a brief update on our partnered program with Neurocrin before summarizing our third quarter financial results and upcoming milestones. Sherry?

Thanks very much, Chris. Beginning with our partnered programs, our collaborators at Neurocrin are conducting two separate Phase II clinical trials evaluating NBI 921352. One study is focused on adult patients with focal onset seizures, and the other study is examining the use of NBI-921352 in patients with SCNA-related epilepsy. Notably, Neurocrin has guided that data from its adult focal study are anticipated to be released later this month. As a reminder, NBI-921352 is a highly selective inhibitor of a sodium channel called NAB1.6. which we discovered at Xenon and licensed to Neurocrin. And we're excited to have this hypothesis of selective sodium channel inhibition be tested. We look forward to working with Neurocrin on this upcoming data release and the next steps in the program. I'll now touch on some highlights from the financial statements and would refer you to our news release and 10Q report for further details. Cash and cash equivalents in marketable securities were $639.1 million as of September 30th, 2023, compared to $720.8 million as of December 31st, 2022. Based on current operating plans, including the completion of the XTN-1101 Phase III epilepsy studies, we anticipate having sufficient cash to fund operations into 2026. So, looking ahead to some important milestone events for Xenon, we expect two important clinical data readouts in the near term. First, our top-line ExNova MDD results are anticipated in late November to mid-December. We also expect data from the adult focal onset study conducted by our partner, Neurocrin, in November. We look forward to presenting longer-term XTOL open-label extension data, including rates of seizure reduction and seizure freedom, at the upcoming AES meeting in December. And importantly, we continue to make progress on advancing our XTL-1101 Phase III epilepsy program, including our XTL-2 and XTL-3 clinical trials in focal onset seizures and our exact clinical trials in PGTCS, with patient enrollment in XTL-2 expected to complete in the second half of 2024. Our team believes we can make a difference in the lives of patients living with epilepsy and other neurological disorders. We remain focused on executing our clinical development plans and look forward to our near-term milestones and reporting on our progress in the months ahead. I'll now ask the operator to open the line for any questions. Operator?

Thank you. At this time, I'd like to remind everyone that in order to ask a question, please press star then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. That being said, our first question comes from the line of Paul Matys from Stifle.

Hey, thank you for taking my questions and congrats on the progress. I had two questions if you don't mind. One on XTOL2, Ian, thanks for the color on timing and congrats on the execution. Can you just give some clarity on once you get to full enrollment, what would be the timing to top line data? And then second, I had a question for Chris or really the broader team on Exnova. And I thought some of the commentary, Chris, you mentioned on an acceptable adverse event profile to clinicians was pretty interesting, especially related to CNS side effects. Ahead of these data, how would you draw that line as it relates to a dizziness rate or discontinuations due to AEs where the profile still remains commercially competitive versus a profile where do you think it actually might be more problematic in this population?

Thank you. Thanks, Paul. Yeah, I'll tackle the first. On the second one, yeah, maybe Chris, one second, you can just start and just, I know we did it in the prepared remarks, but just ensuring that we're all kind of aligned on what we think about in terms of the AE profile, and then Chris can provide perspective on what's acceptable there as we think about a differentiated AE profile. So in terms of EXTOL 2, Paul, is We've guided today that we think patient enrollment will be completed in the second half of next year. So when the last patient gets screened into the program, there's a two-month baseline period. And so we need to count the number of patients or the patients need to count their number, sorry, patients need to count their number of seizures for a baseline number before those patients are randomized. and then it's a three-month double-blind period. So that's five in total, and then there's some follow-up before we can be in a position to unblind data and provide top-line results. So it's kind of in that six- to eight-month range from last patient enrolled to top-line data, again, just depending on the timing of follow-up and database lock and data analysis, but in that range. So hopefully that's helpful. And then, Chris, over to you on the AE profile.

Yeah, happy to address the AE profile. So as we indicated in the prepared remarks, what we've done from a profile testing with U.S. prescribers is present them with an AE profile that's consistent with what we've seen coming from XTOL with both the 10 milligram profile and the 20 milligram profile across the dimension of AEs that were common from the epilepsy study. So that specific profile in the context of offering efficacy that is consistent with what we've seen with other products in the space, and then the overarching profile of XEN-1101 in terms of once daily dosing, the ease of use attributes that we mentioned in epilepsy as well. So that's specifically what's been tested. And what we've heard very clearly from physicians is that there's a role for a product that looks like the Exxon 1101 profile in the future treatment paradigm of MDD, assuming that the product gets approved. And there's an appreciation for every product has a risk-benefit that's different. And the lack of very concerning AEs that are seen with SSRIs and SNRIs, specifically sexual dysfunction and significant gain, was viewed to be compelling from a clinician's point of view. as a potential driver for utilization.

Yeah, I'll just add a little bit. I think I'd really like to kind of underscore the phrase that Chris just used, risk-benefit, because I understand the question in the context of, you know, the safety and what's acceptable from an adverse event perspective, but the totality of that safety data will be relevant, right? So whatever sort of your dizziness is, Whatever that rate ends up being, if you're not really causing any serious sexual side effects, that's an upside. Also, if you're not having any serious safety issues like a dress or serious rash or anything like that, I think that also puts the safety signal into context. And then, of course, the question is focused on safety, which makes sense. I get it. But really, it needs to be taken in the context of the overall risk-benefit of the drug because You know, you think back to the azogabine-controlled trial with a separation of 7.9 points between active and placebo. If you're seeing that sort of separation, then you're, you know, what you're willing to sort of accept in terms of adverse events goes up substantially compared to something where there's just a couple point separation between active and placebo.

Fair enough. Thanks very much.

Thanks.

Thank you. Our next question comes from the line of Brian Abrams from RBC Capital Markets. Your line is open.

Hi, good afternoon, and thanks for taking my question. Congrats on the continued progress. On the efficacy side for MDD, now that you've done the market research and we're getting closer to data, could you talk a little bit more about the scenarios for both Madras and SHAPS that might prompt you to explore a registrational program focused on MDD to focus more on anhedonia or to focus more on building out the mood signal in the epilepsy indication. And then just secondarily, you know, since you gave the timeline update on XTOL2, can you just clarify, I guess, how far behind XTOL3 is timeline-wise and how much of a rate limiter that study is for future filing, or could those safety data just be submitted as a safety update during the review? Thanks.

Thanks, Brian. Yeah, I'll tackle these, and then if anyone has anything to add on our side, please jump in. Yeah, we've kind of really talked about the different outcomes in MDD as there's potentially multiple paths forward, right? If we don't see separation and activity, then I think that's clear. And then the two paths in terms of seeing activity, I think if we see a separation and we believe that we are seeing an antidepressive effect, but we believe that there's still risk in terms of a registration program, then I think that's a good opportunity for us to continue to differentiate XEN-1101 in the epilepsy space. And we didn't focus on it on our remarks today, but I think everybody knows And I'll remind everyone on the call that not only do we have very compelling efficacy in epilepsy, but with a novel mechanism, QD, no titration, and we're seeing early onset to efficacy at week one are all things that we think is a very compelling product profile in epilepsy. And if we can add mood to that in terms of medical communication and education, I think that could be even stronger. So that's obviously an option. And then although we're not going to put specific numbers around it, and I think risk benefit that we just spoke about in the previous question I think is important, if we think that the risk benefit overall is compelling in depression, then we are comfortable moving ahead with registration work in the primary indication of major depressive disorder. So there has to really be a clear bar there that we believe that we can replicate the data in larger studies in phase three. In terms of your second question on XTOL2 and then XTOL3, so XTOL2 is on the critical path to us filing an NDA. So it's not XTOL3 or EXACT. Obviously, any patient that goes through XTOL2, XTOL3, or EXACT can go into open label extension and we can use the safety data from those other studies as part of the requirements in terms of the overall safety database. But we're really focused on XTOL 2 on the critical path to filing because, as we discussed with FDA at our end of Phase 2 meeting, we'll be filing on the XTOL 2 data combined with the XTOL data that we've obviously previously published and we've shared with FDA as well. So at some point in the future, we'll give guidance on XTOL 3 and exact, but to answer your specific question, not on the critical path in terms of registration and filings.

That's really helpful clarity. Thanks, Ian. Yep. Thank you.

Again, just a reminder, if you'd like to ask a question, please press star 1 so that you may join the queue. The next question comes from the line of Tess Romero from J.P. Morgan. Your line is open.

Good afternoon, guys. Thank you for taking our questions. So with enrollment expected to complete in the second half of next year in XTOL 2, what are the key levers to being on the Sooner versus the later end of that enrollment guidance. And it was a little bit alluded to in the prior question, but what is the latest thinking on the cadence of the pivotal data sets for XTOL2, XTOL3, and XACT? Should we expect XACT before XTOL3, or how should we be thinking about that? Thank you.

Thanks, Tess. I'll start. Chris, can I provide your perspective as well? Tess, I don't think there's any, from my perspective, specific lever to pull for patient enrollment to be completed earlier in the second half of 2024 versus later in the second half of 2024. We are executing well against the plan of site initiations and patient screenings and patient randomization, so we feel confident where we are. We do our best to predict. And as we have guidance that is out a year or so, we're going to put some error bars there based on our best assumptions and expectations. As we get closer, we'll be able to narrow those. But I don't think there's any specific lever in terms of trying to make that go faster. I think we have from the very beginning, we want to run a good study and we'll go as quickly as we can while maintaining the integrity and the conduct of the study. Chris, I don't know if you have anything to add specifically there, and then I'm happy to jump in on the second question on the cadence of data then.

No, I don't have anything to add. I just, you know, for every patient that's enrolled in any clinical trial, there are so many different variables and so many different variables at each site and variables at each country. And so it's just complicated to the extent that it's hard to sort of put my finger on one or two things and say this is what's going to drive the timeline one way or another.

And then your second question in terms of cadence. Um, so obviously XTOL2 has been our focus and we've talked often, um, with investors that, um, you know, we've tried to leverage an XTOL2 as many of those relationships that we had in XTOL. So investigators that have experience with the drug and clinical sites that we've worked with in the past, and quite frankly, investigators that still have patients, um, that are being treated, uh, with XEN 1101 and open label extension from the XTOL study. So we're doing all of that in EXTL-2. When we have guidance on EXTL-3 and EXACT, then TESS, we can come back to the guidance on which one's gonna read out first of those two separate phase three clinical trials. It's premature to do that today.

Okay, thanks for taking our questions.

Thank you. Our next question comes from the line of Andrew Tsai from Jefferies. Your line is open.

Hey, good afternoon. Thanks for taking my question. Just one on MDD reading out. You know, we understand that a profile of 1101 could be different from between MDD and epilepsy. I think you've mentioned previously how you are monitoring blinded safety. So how are the blinded AEs and the AEs due to discontinuation rates looking compared to your internal expectations? Is there anything out of the ordinary relative to what you guys assumed going on in the study? Or maybe said another way, directionally speaking, are you seeing lower AE rates in the MDD study compared to your epilepsy study? Thanks.

Thanks, Andrew. You know, I'm sure this may be the first of other questions just on some of the details. of the mdd study i'm sure you can appreciate and and others can as well is the study is now complete you know we're very close to um unblinding the data and we'll have data you know in the coming weeks as we've guided in late november to the december so we're not going to make any specific comments around you know what we're seeing in the data we have said previously that obviously as we run any clinical study we're going to monitor it along the way and we're gonna do safety review committees that are required, and based on those previous safety review committees, there hasn't need to be any adjustments in the study, but we're not gonna talk about specifics on the blinded data, and we're looking forward to sharing the full data set in the near term.

Thanks very much.

Thank you. The next question comes from the line of Jason Gareberry from Bank of America. Your line is open.

Hi, good afternoon. This is Dina Ahn for Jason. Congrats on the progress this quarter, and thank you for taking our question. So we just, I guess, had a question on the Ex Nova top line that we'll be seeing very shortly. I guess if we don't see a positive trial soon, Does that add any risk or uncertainty in your view to being able to generate additional data for 1101's antidepressant effects in epilepsy patients? And then just wanted to sort of follow up on the MDD market research on 1101's safety profile, kind of given that safety is kind of a major driving force in the MDD space. besides the lack of, you know, serious AEs that come with the SSRIs and SRIs that you mentioned earlier, um, you know, the sexual dysfunction, weight gain, um, did K Wells point out, you know, any, um, any part about 1101's AE profile that could be sort of a positive differentiator, um, in MDD patients? Thank you so much.

Uh, thanks, Dina. Um, a lot there. So I'll, uh, I think we've got them all down here, but if we missed one, just jump back in. So maybe I'll make one kind of global comment around the Ex Nova study, and then I'll pass it to Chris Kenny just to talk about, you know, the population that is an epilepsy patient that has comorbid depression, which is different than the primary population. obviously the patient that has major depressive disorder. And so Chris, maybe you can just comment about that. And obviously we are looking, not stratifying, but looking at some of those data in phase three. And then Chris, one second, we can talk about the 1101A profile in MDD. You know, I think, you know, you started your question with, you know, if XCN 1101 doesn't work in Exnova, you know, I think if we don't see separation in, You know, I'm, you know, we're very confident in saying that we don't think there's any read through into the epilepsy program. So I just want to be absolutely clear with that. You know, we're very confident in in. the consistency and reproducibility across epilepsy studies and the compelling profile we have from XTOL and the ability to execute in XTOL2 and XTOL3. So, you know, I think this is a really interesting and important readout in the near term in ExNova, but I don't think the outcome of that has any read through into our epilepsy program. But why don't we go a little deeper Chris Kenney, just in looking at that comorbid patient or the patient that has comorbid depression that's an epilepsy patient?

Yeah, I mean, what I would say is that the underlying pathophysiology of the depressive symptoms can be different depending on whether you're looking at a patient who has a different psychiatric issue or a neurodegenerative issue or epilepsy. So just because a drug is behaving a certain way In one of those populations, it doesn't mean it's going to behave exactly the same in the other. And just to be a little more concrete, in the Phase III program, our epilepsy patients obviously were focused on developing an anti-seizure drug, and that's the focus. But we are looking at mood using scales in that population. So once those Phase III studies are done, we're going to have this enormous body of information about how those patients respond to the drug you know, from the standpoint of their depressive symptoms. Now, the downside is we're not purposely enriching for depressive symptoms the way we are in Exnova, and so there are some limitations. But, you know, we're going to let the data guide us for both studies and, you know, just acknowledge the fact that depression isn't the same as epilepsy.

Thanks, Chris. Chris von Tegern on a little bit more on the MDD or AE profile of 1101 in MDD.

Absolutely. So just to remind folks, if we take a step back and think about the profile that emerged from XTOL with the 20 milligram and the 10 milligram profile, the majority of the AEs that are reported were mild. And when you think about the difference between 20 milligrams and 10 milligrams, the 10 milligram dose was highly comparable, if not indistinguishable, for placebo as it pertained to the AE profile. So and then The 20 milligram profile, highly consistent with other CNS active anti-seizure medication with dose limiting or really AEs that emerge at the high end of the dose paradigm, but still appropriate for that patient population. So, trying to bookend the AEs in the context of the MDD market research. The specific question was around, are there other AEs that can be seen as a positive differentiator? Well, I think the cleaner the profile looks, the better XEN-1101 emerges in the eyes of clinicians. So that very well could be a positive differentiator if one sees an AE profile that is similar to the 10 milligram profile that emerged from Extol. But to be clear, we also spend time in our market research diving deep into the perspective on an AE such as dizziness, which is a little less common in the current standard of care, but in the context of it being a mild and potentially transient AE was something that clinicians viewed in the totality of the risk-benefit profile to be certainly within reason and would ultimately result in the product being used in their armamentarium.

And maybe I would just add one other point to Chris's comment. If we, you know, we have a huge body of data on Exxon 1101 now, just as a reminder in Chris Kenny's comments earlier, you know, we have our first patients out more than four years of dosing. We have hundreds and hundreds of patient years of exposure now, and we're seeing this consistency in profile. And we know that not all patients are going to tolerate these drugs the same. So as we, in our epilepsy experience, as we move from an X toll from 10 to 20 to 25 milligrams, you get a step up in efficacy and you get a step up in some of the CNS adverse events based on, you know, the potency and activity of this drug. And we know that when we think about epilepsy or we think about depression, there would be multiple doses of dosages available. And so if you don't tolerate a certain dose, there's an opportunity for you to move to a lower dose, which can address some of the tolerability. So, you know, I think we have, when we think about XCN 1101, we know a tremendous amount about it. And we have that flexibility because we know patients will tolerate the drug differently from patient to patient.

Great.

Thank you so much.

I appreciate all the color. Thank you.

Our next question comes from the line of Paul Choi from Goldman Sachs. Your line is open.

Hi. Thank you, and thanks for taking our questions. I have two. First, for the team, with regard to the pace of enrollment in XTOL2, I appreciate your comment that it's tracking faster than XTOL, but could you maybe just comment on if you're seeing any competition for recruiting patients and whether any of your clinical trial sites overlap with others developing potassium channel drugs for epilepsy? And my second question is, under a scenario where ExNova reads out positively, can you maybe comment on how the recent FDA rejection of Zoran alone has or hasn't affected your thinking on potential future development in MDD. Thank you.

Thanks, Paul. Yeah, so maybe I'll make a couple of comments first on EXTEL 2 and Chris Kenney. You're very close to the investigators on the site, so please add your perspective as well, and then we can get to the ExNova question. So as we think about XTOL2, I mean, I think one of the messages we're communicating today is that obviously we have a lot of experience in running global epilepsy studies. I think if we look back over the last few years, we have run the largest number of significant epilepsy studies, you know, when we compare ourselves to any other sponsor. So I think there's a huge amount of experience that we're gathering. Often we don't find that a clinical site will take on two competing studies, so they'll focus on one, but I'll let Chris provide his perspective there. And then when we just look at the recruitment rates in XTOL2, when we look at other companies over the last number of years that have run epilepsy studies, I believe that our recruitment rate and our ability to complete these studies have outperformed others. And so obviously we're very proud of the work that the team has done But, Chris, any other specific comments that you're seeing at individual sites on competition?

Yeah, I mean, the challenges that have come up, probably the number one challenge at the sites is more about making sure that each site has the appropriate resources to be able to support the study. And the issue of competition with other anti-seizure medications hasn't slowed down, to my knowledge, even a single site. So if you think about the timing in terms of, I believe when you say KB7 drugs, I believe you're alluding to the public information that Biohaven is going to start Phase 3 by the end of this year. We were going out to sites quite a while ago, and so we've locked in those sites already that we were most focused on. So that really competition with other KB7s has not, had any role in terms of slowing us down to date.

Thanks, Chris. And then, Paul, your other question on Ex Nova and maybe the regulatory environment. You know, we haven't had regulatory interaction with the psychiatry division. Obviously, with, you know, if Ex Nova is positive and we move into late-stage clinical development, we do an end-to-phase two meeting. So I think maybe we'll just pause on that question until we have more interaction. You know, when we look at the Xeran alone summary basis of approval and we've looked at the regulatory information that's publicly available, we don't see any read through to the work that we're doing with XCN 1101 in major depressive disorder with the caveat, as I mentioned earlier, that we still need to have detailed regulatory interaction as we would think about a late stage program.

Okay, great. Thanks for all the color.

Thank you. Our next question comes from the line of Joseph Tong from TD Cowan. Your line is open.

Hi there. Good evening and thank you for taking my questions. Maybe the first one on the upcoming Neurocrine data. How are you thinking about potentially moving forward with that co-fund option? What are some considerations you have and can you remind us when you have to make that decision? Is it immediately after data? Is it after an end of phase two with the FDA? Or is there a time on that? And then for the 1101 NDA filing, can you just remind us what kind of safety database is required to initiate that? Is having patients through that 12-week double-blind period sufficient or will you need some additional time after the data readout before you could start the filing? Thank you.

Great. Thanks, Joe. Sherry, do you want to tackle the first one on co-fund? And then Chris and I can provide perspective on safety database.

Yes, absolutely. So as a reminder, for our collaboration with Neurofin, we have a tiered royalty structure. So ultimately, if the drug progresses, we would be eligible for royalties that are based on sales. So the co-fund option allows for us to opt in to pay for or fund 50% of the C-3 development costs. And in return, we would get an incremental step up in that royalty, which at the highest tier would amount to a 20% royalty. We're going to have the benefit of having a lot more information in hand before we have to make the decision around whether we want to trigger the co-fund. So importantly, we're going to have data from this upcoming C-2 study, which we'll be able to evaluate in addition to all of the information around the phase three development program. So an agreed upon protocol with FDA phase three, a full budget around what the phase three development program will look like, and we'll be able to make a decision based on that, the totality of that information. I do want to point out, I think, you know, given our experience in the space, we are very well positioned to be able to review all of that and make a very informed and educated decision. And also, I will say that at this stage, you know, Neurocrine is driving the development of the 352 program. And ultimately, we'll have to see what their next steps are. So it is possible that from this Phase 2 signal finding study, they may decide to proceed into a larger Phase 2b study rather than directly into Phase 3, in which case the timelines around that are even longer. So don't expect that it's a decision that we need to make in the near term. I'd say, you know, at the fastest, if they are going straight into phase three, probably, you know, I'd say at least 12 months, maybe more like 18 months until they have regulatory interaction and all of that information I discussed.

Thanks, Sherry. And then, Joe, I think your question on... you know, NDA and safety database, when you specifically said around, you know, after the double blind period, I'm assuming that you're kind of referring more to long-term exposure. So I'll answer it that way. And then if you have a follow-up, let us know. So, you know, this is a large market opportunity. So we think about ICH guidelines in terms of exposures, the long-term exposures. that are required are 300 subjects, or the guidance is 300 subjects of six months of exposure and 100 subjects of 12 months of exposure. And as I'm sure you can appreciate, we have a significant amount of long-term data. Actually, I think that's one of the things that is continuing to differentiate us versus even those in the competitive space is that we now have so much experience with this molecule that long-term safety is not going to be gating to an NDA filing by any means.

Okay, perfect. That is very helpful. Thank you so much. Thank you.

Thank you. The next question comes from the line of Danielle Brill from Raymond James. Your line is open.

Hi, guys. Thanks so much for the question. I was wondering if you could talk about the decision to permit enrollment of patients with PTSD in Ex Nova. We ask this since PTSD can be associated with lower treatment response rates to more traditional antidepressants. Specifically curious if you stratified enrollment and if you plan to break out treatment response rates in patients with or without PTSD or other comorbid anxiety disorders. Thanks so much.

Chris Kenney, can you provide perspective there?

Well, the top line analysis of Exnova is going to focus on the Madras and the SHAPS, top line safety, et cetera. So it's not part of the top line. The second round of data, we can look at those sorts of things. But that isn't a major. Looking at PTSD, it's not stratified in the study. And looking at whether those patients are responding differentially isn't part of the plan either. I don't know, Danielle, I don't know the numbers off the top of my head, but I think we're talking about relatively small numbers, and so I think that in the context of a study this size, I think even doing that may have limited utility.

Understood. Thanks for the question. Sure.

Thank you. Our next question comes from the line of Mark Goodman from Lee Ring Partners. Your line is open.

Hi, thanks. Hi, thanks. This is Maru on the line for Mark. Could you just give us an update on your pediatric formulation of Zene 1101 and also your second-gen molecules that are in preclinical development? Could we expect to see any data from these candidates in the near term? Thanks.

Thanks for the questions. Uh, yeah, we are, you know, we have, as we stated, I think in previous calls, we've, we've got alignment from regulators on what the pediatric plan is for XCN 1101. Um, so, uh, there's some layers to this, um, uh, in, in terms of focal onset seizures, we have an ability in the U S to take advantage of the what's called the PK extrapolation role. where we can do open label work in younger cohorts of patients. We'll start with adolescents and then move into children. With our exact study or our primary generalized tonic-clonic seizure study, we have, based on feedback from regulators, moved the lower bound of age to 12 and above for that study. So we'll be enrolling some of those patients in the phase three program. And then in terms specifically on a pediatric formulation, so obviously an oral capsule can go down to a certain age group and then when we get into much younger age groups we're going to need to work on a pediatric formulation so that work is ongoing internally in terms of next generation kv drugs uh yeah i think we've we've communicated um you know a number of times that you know we have a number of different chemistries and different molecules that we're interested in pre-clinically that target the potassium channels in the cns And we don't talk a lot about kind of stage of development where we are publicly with those, but we would expect, you know, over the next year or two, we would have molecules that will transition into clinical development. And that's probably an appropriate time to start sharing some of the preclinical data publicly as well.

Operator, we can move to the next question.

I apologize, and thank you. Our next question comes from the line of Laura Chico from Wedbush. Your line is open.

Hi, this is Ingrid on for Laura Chico. Wondering if you could speak at all to any efforts to conformulate 1101 with another ASM. Could this be something that could be explored in focal epilepsy space? I realize this may be challenging to dose optimize, but would there be any advantages to this type of approach? Thank you.

Thanks, Ingrid. Yeah, really interesting question. Chris Fonseca, I know you've done some time thinking about this and obviously the types of anti-seizure medicines that have been developed over time. So maybe you can start and then Chris, Kenny, if you have anything to add as well.

Yeah, what I can say is what we expect from a commercial use standpoint in the focal onset seizure market is most certainly combination use with other commonly used anti-seizure medications. And there are a handful of those products which are used quite frequently early in lines of therapy. Levotiracetam, Lamotrigine, and increasingly Leucosamide are products that would be potentially ideal candidates for thinking about co-formulation opportunities. It's definitely something that's been on our radar for consideration, although there are technical complexities to consider when you think about the range of doses that exist, as well as the requirement for other products to be titrated to full efficacy. One of the key advantages of Exxon 1101 and the treatment of FOS is that we don't require titration, and that gets us to a therapeutic dose with the initial dose selected. So there's a little bit more technical complexity to that question than there the obvious desire to think about co-formulation with other commonly used anti-seizure medication and something that still needs to be explored.

Chris, anything to add? Nothing to add, Ian.

Yeah, okay. Yeah, I think, as Chris said, there's a real challenge there is you have a lot of these drugs that are titrated and not everyone gets to the same dose, and so that provides some inherent technical challenges on co-formulations.

Thank you.

Our next question comes from the line of Mohit Bansal from Wells Fargo. Your line is open.

Hi, this is Serena on for Mohit. Thanks for taking our question. So I have two. The first is that if the monotherapy study in NDD doesn't work, or even if it does, is there a possibility of studying Xenon 1101 as an adjunctive in NDD to see if there's any synergistic effects? And then my second question is, if you can help us understand why there are no treatments specifically approved for anhedonia when it looks like some antidepressants have shown a benefit on anhedonia scores. Thank you.

Sure. Thanks for the questions. Chris, Kenny, do you want to start on... I mean, maybe I'll start with a global comment, and then maybe you can provide your perspective on monotherapy and potentially future development in the adjunctive setting as well. And any perspective you have, I think both you and Chris can weigh in on. You know, I think if, you know, just to turn to the very first part of your question on, you know, if ExNova isn't, you know, isn't positive, would we move ahead with adjunctive studies? I think that's unlikely. that if we don't see a signal in this study that we would be running an adjunctive study separately to this. I think in the scenario where Exxon 1101 is positive and Exxonova and we're moving ahead, then I think it's a question that we've definitely thought about, and it'll be somewhat jurisdictionally dependent also based on interaction with regulators. But Chris, why don't you provide your perspective there, and then we can move to the Anne Hedonia question.

I think you covered it, Ian. I don't have anything to add to that.

Okay. And so, yeah, I mean, maybe just at a different way, if we're positive in ex nova and we're moving ahead into registration studies, then I think we would look at both potentially monotherapy or adjunctive studies in future development. On the anhedonia side, either Chris or Chris, your perspective on maybe why we haven't seen. I know anhedonia is definitely showing up as an endpoint in a lot more studies now, but we haven't seen that used as a primary endpoint in development.

I'll start off and then I'll hand it off to Chris. If you take a look at the patients who meet the criteria for having moderate to severe depression, which is the case in the Ex Nova study then it's very difficult to find a complete lack of anhedonia. In fact, that's a key feature of getting the diagnosis of MDD. So they tend to lock together pretty closely. And, yeah, as Ian just said, I mean, there's been this increasing interest in anhedonia. I think your observation is more driven, I think, by people just not focusing on it in the past. And now it's become clear that it's something worthy of treatment. Chris?

Yeah, the only thing I can add there is that when we go out and do market research, there's very clear consistency with primary efficacy endpoints around Madras in this space. And one can only assume that's in order to avoid deviating from a regulatory perspective on what gets ultimate FDA approval. But we have seen, to Ian and Chris's point, increased interest in Hedonia as a component of the efficacy profile for these products, given the fact that it's a core comorbidity associated with depression. And we're eager to see how this unfolds in the coming years.

All right. Thank you so much.

Thank you. And our last question will come from Tim Lugo from William Blair. Your line is open.

Thanks for squeezing me in. For XTOL 2 and 3, I know they're designed very similarly to XTOL. However, I think one of the defining features of XTOL was how many therapies those patients have failed, and now 1101 is an unknown asset, and Xenon is a very well-known company within the community. Can you just talk maybe how the baseline profiles of XTOL 2 and 3 are lining up versus X toll and maybe how that could swing what will eventually be the results coming from the study?

Yeah, thanks, Tim. I think that's a really interesting question that we're absolutely monitoring. I don't think we have a lot to say on it today, but something that we'll be tracking. So I'll give my perspective and then Chris, Kenny, provide yours as well. Yeah, so there's a good opportunity maybe just to take a step back and confirm some of the comments that you made, which are on point, which is XTOL 2 and XTOL 3 are designed after XTOL. Obviously, the naming convention there was very deliberate. So it is the same inclusion-exclusion criteria for XTOL 2 and 3 as compared to XTOL. But as you suggest, during XTOL, 1101 was an unknown molecule at that time. And also we know that XTOL was run, at least part of XTOL was run during the pandemic. And we got quite a severe patient population. And when we look at the literature, we can't find another study where it was as severe a population as we trialed in an XTOL. And we look at three different measures. We look at the number of drugs that patients had failed prior to study, the number of background therapies they were on coming into study, as well as the baseline seizure burden. And so there is a hypothesis that maybe an EXTEL 2 and 3 will get a less severe patient population. Yeah, we'll look at that, Tim. We're not at a point right now to be able to comment on that. It's always difficult when you're running a study because those baseline characteristics are changing every day as you're enrolling more patients. But as we get closer to completing these studies, I think that would be something that would be relevant for us to comment on. Chris, anything to add to that?

Well, I just want to sort of emphasize the importance of keeping an eye on the baseline characteristics of these studies as we go forward. So that's something that we always do because we want to make sure that the population is somewhat in keeping with what we're expecting. And if not, then we want to be able to pivot and not wait until the end of the study to realize that. So that's something that we follow very closely. I think it's hard to imagine a scenario where we're going to end up with patients who are more impaired. And so I think it's more likely, to Ian's point, that we end up with patients who are less impaired. And, you know, as we tease out the data from XTOL, it suggests that those patients actually respond better. So we have to confirm that in phase three, of course. But so I think that's all I'll say. It remains to be seen exactly how the populations compare. Thank you so much. Thanks, Tim.

Thank you.

With that, this concludes today's conference call. Thank you for joining. You may now disconnect.