Xenon Pharmaceuticals Inc.

welcome you to the Q4 2024 CNN Pharmaceuticals Inc. earnings conference call. All lines has been placed in view to prevent any background noise. After the speakers remarks, there'll be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I would now like to turn the conference over to Chad Fugierre. Please go ahead.

Good afternoon. Thank you for joining us on our call and webcast to discuss Xenon's fourth quarter and full year 2024 financial and operating results. Joining me are Ian Mortimer, Xenon's president and chief executive officer, Dr. Chris Kenny, Xenon's chief medical officer, and Sherry Allen, Xenon's chief financial officer. After completing their prepared remarks today, we'll open the call up for your question. Please be advised that during this call, we'll make a number of statements that are forward-looking, including statements regarding the timing of and potential results from clinical trials, the potential efficacy safety profile, future development plan, and current and anticipated indications, addressable market, regulatory success, and commercial potential of our and our partners' product candidate, the efficacy of our clinical trial design, our ability to successfully develop and achieve milestones in our clinical development program, including the anticipated filing of INDs and NDAs, the timing and results of our interactions with regulators, our ability to successfully obtain regulatory approval, anticipated timing of top-line data readout for our clinical trials at the Zetsu counter, and our expectation that we'll have sufficient cash to fund operations in 2027. Today's press release summarizing Xenon's fourth quarter and full year 2024 financial results and the accompanying report on Form 10Q will be made available under the investor section of our website at -pharma.com and filed with the FCC and on Cedar Plus. Now I would like to turn the call over to Ian.

Thank you, Chad, and good afternoon, everyone. Thanks for joining our call today. I'll begin with a brief review of our accomplishments in 2024 and then look ahead to what promises to be an exciting year in 2025. Highlighted by our first phase three epilepsy readout and the continued progress of our growing neuroscience focus pipeline. After that, I'll turn the call over to Chris, who will share more details on our clinical development programs. And then later Sherry will comment on the potential of the Zetsu counter in the bipolar depression treatment landscape and close with a summary of our financial results. Looking back at this past year, I am proud of the numerous advancements across our pipeline, including the advancement of the Zetsu counter in our broad phase three epilepsy program, the launch of our phase three MDD program, considerable planning around further indication expansion of the Zetsu counter in bipolar depression and significant progress in our discovery portfolio with several molecules across multiple targets placed to enter the clinic this year. 2024 was a year of execution for Xenon and the progress made across our business has positioned us well to deliver on our three key strategic priorities. Number one, driving towards phase three data, NDA submission and commercializing the use of Zetsu counter in focal onset seizures in the US. Number two, broadening the Zetsu counter opportunity across additional epilepsy and neuropsychiatric indications. And number three, expanding our product portfolio through advancement of our promising early stage ion channel programs. We believe Xenon's leadership in the KV7 landscape is unmatched and our lead asset is that the counter is the only KV7 opener in development backed by long-term efficacy and safety data from clinical studies of patients living with epilepsy. We now have amassed over 700 patient years of exposure in focal epilepsy patients. There remains a substantial need for new, efficacious and well-tolerated epilepsy therapies, especially for those patients who continue to experience the debilitating impacts of focal seizures, even while taking multiple anti-seizure medications. Based on the significant body of compelling clinical evidence that we have generated to date, along with Zetsu counter's other important attributes, such as once daily dosing without the need for titration, a rapid onset of effect, novel mechanism of action and potential mood benefit, we believe that Zetsu counter represents a potentially -in-class anti-seizure medication that could be paradigm shifting in the future treatment of epilepsy. As we near the completion of our first phase three epilepsy readout, which will enable the completion of an anticipated NDA filing, we are excited about the potential for Xenon's first commercial launch. Over the last 12 months, it culminated in a strong presence at the American Epilepsy Society meeting, or AES, which took place in December. This is the marquee medical Congress in epilepsy that hosted over 6,000 attendees. And we were able to present new long-term Zetsu counter data from our ongoing XTOL open label extension study, showing a sustained monthly reduction in seizure frequency, impressive seizure freedom rates in patients with epilepsy, and improved quality of life measures. Xenon has led some of the latest surveys and research to understand in more detail the high burden of illness within the epilepsy community. And AES provided us with an opportunity to highlight some of these findings around the mental health burden and comorbidities of epilepsy. We believe that an enhanced understanding of the burdens of focal onset seizures and the association between these comorbidities, particularly mental health comorbidities like depression, may enable better treatment options and help in improving patient outcomes. Chris will provide more detail about our AES data presentations and activities in his prepared remarks. Within our phase three MDD program, we are pleased to be enrolling patients in our ExNova 2 study. And we expect that the second of three planned studies, ExNova 3, will initiate around mid-year. Further, we're in an incredibly fortunate position in that Zetsu Calhouner's attributes may enable significant utility beyond epilepsy. And we believe that Zetsu Calhouner has broad potential in neuropsychiatric indications. Supported by strong scientific rationale, today we announced our plans to initiate a registrational program studying the use of Zetsu Calhouner in bipolar depression. Both Chris and Sherry will provide further details on the current unmet patient needs and market research that supported our decision to pursue this new neuropsychiatric program. This is an exciting opportunity for Zetsu Calhouner. With the launch of this new program, Zetsu Calhouner will be in registrational trials across four distinct epilepsy and neuropsychiatric indications. Truly a pipeline and a product opportunity. We also continue to expand our pipeline by leveraging our extensive discovery knowledge and expertise in developing potassium and sodium channel therapeutics. This past year, we made significant progress within our early stage portfolio. Progressing multiple drug candidates targeting KV7 and NAV1.7 into IND enabling studies. Recognizing the potential broad applicability of the KV7 mechanism of Zetsu Calhouner, we have identified multiple chemically diverse KV7 development candidates. And we believe that this mechanism may have utility in a broad range of therapeutic indications, including seizure disorders, pain, as well as neuropsychiatric disorders, such as MDD and bipolar depression. Further, I'm incredibly excited that we continue to make meaningful progress within our NAV1.7 sodium channel program. Our pioneering work around the NAV1.7 target has formed a core part of xenon heritage. Given it's important as a pain related target with strong human genetic validation, we believe NAV1.7 could represent a new class of medicines without the limitations of opioids. We are now in a position where we expect multiple regulatory filings in 2025 coming out of our early stage portfolio to support the initiation of first in human trials across multiple targets. We also expect a lead candidate within our NAV1.1 program will enter IND enabling studies this year. We presented some of our preclinical findings at AES this past December. Briefly, these results showed that dosing with an orally available small molecule, CNS penetrant, highly selective NAV1.1 potentiator suppressed induced seizures and improved motor performance, supporting the potential for improvements in dravet patient motor function. Further, in these animal models, chronic dosing suppressed spontaneous seizures, protected against sudden unexpected death in epilepsy or SUDEP, and increased long-term potentiation, the potential cellular correlate of learning and memory. These preclinical data are incredibly exciting and suggest that targeting NAV1.1 could potentially address the underlying cause and symptoms of dravet syndrome. Later this year, we are planning to host an investor webinar to showcase various Xenon early stage programs, including deeper dives into the mechanism, underlying human genetics, preclinical and other supporting data generated to date, as well as an overview of the unmet medical needs and commercial opportunity, and more details to come at a later date. Finally, we're pleased to confirm that as part of our collaboration with Neuroprim Biosciences, a promising selective inhibitor of sodium channels, the development of -1.1 and -1.2, and -1.6 that was discovered in Xenon's labs, has progressed into a phase one study, and this triggered a milestone payment to us. This important achievement is a testament to our world-class discovery team and a direct result of Xenon's deep expertise and pioneering work in the sodium channel space, with our research work contributing to the discovery of new molecules and a further understanding of how mutations in the genes that encode for both NAV1.2 and NAV1.6 cause irregular neuronal activity associated with several forms of epilepsy. Neuroprim has guided that this first in human study will evaluate the safety, tolerability, pharmacokinetics and pharmacodynamics of investigational compound MBI921355 in healthy adult participants to support its development for the potential treatment of certain types of epilepsy. Looking ahead, we expect the next 12 to 24 months will represent a catalyst-rich period for Xenon as we continue to advance our deep and expanding pipeline of promising late and early stage programs. We anticipate a number of important milestones. Most importantly, the first phase three top line readout of a Zetucalner and focal onset seizures expected in the second half of 2025, representing a major inflection point for Xenon as we evolve from a clinical to commercial stage organization. This is an incredibly exciting time at Xenon and I look forward to keeping you updated on our progress. So I'll now turn the call over to Chris to provide some additional detail around our development programs.

Chris,

over to you. Okay, thanks a lot Ian, appreciate it. To build on your comments, it was inspiring for the team to connect with a broad range of healthcare providers, advocacy groups and patients at AES, where awareness of Xenon and Zetucalner has grown since we first presented XTOL data in 2021. In addition to our five peer reviewed presentations, we hosted a well-attended scientific exhibit and expanded our presence within the exhibit hall. This year at AES, we also focused on the mental health burdens associated with epilepsy at our mental health Oasis booth, where the team engaged in meaningful discussions about the under-detected and under-treated depression symptoms associated with epilepsy. In our discussions with healthcare providers, they directly witnessed this high burden of illness within the epilepsy community and support our goal to better understand the mental health comorbidities of focal onset seizures, like depression, in order to offer more personalized treatments and improve patient outcomes. The patient-reported survey data that we collected further illustrates the substantial burden of illness for people living with epilepsy, with reduced quality of life, high seizure frequency and fatigue, as well as other comorbidities, such as anxiety and depression, further underscoring the need for new treatments to help people living with epilepsy. Now, the momentum from AES has carried through into the new year, and I'm pleased to report that our clinical development programs for Zetucalner continue to progress as planned. Our late-stage epilepsy program includes our phase three ex-tol studies in focal onset seizures, or FOSS, and our exact study in primary generalized tonic-clonic seizures. As Ian noted, we're anticipating the first FOSS top-line data readout in the second half of this year, which combined with the existing data package from our ex-tol clinical trial, and additional supporting safety data, we expect, will support our NDA filing for FOSS. In parallel with the considerable progress made across our phase three Zetucalner clinical development programs, our medical affairs team continues to engage with the broader medical community to highlight the robust scientific evidence generated to date. We are in an enviable position as not only can we showcase the positive results from our completed ex-tol clinical trial, but we have our ongoing seven-year open-label extension study, providing further long-term data from patients living with epilepsy, which we believe is a key differentiator from other molecules currently in development. The most recent interim data from the ongoing ex-tol open-label extension study presented at the American Epilepsy Society shows impressive sustained monthly reduction in seizure frequency, approximately 85% at month 36, while importantly maintaining a consistent safety profile that suggests Zetucalner continues to be generally well tolerated. Additionally, approximately one in three patients on Zetucalner for at least 36 months achieved 100% seizure reduction, or seizure freedom, for a period of one year or longer, giving both us and the epilepsy community tremendous confidence in Zetucalner's potential to address the significant need for new anti-seizure medications. These data are particularly impressive, given that the literature supports the likelihood of achieving seizure control once a patient has failed three anti-seizure medications is less than 5%. This is a meaningful metric for epileptologists who tell us that seizure freedom translates directly into improved quality of life for people living with epilepsy. Turning now to our clinical programs outside of epilepsy, over the last year, we've been exploring the applicability of a Zetucalner in additional potential neuropsychiatric disorders based on scientific rationale, unmet medical needs, and strategic fit for xenon. Today, as Ian mentioned, we are outlining our plans for a phase three program in bipolar depression, with the goal of initiating the first of two Zetucalner clinical studies in bipolar one and bipolar two depression by mid-year. Briefly, bipolar disorder is a psychiatric condition characterized by mania or hypomania and depressive episodes that can severely impact a person's quality of life. As of 2019, approximately 40 million people worldwide were affected by bipolar disorder. In the US, it is estimated that bipolar disorder affects nearly 6 million adults, or about .6% of the US population. Of note, on average, patients diagnosed with bipolar disorder spend three times as many days with depressive symptoms than with manic or hypomanic symptoms. The severity of depressive symptoms has been associated with functional impairment, reduced quality of life, and a higher prevalence of suicide. Effective treatments for depression and bipolar disorder are limited, and many patients are non-inherent due to intolerability and side effects. Polypharmacy is common in the treatment of bipolar depression, and there remains a significant unmet medical need for safe and effective therapies to treat patients with bipolar depression. Our expansion into bipolar depression is based on strong scientific rationale from preclinical data showing an antidepressant effect of azetucalner, genetic links between bipolar disorder and KV7, evidence of KV7 downregulation in bipolar disorder, as well as clinical studies that explored the use of KV7 potentiators in depression. Considering the treatment landscape for BPD, azetucalner's novel selective KV7 mechanism of action, potential benefit on anhedonia, rapid onset of effect, and favorable tolerability profile are particularly attractive in BPD. Further, we believe that azetucalner's current safety profile could represent improvements over commonly used drugs used to treat bipolar depression, such as atypical antipsychotics, lithium, valproic acid, and limoetrogen, given our MDD study, where no study subjects experienced notable adverse effects on sexual function or weight gain. We look forward to providing more details around the BPD registration program once our first trial is initiated mid-year. Later in this call, Sherry is gonna review some of the learnings from market research with prescribing physicians that further support our expansion into BPD. Turning now to our MDD program, I wanted to highlight that ExNova 2, the first of three planned phase three clinical trials evaluating azetucalner in patients with MDD, is currently enrolling patients. And the next study, ExNova 3, is expected to initiate mid-year. We continue to engage with physicians who treat patients with MDD to educate them about our ongoing clinical studies and the potentially differentiated profile of azetucalner versus standard of care agents. Of note, physicians are interested in azetucalner's novel selective KV7 mechanism of action and its potential benefit on anhedonia, rapid onset of effect, as well as its potentially favorable tolerability profile, with data supporting no notable adverse effects on sexual function or weight gain. We have the additional benefit of being able to reference not only the phase two ExNova efficacy data, but also the long-term tolerability data gathered from our ongoing XTOL open label extension study. Staying within MDD, patient enrollment is now complete in the phase two proof of concept study of azetucalner in MDD, led by the Icahn School of Medicine at Mount Sinai Ann Baylor College of Medicine. Top line results from that study are anticipated in the first half of 2025. Looking ahead, we have a number of near-term opportunities to highlight azetucalner and engage in scientific exchange at upcoming medical congresses, including the American Society for Experimental Neuro-Therapeutics, ASCEND, and the American Academy of Neurology, or AAN, taking place in the first half of this year. I look forward to updating you on our efforts during our next call. As we continue to build upon the foundation of strong azetucalner clinical results, amass a growing amount of supportive data from the ongoing open label extension FOSS study, and drive towards a phase three readout later this year, we believe that azetucalner provides the promise of a much needed anti-seizure medication to people currently living with the burdens of epilepsy. I'd like to turn the call over to Sherry now, who will begin by providing some additional detail around our bipolar disorder market research before summarizing our financial results. Sherry.

Thanks so much, Chris. Building upon strong mechanistic, clinical, and genetic rationale for our expansion of azetucalner into bipolar depression, we have enhanced our understanding of the current unmet medical need, based in part on our own primary research with US-based prescribing psychiatrists. Similar to our approach when assessing the potential opportunities in epilepsy and MDD, we believe that market research is an integral part of our planning process to better inform our clinical development and commercial plans. We surveyed high volume prescribing psychiatrists and key opinion leaders in the US to test a product profile of azetucalner that was reflective of our clinical findings to date. Similar to our epilepsy and MDD research, physicians were interested in a drug profile that included attributes such as once daily dosing with no titration. In addition, many of the attributes of azetucalner that are attractive in MDD were also viewed as favorable in BPD, including physicians are interested in new agents with novel mechanisms of action, especially given current unmet need of those patients who have already failed antipsychotics. Physicians are also looking for new therapeutics that do not have the liabilities of commonly used agents, such as sexual dysfunction and significant weight gain. There's also a keen interest in products that have the potential to deliver rapid relief of symptoms given the delayed therapeutic response with the current standard of care. And lastly, physicians also identified the ability to address anhedonia, a common comorbidity of both MDD and BPD as another potential differentiator. In summary, azetucalner's novel mechanism of action, safety profile and potential benefit on anhedonia were identified as key strengths in support of a profile that compares favorably against the latest generation of antipsychotics and could support a compelling product fit in the future BPD treatment landscape. We're incredibly excited by the potential of azetucalner and its KV7 mechanism as we pursue multiple streams of late stage clinical development and key epilepsy and neuropsychiatric indications. Now I'll briefly turn at our fourth quarter and full year results for 2024. We had cash and cash equivalents and marketable securities of 754.4 million compared to 930.9 million as of December 31, 2023. Based on our current operating plans, which include the completion of the azetucalner phase three epilepsy studies and supporting late stage clinical development of azetucalner in both MDD and BPD, we anticipate having sufficient cash to fund operations into 2027. Given our proven track record of strong fiscal management, Xenon is in the fortunate position of having a strong balance sheet to support multiple registrational programs for azetucalner and the continued maturation of our early stage pipeline. I would refer you to our news release and 10K report filed today for further details around our financial results. Before turning the call back over to Ian for concluding comments, I wanted to take a moment to reflect on the news in today's press release that I intend to step down as CFO later this year. While this was not an easy decision, it is solely for personal reasons and for the benefit of my family. I will remain in place as CFO through to June 30th and I'm committed to ensuring there's a smooth transition. It has been an honor to serve in this position and I'm proud of what we've accomplished over my 10 plus years with the company. With multiple phase three programs underway for our lead program, an exciting preclinical pipeline of assets and a balance sheet that supports the continued advancement of these programs, I'm confident that Xenon is positioned for success. Ian.

Thank you, Sherry. As many of you on the call know, Sherry has made invaluable contributions to our organization over the last decade and was instrumental in helping build Xenon as we evolved from a drug discovery organization to what is now a late stage clinical organization readying for our first potential drug approval and launch. Not only was Sherry key in our capital raises over the years, but she has been instrumental in the growth of our organization, working to build out specific functions and systems for clinical development and then in the anticipation of commercialization. I know that Sherry did not take this decision lightly and I'm grateful for her commitment to a smooth transition and multi-month lead time as we search for her successor. Sherry, on behalf of the board and our entire Xenon team, I wanna sincerely thank you for all of your significant contributions. I know we will continue to successfully collaborate through this transition period and we wish you all the best as you embark on your next chapter. As we drive towards the significant first data readout from our Phase III epilepsy program that is expected in the second half of this year, we are entering a truly transformational period for our company. Since positive results from our Phase III program could enable the submission of our NDA with the goal of advancing a Zetucounter towards commercialization. By the second half of this year, we plan to have two of three planned ExNova trials in MDD underway, as well as a registrational study in BPD initiated. We are also anticipating top line results from the investigator sponsored Phase II study in MDD in the first half of this year. In addition, the continued maturity of our early stage pipeline could result in multiple INDs or equivalents in 2025 with the goal of initiating first in human trials across multiple targets, consistent with our goal to be a premier, fully integrated neuroscience focused company. To everyone who has been with us on this journey, we appreciate your support and we hope you join in our excitement as we take these important steps forward that brings us closer to delivering a Zetucounter to people living with epilepsy. So with that, we can now open the call up for your questions. Operator, over to you.

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. Our first question comes from the line of Paul Maties from Stifo. Please go ahead.

Hey, thanks for taking my questions and Sherry, sorry to see you leave Xenon, wishing you all the best. A couple of quick questions from me. One, as it relates to the first phase three in epilepsy, I was wondering if you can share anything more on just how close you are to full enrollment and is it still realistic the data could come in three queue or does it look more like four queue now? And then on bipolar, as you guys move full steam ahead here, how are you interpreting the results from other KV7 readouts this year? If those data were negative, would that impact your enthusiasm at all? Thank you.

Thanks, Paul. I'll take the first one and then make a couple of comments on KV7 in bipolar depression and then Chris, definitely provide your perspective on the scientific rationale. So Paul, we're comfortable with the guidance that we have right now, which is phase three epilepsy data in the second half of the year, that hasn't changed. As we get closer, we will narrow that. So we're not there today, but we will narrow that guidance as we get closer to the second half of the year. In terms of bipolar depression, I think you're referring to, there is a competitive company that's doing a KV7 in bipolar mania. We think bipolar depression is the stronger scientific rationale, mechanistic rationale, some of the genetic data that's in the literature as well. So our focus is on bipolar depression in terms of the expansion of azetucalner outside of epilepsy in MDD. So nothing's gonna change kind of our confidence in going into bipolar depression and the work that we wanna do there. And maybe Chris, you can just provide your perspective on moving into BBT as well.

Yeah, happy to do so, Ian, thanks. Yeah, hey Paul. So, I mean, if you take a look at the attributes of this drug that are appealing for depression, they're very similar for bipolar. It's the unique mechanism of action, the improvement in anhedonia, the rapidity of onset and the tolerability. And if you think about the landscape of opportunities for patients for pharmacologic treatment in depression relative to bipolar, there's quite a bit more there. So the competitive landscape is anemic in bipolar relative to really an unmet need there. As far as the rationale, I think that the reason why MDD made the most sense is because there was clinical data already gathered. And so that's where we started. If you take a look at the genetic work that's been done, there's just as strong, or actually I would argue even maybe a stronger association between the genetics of KCNQ2 and KCNQ3, which are the genes encode for KV7.2 and 7.3, which is what our drug targets. And I would argue that that association appears to be even stronger in bipolar than in MDD. So we're pretty interested. I think there's a really strong rationale across the board for going forward into bipolar. When I look at the difference between mania versus depression in these patients, there is an open label extension study that was done with another KV7 drug where I felt that the results, we felt that the results were pretty lukewarm in terms of its improvement of mania. So I think that the story for depression in bipolar is far more compelling than the story in mania. So suffice it to say that whatever, obviously we're quite interested in what those results will be in terms of the mania study that should read out imminently with the other KV7 compound, but it's not gonna change our plans.

Thanks so much for the thoughts. Our next question comes from the line of Tess Romero from JP Morgan.

Hi, team. This is Caroline Pocher on for Tess Romero with JP Morgan. Thanks for taking our questions. Just a couple from us. So just a quick housekeeping question, but can you just clarify that enrollment in XTOL2 is not yet complete? And then on bipolar depression, can you just provide any additional insight into the design of the phase three that you intend to initiate in terms of patient population and endpoints you might assess? Thank you.

Sure. Yeah, Caroline, I can take both of those. So the first one, so yeah, our guidance right now, we've just committed to talking about top line data in the second half of the year. So we haven't specifically commented on the completion of enrollment, both the completion of enrollment and narrowing of the guidance we'll do as the year progresses. Specifically on bipolar depression, more details to come. So we're committed to, this is gonna be a registration program. So a phase three study in bipolar depression, but the real details of trial design will be disclosing that in subsequent quarters as we move forward. I mean, we've made great progress in terms of planning the study, interacting with regulators, choosing CROs, like a lot of the work that we need to do that you expect where we would be to get the study initiated by mid-year. But just hold off on some of the details in terms of trial design and endpoints and some of the statistics. More to come on that in the coming quarters.

Ian, can I just build, I just wanna build on one thing cause I wanna make sure that it's clear. In the prepared remarks, we talk about the first of two studies beginning middle of the year in bipolar, which is accurate. And we also talk about containing both patients with bipolar one and bipolar two. And I just wanna be clear that that's a combination, both studies will have a combination of bipolar one and bipolar two. We're not doing one study in bipolar one and one in bipolar two. I just wanna make sure there wasn't anything confusing about the prepared remarks, Tessa. Okay, thanks Chris.

Awesome, thank you.

Our next question comes from Andrew Tsai with Jefferies.

Hello, this is Matt Barkas on for Andrew. First of all, congrats Sherry on your time at Xenon and our team wishes you the best. For the phase three focal epilepsy study, can you just talk a little bit about what the minimum efficacy threshold is for S2-Kelner that you wanna see for best in class status in your view? And then also for the phase two study from Mount Nye, the dataset MDD, how granular of a dataset can we expect to see on the secondary measures like Madras, JT, Schaeps, et cetera? And can we expect to see efficacy kinetics there as well?

Thanks. Thanks Matt. Yeah, I'm happy to go first. And then Chris, if you have things to add as well. Yeah, the first question just on what a success look in the phase three epilepsy program. Maybe to take a step back, we haven't reviewed the details of the phase two EXCEL program in some time, obviously. We focused a lot on the open label extension. But when we look, we often think about really is that to counter in focal onset seizures really from a pretty broad lens, meaning we've talked about the novel mechanism, the no titration, the rapidity of onset, from the EXCEL study in the short term, it was the best placebo adjusted efficacy ever seen in a focal onset seizure study in a very severe or refractory patient population. And then we've talked a little bit today and at AES about some of the long-term efficacy and safety as well that we're feeling really comfortable about. So what we know today is I think an incredible profile. And that's why we've talked about this as potentially being really paradigm shifting in terms of bringing a new therapy forward for patients that are still suffering with seizures. In terms of the phase three program for later this year, we're looking for a successful study to be able to file an NDA and be able to have this drug available more broadly to patients. And so I would say the bar really is to show statistical significance to support our plans going forward. As we get deeper, when we unblind the data and we get deeper into the data, then I think we can talk about it more broadly. But I would say given everything we know about the molecule and the mechanism and the long-term data and short-term data that we've generated to date, it's really about statistical significance and a path forward is the most important thing from the phase three study. In terms of the phase two IST-MDD Mount Sinai study, your question there. Yeah, we're working closely with the two PIs from Mount Sinai in Baylor, as Chris mentioned in his prepared remarks. The study is complete in terms of patient enrollment. And that study still needs to be on, in terms of all the data analysis. We would expect when we're able to provide data publicly that we would have those key secondary endpoints that you've mentioned in terms of the clinical scales of depression and anhedonia as measured in that study by Madras and Schaps. Obviously the primary endpoint is a functional endpoint. It's a functional MRI endpoint. So that would be available as well. But we're working closely with Mount Sinai in terms of a communication strategy to provide all of the information that you've suggested in terms of providing that publicly in the first half of this year. Chris, anything that I missed that you wanted to add to? No,

you

covered it.

Thanks Ian.

Great, thank you. Thanks for the question.

Our next question comes from Brian Abrahams from RBC Capital Markets.

Hi everyone, this is Nevin on for Brian. Thanks for taking in our questions and Sherry just wanted to extend our best to you on your next steps as well. So just a couple questions from me. I guess how are you guys seeing X-COPRI doing on the ground and based on its current uptake, can you tell us a little bit about how a KV7 might fit into the treatment paradigm and relative to kind of the sales that you're seeing with X-COPRI since launch and other competitors like Berva Asitem, how do you kind of see the sales for Zutkelnar relative to them on its potential launch? Do you see this as a potential comp for the initial launch or are there reasons to think that it could be even better?

All right, great, thanks Nevin. Good question. Sherry can start just with some of the commercial dynamics and what we're seeing from X-COPRI and what we're hearing and then Chris and I can add in any perspective, I think, you know, kind of core to your question is how do we believe that Zutkelnar is gonna differentiate from the branded medicines that are both currently available as well as how the branded medicines have done historically.

Yeah, so just a little bit about X-COPRI. I mean, I think, you know, their year-end results were interesting. Q4, they had strong results and their 2024 sales, exceeded the upper end of the guidance. As I'm sure most of you are aware, so they ended up closing the year north of 320 million, which was a 60% growth over 2023 and really great given the profile of that drug. Their 2025 guidance is strong as well. They provided a range of sort of the mid 400s. So it does seem like they are on track to hit their longer term goal of reaching a billion in sales before the end of the decade, which I think really tells us that there is an unmet medical need in the space and there's a commercial opportunity for a drug that provides a better profile than what's currently available on the market. I mean, we do know X-COPRI of course, has some liabilities associated with it. That drug does have to be titrated slowly over many, many weeks in order to manage a severe, but rare risk of a drug allergy. And for that reason, I think has been a little bit slower at launch in combination with the fact that the drug was launched during the pandemic. And given that profile, I think was a little bit challenging for physicians in light of just some of the challenges with the pandemic. Our perspective is you look at the profile of the Zetu Kelner, and of course we've talked a lot about this, but the novel mechanism, the rapidity of onset, the lack of titration, the tolerable safety profile, and the potential benefit on mood. As we bring that all together and we look across every aspect of the drug, we really feel that it sits above others. And as we look forward to the dynamics when Zetu Kelner will launch, we will be likely the only branded agent with X-COPRI. And so we feel very strongly that given the profile we've described, a Zetu Kelner should really be the first branded drug of choice. So we would expect that as patients cycle through one or two generics, that they would then be eligible for a Zetu Kelner and that physicians would reach for a Zetu Kelner in those situations.

And maybe, thanks, Sheri, I think that was an excellent overview. Maybe just to add and zoom out a little bit, UCB had Briviax results out this morning, and those were very strong in terms of growth as well. And then if we kind of really look back, right, there's been some incredibly important anti-seizure medicines over the years, including Keppra and Lamictal and Vimpad. And as Sheri mentioned, if we kind of think about the profile of a Zetu Kelner in the profile of all of those drugs, I think we have tremendous confidence in what the commercial opportunity is for a Zetu Kelner in epilepsy. Chris, anything to add from your perspective?

Well, maybe just a couple things. I mean, obviously X-Copri is doing pretty well. It has a really good reputation as being robustly efficacious. If you take a look at the seizure freedom data that they frequently talk about, it's usually at a dose, 400 milligrams a day, which isn't really used that much. When you take a look at our seizure freedom data that we're talking about in our open label extension study, those patients are on 20 milligrams. So in our go-to dose in phase three is 25 milligrams. So it's in the range of a dose that we expect to be used down the road. Sheri made a comment to the allergic reaction, we haven't had any cases of DRESS. So I think that we have more to learn about this drug and to get it approved based upon the data so far. I think that we stack up pretty well from a seizure freedom perspective. We don't have the titration, which Sheri mentioned we haven't had DRESS. And then there's this potential to take care of the mood issues, which I think is one of the advantages that Isetocounter really provides to the armamentarium for epileptologists.

Great, thank you so much. Thanks, Chris.

You're welcome.

Our next question comes from the line of Brian Scourney from Brea.

Hey, good afternoon, guys. Thanks for taking the question. Sheri also let me express my gratefulness for all the work you've done at Xenon and we're seeing the best in the future. So there's just another sodium channel modulator approved for acute pain. And I know we've talked about the merits of NAB 1.7 versus NAB 1.8, which is as we kind of get to the end of IMD staging here and start looking forward to the kind of proof of concept, I'm just wondering, where you're currently thinking kind of the initial indication target would be, like what's the quickest way to kind of determine how your NAB 1.7 modulator might address pain indications? Is it in sort of like a post-operative pain setting? Is it in sort of a more chronic setting? And I know pain studies are generally done both against placebo and active control. With this approval, would you look to actually

use

that as an active comparator? That's what I...

Thanks, Brian. I think some really important questions there that we talk a lot about internally and we haven't quite come to final decisions on many of them. Maybe I'll make a couple of comments though. I think later this year, we wanna do an investor, call it like a webinar or mini kind of R&D day where we're gonna be able to share a lot more data with you. So I think it'll be nice to be able to kind of have a more holistic view of the program and why we think we really like the NAB 1.7 target and why we think our chemistries have addressed some of the challenges historically. Early on, we're thinking about obviously a traditional phase one study and then quite traditional on the phase two proof of concept study. So things like bunionectomy or adenoplasty. I think longer term is really where your question is. There's nothing specific either in the genetics or any of the data that we've generated pre-clinically that suggests that this should only work in kind of post-operative acute or as the opportunity to work in the chronic setting. So as we think about it today, I think all those options are on the table including, you asked your question around just how would we even design the proof of concept studies in terms of placebo or active control. We are working through all of that right now, haven't made final decisions, but as we do, we'll be able to communicate them publicly. But I think many people know we've had a long experience on this target. And personally, I'd really wanna see as broad a development program as possible if we believe that we're seeing analgesia in a human in some of the early proof of concept studies, then I think there's an opportunity to try and test the mechanism broadly.

Great,

thank you.

Our next question comes from the line of Jason Garberry from Bank of America.

Hey, good evening guys. Thanks for taking my questions and Sherry started to see you go, but best of luck in future endeavors. So I guess firstly, with the BPD program, I know there's, you're gonna hold off on giving details. I'm just curious if you plan on looking at this drug as an adjunct to lithium or valproate and are the most recent approval in the space. Look at this both from a monotherapy and an adjunctive basis. And then secondly, with the second gen KB7, is the focus there gonna be novel indications or do you believe that the molecule may offer advantages over as at the counter and that there can be opportunities for this follow on there?

Thanks Jason. Yeah, on the first one, details are coming. So in terms of the trial design and specifically mono versus adjunctive and just the sizing of the study and end points, all of that will be in a position to disclose just in advance of the initiation of that study around mid-year. Your question on KB7 in terms of backup molecules or next gen molecules, yeah, I think it's a really important one. What's really interesting about is that to counter when we just look at the profile of is that to counter in the data we've generated so far, there isn't anything obvious that we're trying to solve for in the next generation of molecules. So although we have chemical diversity, novel intellectual property, all the things you would expect in a de novo kind of drug development or drug discovery program, there's nothing specific that we're trying to solve for. So many of these molecules, when we look at all of the attributes pre-clinically in terms of choosing a candidate to move into toxicology studies, a lot of them are gonna look more like is that to counter than not because I think we have real success there and we wanna build on that. In terms of where we would go therapeutically, I think the answer is both. So we think we can't fully answer the question on whether there's gonna be differences between these next gen molecules and is that to counter until we run some human clinical developments. So I think some of these attributes and differentiators may show up as we do human clinical development. We still think that we wanna do continued work in epilepsy and neuropsychiatry. I also had mentioned in my prepared remarks, we like pain for the mechanism as well. So I think there's an opportunity to continue development of the mechanism in indications where we've shown data with is that to counter as well as broadening outside of this. Okay, thanks

guys. Our next question comes from the line of Sarah Scram from Lula Blair.

Thanks for taking our questions and just wanna add my, thanks and congratulations to Sherry. I have one quick clarifying question and then one additional. So first understanding that the focus is on bipolar depression, would you expect to see or could we see benefits on mania as well or are you guys only looking at depression? And then secondly, for the preclinical NAV 1.1 program, do you see this as a development opportunity in Gervais only or would you look to kind of position this for other types of epilepsies? And if only in Gervais, how do you see the treatment landscape evolving over the next three to four years?

Thanks Sarah. I'm happy to, Chris, why don't I start on the NAV 1.1 question and then if you wanna address the bipolar depression mania question. Yeah, our initial focus for our NAV 1.1 will be in Gervais because the Gervais children, as you know, are haplo insufficient in the protein. So they have 50% NAV 1.1 and we're potentiating current through the wild type channel. We've shown, I think an incredible preclinical data package that we were able to share at AES a couple of months ago where, you know, in these Gervais animals, we can protect from spontaneous seizures, we can protect from SUDAP and we can have an impact on long-term potentiation. So, you know, I think where, and this is maybe a little bit to the core of your question, I think where the field is going, especially for a lot of these genetically identified epilepsies is we need to get past seizure control into disease modification and I think there's an opportunity to do that both with the approach with an antisense oligonucleotide, as well as our small molecule approach. And so we're really excited, I think, to have an oral small molecule that you can do weight-based dosing and titration, I think would be, you know, incredibly valuable for the field and for physicians and for their families. I mean, given the approach, it does potentially have broader utility than just Gervais syndrome in other forms of epilepsy and potentially there's some ideas even outside of epilepsy as well in the literature. So I would say our focus, at least initially, will be on Gervais syndrome, but there may be an opportunity to broaden out as we move forward. Chris, do you want to make a comment just on the bipolar question?

Sure, I'll make the comment from two perspectives. So if you, you know, our intention is to conduct a study in bipolar depression, and in those studies, the patients aren't manic. So you can't really go into a study like that and expect to show that there's gonna be any improvement in mania because the patient shouldn't be exhibiting those symptoms at baseline. You might follow mania just to make sure that you're not exacerbating it, but expecting a readout with mania, you know, with patients in that stage of the disease, which is with depressive symptoms, isn't realistic. And the flip side of that is also true. If, you know, for the mania study that we'll be reading out soon with the other KV7 compound, those patients come into the study with minimal depressive symptoms. I think the MADRUS score is like 10 to 12. It's quite low. So expecting a readout in that study with depressive symptoms, I think, is probably unlikely as well. So it kind of come in from both angles. But we're excited about, I mean, I think that, you know, you look at the genetics, it's a pretty compelling story for bipolar. So we're excited about this opportunity.

Great, very helpful. Thank you.

Our next question comes from the line of Laura Chico from Wedbush Securities. Please go ahead. Please go

ahead. And on for Laura Chico. So one for on Azizic counter. So at launch, what type of patients are most likely to be the early adopters? Will this be driven more by patients seeking better seizure control or could this be more from patients who are experiencing mood disorders on their current ASMS?

I can start and then Chris, please do add your perspective. I mean, I think one, I think we need to see the totality of the package that we're generating in phase three to kind of better answer your question. And why I say that is obviously in the phase three focal onset seizure program, we're looking at the reduction in seizures, the primary and key secondary end points of the study, but we also have exploratory end points on some of the comorbidities, including depression and anxiety. We're not powered for those and there aren't entry criteria that it needs to be an impaired population coming in, but we should have some indication of data in epilepsy patients with the psychiatric comorbidity. So I think that's gonna be an interesting part of kind of the overall package. But we're definitely when we speak with epileptologists and the epilepsy community, and we talked about in our prepared remarks, I think we've done a lot in terms of survey work and really understanding the complete burden of illness for these patients, not just the seizures, but a number of other things that are impacting their quality of life. So I think you're gonna have patients that, the patients that are still having breakthrough seizures are often looking for both new medicines that will help on their seizure control, but also addressing some of the psychiatric comorbidities such as mood. But Chris, you should provide your perspective as well.

I mean, it's a great question. I think it's challenging without, as you've said, the phase three results without the final label and all these things that we need to still work on in the coming months and so forth. The only thing I'll say is that one thing that we have learned about this field is that prescribing patterns are largely dictated by the prescribers and their perspective rather than by the patient's needs. So when you talk, you asked about early adopters. I think that would be, just to make it clear, that will certainly play a role, but it'll be more from the prescriber perspective of wanting to be an early adopter than probably the patient perspective. Thank you.

Our next question comes from the line of Joseph Thorne with TD Cowan. Please go ahead.

Hi there, good afternoon. Thank you for taking my question and adding my best wishes to Sherry. Maybe on the bipolar depression study, I saw that you're looking to launch too with the MDD, you have three planned phase three studies. I guess, is there anything behind that decision? Is it a little bit easier to manage placebo response or anything in the bipolar depression population? And then maybe jumping over to PGTCS, can you just comment a little bit on how enrollment is going there? Obviously, quite a bit of competition in FOS, maybe not as much in PGTCS. I guess, what are you finding maybe easy or challenging when enrolling that study? Thank you.

Thanks, Joe. Chris, when and I, I'm happy to take the second one and then you can provide your comments on PGTCS as well and then your perspective on the bipolar versus MDD. Yeah, I think when we've had these discussions with investors, we recognize that, yes, there's probably more clinical studies, you're right, Joe, going on in focal onset seizures, but those patients are more prevalent and easier to recruit into a clinical study, often with the primary generalized tonic-clonic seizure studies. These are often done post-approval, so after the label in FOS. And they can often take quite a number of years if we use VIMPAD or X-Copri as an example, those have taken multiple years to complete and there's a wide variety of reasons for that. It's a less prevalent patient population. They're having generally fewer seizures, but those seizures can be really significant and have an impact. And due to that, often physicians want intervention immediately, which would make those patients, or at least a subset of those patients, not eligible for a clinical study. So there's some challenges that are very specific to that therapeutic indication. I think it's really important for the community for us to develop, is that to counter broadly, we were the first company, or first sponsor, at least in our knowledge, to commit to doing both FOS and PGTCS pre-approval and in parallel. So I think we're proud of that. I think it's the right thing to do, but we do know that the PGTCS study will take longer. Chris?

Yeah, so going back to the question about three studies in MDD and two in bipolar, the reality, so what we're hoping for is that by the time those bipolar studies roll out, we will have had two positive studies in MDD. We'll be talking about an SNDA for MDD. And so in that context, having one positive study or two positive studies in bipolar depression, the threshold to get the drug approved in that context will be somewhat lower, particularly in the setting of the relatively new FDA guidance about the sufficiency potentially for a confirmatory study to be enough to yield an approvability package. But for right now, two in bipolar. You're welcome.

Our next question comes from the line of Douglas Cao from HC Playwright.

Hi, good afternoon. Thanks for taking the questions. And first, I just wanna wish Sherry all the best and say, you know, enjoyed working with her. You know, maybe two things. First, I wanna start with the point that you sort of briefly touched on, Ian, in terms of the Polka Onset epilepsy study and the benefits for mood. Obviously, you're not powered for endpoints for patients with mood disorders, but I'm just curious if you provide some detail or perspective on how, you know, what endpoints there will be to help us characterize the mood benefits for patients with FOS. And, you know, even though they're not necessarily powered, is there any chance that perhaps some of them could end up on the label? And then the second sort of follow-up question I did, I just wanted to touch on or get some perspectives on just your R&D spend, just given the significant acceleration in terms of your pipeline extension, both with Azutu to calendar in terms of new indications, but as well as additional molecules entering clinic. Thank you.

Thanks, Doug. I will, let's, we'll split this up and just for the entire call, this will be the last question. We're over time, but we'd be happy to follow up with everyone else later today and over the next few days. So yeah, I'll make maybe a couple of comments, Chris, and then if you can share kind of the patient reported outcomes on the psychiatric comorbidities in the epilepsy program, I think that'll be helpful, and then Sherry on the OPEC side. So in terms of the label question, Doug, I think it's just premature, right? I think we need to see the data, but it's premature to make a comment on whether this would be something that we would publish or it would be something that we would have a discussion with a regulator on. And just to be clear, as I said, that we weren't powered for these exploratory endpoints, we're also not stratifying, so there may be some imbalances between the different groups as well, and we're not exactly sure just how impaired the population is. And so what we will be looking at is, is there a subpopulation there that does have elevated depression or anxiety and being able to measure that and how they're doing? So that's kind of been our approach to it. I think it's an important exploratory endpoint, but I just wanna make sure that we're managing expectations with the caveats and limitations, that this is really driven as a registration study with seizure reduction as the critical endpoints. But Chris, maybe you can just talk about how we're measuring those and then Sherry on the

expense side. Sure, happy to do it. So within the Phase III Epilepsy Program, in every study, at every visit for every patient, we're evaluating both depression and anxiety. And the anxiety is being assessed with the GAD7 scale, and the depression is being assessed with the Beck Depression Inventory. So we'll have a lot of data, but there are a number of caveats, which Ian, I think, highlighted nicely. Sherry?

Yeah, Doug, on the OPEC side, so, I mean, one thing is we've reinforced our cash runway guidance into 2027, which is great. Of course, we've been thinking some time now about indication expansion in neuropsych. So that has been on our radar and factored into our models, which is why our cash runway hasn't changed. But we are gonna see a meaningful increase, in particular on the R&D side. Of course, as you noted, it's because we now are gonna have many Phase III studies ongoing through 2025 and 2026 with the addition of bipolar disorder or depression, in addition to the fact that we now have our MDD Phase III Program up and running with ExNova 2 initiated at the end of last year and ExNova 3 starting mid this year. So that program's gonna be in full swing in 2025 and continuing to incur expense over 2026. We are gonna have our first Phase III FOS readout later this year, but there are gonna continue to be costs across the epilepsy program, because, of course, we're gonna have a second FOS study ongoing, as well as our EXACT study and the important open-label work that we're doing, both as part of the EXTOL study, as well as our open-label for the Phase III Epilepsy Program. So all of that is factored within our runway. And then, of course, we're making significant progress on the preclinical side, and we're expecting multiple molecules to move into Phase I this year, and so we have factored those expenses in as well, and that'll drive an increase in 2025 and 2026. All that being said, we're comfortable with our cash runway position. We feel like we're in a really good place financially and have done a really nice job managing our capital with such a robust pipeline. We'll see an increase in GNA as well, not as much as on the R&D side, and that's really driven by a continual expansion of our corporate functions to support the significant growth on the development side, but also to support prelaunch... But also to support precommercial activities that we are embarking on in advance of what we expect to be the commercial launch of the Zetsu Kelner and FOS. So I'll just wrap up the call now. Thank you, everyone, for joining us today. I appreciate all of the kind words about my departure. If we didn't get to your question, as Ian noted, we will reach out to you directly to connect. Operator, you may now end the call.

Yes, this concludes today's call. Thank you for joining. You may now just...