Xenon Pharmaceuticals Inc.

Ladies and gentlemen, thank you for standing by. My name is Angela and I will be your conference operator today. At this time, I would like to welcome everyone to the second quarter 2026 Xenon Pharmaceuticals Inc. earnings conference call. I'd like to remind everyone that this call is being recorded and that all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will 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 in your telephone keypad to raise your hand and enter the queue. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Miss Colleen Alabiso, Senior Vice President of Corporate Affairs at Zenon Pharmaceuticals Inc. You may begin.

Good afternoon. Thank you for joining us on our call and webcast to discuss Phenom's second quarter 2026 financial and operating results. Joining me today are Ian Mortimer, President and Chief Executive Officer, Dr. Chris Kenney, Chief Medical Officer, Darren Cline, Chief Commercial Officer, and Tucker Kelly, Chief Financial Officer. After completing our prepared remarks today, we will open the call up for 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 clinical trials, the potential efficacy, safety profile, future development plans in current and anticipated indications, addressable market, regulatory success, and commercial potential of our and our partners' product candidates. The strength of our clinical trial design, our ability to successfully develop and achieve milestones in our clinical development programs, including the anticipated filing of INDs or equivalents and NDAs, the timing and results of those filings and our interactions with regulators, our ability to successfully obtain regulatory approvals, Anticipated timing of top-line data readouts for our clinical trials of Azetje Kellner and other candidates, and our expectation that we will have sufficient cash to fund operations into 2029. Today's press release summarizing Xenon's second quarter financial results and the quarterly report on Form 10-Q will be made available under the Investor section of our website at xenon-pharma.com. and filed with the SEC and CDAR+. I'll now turn the call over to Ian.

Thanks, Colleen, and good afternoon to everyone joining us today. We're excited to recap another productive quarter for Xenon as we work toward our goal of becoming a fully integrated neuroscience company delivering life-changing medicines to patients. In the second quarter, we remain focused on three key areas. First, Preparing our new drug application for azetucalner, or AZK, for focal seizures, as well as sharing our exciting Phase 3 XTOL2 results with healthcare providers and preparing our go-to-market strategy. Second, advancing five additional Phase 3 studies of AZK in epilepsy and neuropsychiatry indications, which may help significantly expand the addressable patient population. And third, advancing and expanding our pain programs, including the Phase 1 studies of XEN1120 targeting KV7 and XEN1701 targeting NAV1.7, as well as initiating clinical development of an additional NAV1.7 molecule, XEN1720, demonstrating our belief in and the importance of this target. I'll provide a bit more detail of our recent achievements before passing the call over to Chris, Darren, and Tucker. First, we are making great progress towards submitting our NDA for AZK and preparing for launch. I'm happy to share that we've completed a successful pre-NDA meeting with the Food and Drug Administration, and we're on track for a submission later this quarter. We have continued to share our XTOL2 data with HCPs, including at two important meetings for the epilepsy community, first at the American Academy of Neurology meeting in April, where many of you will recall that the XTOL2 results were featured as a late-breaking science abstract and podium presentation. Then in June, we had another opportunity to present the top-line XTOL2 results at the Epilepsy Foundation Pipeline Conference. This is attended by HCPs, researchers, industry, and patient advocates. Beyond these congresses, our MSLs have been out in the community responding to HCP requests to learn more about our data. Overall, we continue to hear very positive feedback and excitement for both the XTOL2 results, including the best placebo-adjusted efficacy and FOS to our knowledge, and AZK's differentiated profile, including a novel mechanism of action, rapid onset of effect, once-daily dosing with no titration, and no need for dose adjustments with other ASMs. We feel increasingly confident in AZK's potential to become a preferred add-on therapy for the significant number of patients who do not achieve seizure freedom with initial treatment. Darren will share a bit more on the excitement from the epilepsy community later in the call, as well as the progress we continue to make on preparing for the launch of AZK. We also continue to focus on expanding the opportunity for a ZetuCalendar, including through the XTOL3 study in FLS to support potential regulatory submissions outside the U.S., As well as the exact study in primary generalized tonic-clonic seizures to support regulatory submissions for an additional epilepsy indication. Through our ongoing Phase III Ex Nova II, Ex Nova III, and Exceed studies, we continue to advance our work to broaden IZETU-Calendar's opportunity to neuropsychiatry. There is strong rationale for KV7 openers in major depressive disorder and bipolar depression, and ACK could deliver a novel mechanism where innovative treatments are urgently needed. especially treatments that may also impact anhedonia and that could offer differentiated tolerability profiles as well as rapid onset of action. We continue to expect our first phase three MDD study results in the first half of 2027, and we will narrow that guidance as we get closer to the top line readout. Additionally, we're excited about the progress of our early clinical pipeline for pain. We are nearing completion of our phase one studies for both Ramos, XCN 1701, and XCN 1120. And data generated to date supports the initiation of phase two proof of concept studies in acute pain for both programs. We have also recently advanced a second NAV 1.7 candidate for pain into a phase one clinical trial. So this will give us multiple shots on goal for this important pain target. Success in any one of these three novel non-opioid pain programs would meaningful increase value for Xenon and our opportunity to impact the lives of millions who live with chronic or acute pain. And in line with our continued commitment to epilepsy, we also continue to invest in multiple high quality candidates targeting various ion channels. This includes our preclinical NAV 1.1 program for Dravet syndrome, where we are in IND enabling studies with the intent of putting the best candidate into the clinic, It also includes our partner program with Neurocrin, MBI 921355, an investigational selective inhibitor of NAV1.2 and NAV1.6 in development for the potential treatment of certain types of epilepsy, which continues to advance through a Phase 1B study with data expected in 2027. So with that, now I'll turn over the call to Chris, who will provide additional clinical and regulatory updates. Chris?

All right. Thanks a lot, Ian. It continues to be a very exciting time here at Xenon as we prepare the NDA for Z2 calendar and share our data with the community through scientific exchange opportunities. The interactions our team has had at recent meetings, as well as out in the field, have been incredibly affirming of our belief in AZK's potential to meaningfully impact the FOS treatment paradigm and provide a therapeutic option with appeal to epilepsy specialists, Schultz, General Neurologists, and Advanced Practice Providers alike. As Ian mentioned, we have completed a productive and positive in-person pre-NDA meeting with FDA where we gained alignment with the agency on components of the NDA package. We therefore remain on track to submit our NDA this quarter as planned and are encouraged by our continued engagement with the agency. Completing the NDA submission is our team's top priority, and I'm very pleased with our progress and look forward to updating you in the coming months. We also continue our focus on presenting and educating on our exceptional XTOL2 data and recently presented at two important conferences for the epilepsy community. First is a late-breaking science abstract and platform presentation at the AAN meeting in Chicago, and second at the EF Pipeline Conference in Leesburg, Virginia. In these presentations, we highlighted the following key points from our XTOL-2 data. One, with regards to efficacy, the study met its primary endpoint and demonstrated what we continue to believe is the best placebo-adjusted response of any pivotal focal seizure study, which was highly significant and outperformed our Phase IIb XTOL study. This is even more meaningful when you consider the level of treatment resistance in the XTOL2 study population, which had failed a median of five prior anti-seizure medications and where 60% of those patients were on or had already tried and stopped Sinovimate. Second, we also observed early dose dependent MPC reductions in weekly FOS from baseline to week one. reinforcing AZK's rapid and sustained anti-seizure activity. Third, we observed dose-dependent increases in the proportion of patients with at least 75%, 90%, and 100% reductions in monthly seizure frequency through the double-blind period, as well as evidence of efficacy building over time, as evidenced by improvements in the 100% responder rate in the last eight, six, and four weeks of the study. With regards to safety, AZK continued to demonstrate a generally well-tolerated profile, which was consistent with the XTOL study. The most common treatment emergent adverse events across both studies in the AZK dose groups were dizziness, somnolence, headache, and fatigue. With more than 800 patient years of safety and exposure data, we're comfortable that this profile is consistent with other well-tolerated anti-seizure medications, and with a drug that is potent and active in the central nervous system. We also had a tremendous opportunity to interact with general neurologists at AAM, where we highlighted our 48-month XTOL open-label extension data, demonstrating a 91% reduction in monthly seizure frequency for those treated for at least 48 months. In the same group, almost 40% were seizure-free for at least 12 months, and one in four were seizure-free for at least two years. This is truly remarkable considering the level of treatment resistance and seizure frequency in the overall patient population at baseline. Now, as we look ahead, we're excited to continue to share the AZK data at the 16th European Epilepsy Congress or EEC taking place between September 5th and 9th in Athens, Greece. and at the annual American Epilepsy Society, or AES, meeting taking place December 4th through 8th in Denver. With regards to EEC, our XTOL2 topline results are among the six abstracts accepted and planned for presentation. Also accepted is a new abstract that will highlight the mechanistic characterization of the Z2 calendar, including KB7 binding, enhanced channel opening, and rational polytherapy potential. In this presentation, we plan to share in vivo data demonstrating the potential additive effects of a Zetu counter when used in combination with commonly prescribed anti-seizure medications, reinforcing its opportunity to enhance seizure control through the application of rational polytherapy in clinical practice. Looking ahead, we're planning to have a significant xenon presence at AES in December, and multiple new AZK data presentations, including additional data from the XTOL2 study and continued follow-up from the XTOL open-label extension study. Moving on to neuropsychiatry, we continue to enroll patients in our three ongoing Phase III studies of AZK for major depressive disorder, or MDD, and bipolar depression, or BPD. Depression remains an area where the differentiated profile of AZK, including its novel mechanism of action, rapid onset of action, and potential benefits on anhedonia could meaningfully benefit patients in a second category with a much larger patient population who continue to have unmet medical needs. There's a strong rationale for KB7 openers in MDD and BPD. Several preclinical and clinical studies including our own ex-NOVA study have shown promising signals of antidepressive effects for the KV7 mechanism. Additionally, in BPD, specifically there are genetic links with KV7, including evidence of KV7 down regulation. ACK would deliver a novel mechanism to the MDD and BPD treatment paradigms where innovative treatments are urgently needed, especially those that may also impact anhedonia and that have the potential to offer differentiated tolerability profiles and rapid onset of action. Our clinical team has made great progress with ExNova 2 and ExNova 3 in MDD and Exceed in BPD. Enrollment remains on track and we anticipate sharing top line data from ExNova 2 in the first half of 2027. Turning now to our pain portfolio, There remains a critical unmet need for non-opioid therapies, given the limited efficacy of current options and substantial risk of abuse and dependency tied to opioids. At Xenon, we have more than 20 years of experience, both through collaborations and our own discovery research, on novel pain targets, most notably the sodium channel NAV1.7, which we view as the best genetically validated pain target. They're striking genetic data in patients with loss of function mutations that have no ability to feel pain, and gain of function mutations have also been identified that drive pain disorders. Further underscoring the critical role NAV1.7 plays in pain signaling. Our phase one study of exein1701, which targets NAV1.7, continues to advance. Consistent with what we shared earlier this year, We've seen exposures in both the single and multiple ascending dose portions of the study that are predictive of efficacy. Recall that nociceptive sensory neurons have processes that extend into peripheral tissue as well as behind the blood-brain barrier, such that channels are expressed in both peripheral and central compartments. Central NAV1.7 target engagement is therefore core to our therapeutic hypothesis. and in this phase one study, we have confirmed central drug exposure via cerebral spinal fluid collection in healthy volunteers. Based on this, we believe we are achieving both peripheral and central receptor occupancies that exceed what is needed for efficacy based on our modeling and on human genetic data. We're looking forward to completing the phase one study this year. In addition to advancing XEN-1701, We've continued our discovery around NAV 1.7, given our deep experience with the target and strong belief in its therapeutic potential. We've been working on several preclinical NAV 1.7 compounds, continuing to refine our understanding of the biology and to develop novel chemistries. We're pleased to announce that we recently received CTA approval of Exeon 1720, which also targets NAV 1.7, and have initiated a Phase 1 SAD and MAD study. XEN1720 provides us with an additional clinical candidate that further strengthens our leading position in NAV1.7, an important pain target with compelling genetic validation. Beyond NAV1.7, our Phase 1 SAD and MAD study of XEN1120, which targets KV7, also continues to advance. KV7 modulates neuronal hyperexcitability at multiple points along the pain pathway, and we believe KV7 potentiators have the potential to treat a range of pain conditions. This is supported by high levels of KV7 expression throughout the pain pathway, and our preclinical data shows that KV7 is enriched in the CNA delta pain subtypes of sensory neurons. In addition, KV7 openers can block action potential firing in both DRG and spinal cord neurons, thereby significantly inhibiting pain signals from reaching the brain. And evidence supports that dysfunction or downregulation of KV7 activity has been observed in altered pain states. We've been pleased to see drug concentrations in both the single and multiple ascending dose portions of the study. that are consistent with pain reduction in preclinical models. Like NAV1.7, exposure in both the peripheral and central nervous system is likely critical to success for a KV7 opener in pain. And data so far support that we are achieving KV7 target engagement in both compartments. We look forward to completing the phase one study this year and continuing to lead on KV7 science and its application to pain. In addition to epilepsy and depression. With that, I'll turn it over to Darren to provide an update on our path to commercialization.

Thank you, Chris, and good afternoon, everyone. We're making strong progress as we prepare for a potential launch of AZK, our first commercial product, and bring an important new treatment option to patients living with focal seizures. During the second quarter, we continue to execute our commercial build-up, adding key leaders across marketing, Ronsheim, and David Ronsheim. Thank you. We continue to advance our launch readiness and refine our launch strategy, informed by deep insights into the treatment landscape, prescribing dynamics, and the healthcare professionals we expect to serve. In both primary research and advisory discussions with general neurologists, epilepsy specialists, and advanced practice providers, we consistently hear strong enthusiasm for AZK and the recognition of the unmet needs that AZK would address. including compelling efficacy, a well-understood safety profile, rapid onset of action, and ease of use attributes, all of which can make AZK a go-to add-on therapy. While we expect epilepsy specialists to lead early adoption of AZK, our market research supports the view that general neurologists can move to AZK sooner than historically has been the case for newly launched epilepsy therapies. To support these efforts, we continue to refine and validate our brand positioning, sharpen our key points of differentiation, and develop tailored engagement strategies designed to resonate with specific customer segments. We also are increasingly focused on introducing payers to Xenon and communicating the potential value proposition of AZK through the lens of the unmet medical need. We've engaged with payers through several key conferences this year, Helping to refine our market access strategy and strengthen our overall launch readiness. We also have started to build out our payer facing field team with the expectation to fill all roles by the end of the year and deploy them in the field early next year. An important component of the AZK launch will be our distribution approach and we continue to work to identify, engage our channel partners on the distribution and access side. We also continue to build awareness of Xenon as an emerging leader and committed partner to the epilepsy community. Between our customer engagement, MSL, and patient advocacy teams, as well as our presence at congresses, regional meetings, community events, we're making new connections, raising awareness of Xenon and the ACK data we've generated, and deepening our relationship each day. As we move forward, I look forward to sharing more details on our go-to-market strategy. and how we plan to bring innovation to the epilepsy landscape with the best-in-class anti-seizure medication, enhanced channel and patient services and a strong value proposition for payers. We believe the strategy, capabilities and team we are assembling position us well for a successful launch pending FDA approval and ultimately the opportunity to improve outcomes for patients living with epilepsy. With that, I'll now turn the call over to Tucker To review our financial results and upcoming milestones. Tucker?

Thanks, Darren. Good afternoon, everyone. We ended Q2 with cash, cash equivalents, and marketable securities of $1.2 billion, which, based on our current operating plans, provides cash to fund operations into 2029. Given our strong balance sheet, we are well positioned to support AZK's U.S. launch, multiple AZK registration programs, the continued maturation of our pain pipeline, and the advancement of other early-stage research and development programs. I would refer you to our press release and our 10Q filed today for further details on our financial results. Overall, it was a very exciting time at Xenon as we continue to build momentum toward our first commercial launch and across our promising pipeline. As we head into the back half of the year, we remain focused on our upcoming NDA submission expected this quarter, as well as the advancement of our commercial readiness activities to support a strong launch in FOS. We are also working to broaden the therapeutic opportunities for ACK beyond epilepsy, We continue to make progress in rolling our studies in MDD and BPD. We look forward to the readout of our X-NOVA-2 study in MDD, anticipated in the first half of 2027. And lastly, we're excited about the progress we're making in pain, with two Phase I studies for XEN-1701 and XEN-1120 approaching completion, and now one additional Phase I study for XEN-1720 underway. And believe Xenon is well-positioned to become a scientific leader in the development of novel non-opioid pain therapeutics. We remain very optimistic about the opportunity ahead as we transition to a fully integrated commercial stage company. And with that, we can open the call for questions. Operator?

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 1 and your telephone keypad to raise your hand and enter the queue. If you would like to withdraw your question, simply press star 1 again. For today's event, we kindly request everyone to please limit yourself to one question and one follow-up only. If you find yourself having additional questions, you may rejoin the queue. And your first question comes from the line of Paul Matisse with TFL. Your line is now open.

Hey, good afternoon. Thanks so much for taking my questions. One quick one on AZK and one on pain. On AZK, maybe just recap for us this FDA pre-NDA meeting and if anything notable came out of it. and then second on the pain program, maybe talk a little bit about the safety profile you've seen so far. Have you seen any cardiac AEs or anything noteworthy that has been dose limiting for prior NAV17? Sorry, I was talking about NAV17, not KB7. And then just for NAV17, what's the rationale behind advancing a second product now? Thank you.

Thanks, Paul. Chris, do you want to take the Maybe a little bit of color and commentary on the pre-NDA meeting, and then I'm happy to answer the pain questions.

Sure, happy to do so, Ian. Thanks for the question, Paul. So we've had the pre-NDA meeting, as mentioned in the prepared remarks. It was an in-person meeting. It was very productive. We continue to appreciate the collaborative nature, the interactions with FDA. We covered the main topics that we wanted to, questions that we wanted to cover with FDA as it pertained to this submission. We continue to believe that we have a very strong package and that overall it's a pretty straightforward package that we're bringing to the agency. So we're in good shape at this point in time. We're on target to submit this quarter.

Thanks, Chris. And then, Paul, I think I've got all your pain questions. Down here, but if I missed one, just jump back in. So as we think about and your questions were related to NAV 1.7, let's just focus on that target for a second. You know, we've made, we had said earlier this year that based on some of the SAD data, we already thought that we were getting or we had profiled that we were getting up to enough exposures that we would see based on our predictions, kind of that level of receptor occupancy that should show an analgesic effect. I would say we have even more confidence today because we're really nearing the completion of the study. So we've gone through multiple SAD and MAD cohorts. And again, all of our modeling predicts that we're going to have enough exposure to have the receptor occupancy that is being taught by the human genetics. So I think we feel like we're in a really good spot from the XCN 1701 profile. There was a new piece of information that Chris disclosed today that I just don't want to miss. which is we've looked at CSF as well. So, you know, our hypothesis is that we wanna get exposure both in the peripheral nervous system as well as the central nervous system. We can kind of model that based on our animal work and kind of predict what it's gonna be in humans, but we did take extra cohorts just to actually do CSF and to make sure that we were getting central exposure. So I think that's another box that we've checked that again, feel comfortable that we're getting this global receptor occupancy of the target. We haven't finished yet, so I'm not going to go into specific safety data. You asked around the cardiovascular effects. Again, today what we see in the data is that it's a profile that we're very comfortable moving ahead into a Phase II proof-of-concept study, so that's taking everything into consideration. So I'm not going to go into very specific details, but we feel very comfortable on what we've seen so far getting close to completion.

Then you just asked about... Yeah, yeah.

Once we're complete, then I think we have an opportunity to just give you a little bit more information when we have all of the data unblinded and we can see both the placebo and the active groups. And then I think your last one was just around XEN1720, kind of the next molecule. Is that right? I don't know if you dropped off, Paul, but yeah, I think you had a question just around 1720. So we have taken a second molecule into phase one clinical development. You know, when we think about the NAV 1.7 program, and if you go back to the webinar we did almost a year ago, you know, we think that we've made a number of advancements that have overcome some of the limitations we've seen historically. So those were around selectivity and potency, around protein binding, and around the kind of this PK or biodistribution and exposure both in the periphery as well as in the central nervous system. So when we look at 1720, it has some different analysis of those components that we're looking for when we compare it to 1701 and a differentiated chemistry profile. So I think that this is such a high-value target. We're going to continue to do preclinical work. We're going to continue to advance novel chemistries and move multiple molecules into the clinic just to get more opportunities to see what's the best molecule at the end of the day. Nothing changes with the lead molecule 1701. This is really just around a second molecule that has somewhat of a differentiated profile.

Great. Thanks so much.

Your next question comes from the line of Tess Romero with JP Morgan. Your line is now open. Hey, guys.

Thanks so much for taking our questions. Ian, Chris, can you maybe talk a little bit about how you are thinking about what you would still like to get out into the public domain about the profile of a tattoo calendar in your Phase III XTOL II trial and what the specific publication strategy looks like? I know there's a small epilepsy conference at the end of the year, but any other color you'd give us? Thanks.

Thanks, Tess. I'm happy to start, and Chris, you can add. So, you know, I think we've given a fair bit of information on XTOL2 already. So you've seen top line data, you've seen all of the key efficacy endpoints, including, you know, some that were outside of the statistical hierarchy, and you've seen kind of the broad safety profile. So we were able to show those data at AAN, at the EF pipeline, We're going to have more data and encore at EEC and then more, as you mentioned, at AES. If we look back to the XTOL data, we looked at certain different analyses that we're still going through, different seizure subtypes, different types of patients. So all of that work kind of ongoing, and you'll see that over time. The publication strategy is critical. So we have peer-reviewed publication of the XTOL and XTOL-LE data. and we are working hard to get the peer review of the XTOL2 data as well because we think that's really going to be important for the epilepsy community that we not only presented at Congresses, but it's also peer reviewed. Chris, anything to add on kind of details on some of the other analyses you're looking at?

In the prepared remarks, we had talked about the fact that 60% of patients in XTOL2 were either on or had failed Sinovimate. And so you may, Tess, you may see data on that down the road.

Thank you.

Thanks, Tess.

Your next question comes from the line of Andrew Tsai with Jefferies. Your line is now open.

Hey, good afternoon and congrats on the progress this quarter. This is Matt Barkas on for Andrew Tsai. Now you've provided more color today on the progress of your Phase 1 SADMAD studies in pain. Can you just remind us what additional data you plan on sharing later this year for those programs? And then at that time, will you be prepared to delineate which acute pain indications you'll be pursuing next for these studies as well? And then our understanding is that your XSEED started maybe six to eight months after ExNova 2. And with ExNova 2 data in the first half of next year, How should we be thinking about an interim look from XSEED if you have any color on the timing for that? Thanks.

Sure. I think, Matt, I've got them all. I'm happy to kind of walk through timelines and the pain stuff. Tucker, do you want to do the ExNova timelines? And then why don't I jump in on the data from the pain programs and the types of acute pain POC studies?

So, you know, we've said on the call and in the press releases that we'll have the Exnova 2 data in the first half of next year. We haven't provided any guidance yet on either Exnova 3, right, the second phase you're studying MDD. And I think that you asked about the EXCEED study in bipolar depression. And again, as you said, both of those started after Exnova 2, but we're still not far enough along the enrollment curve to provide an updated timeline for when those might read out. But they'll certainly be after, obviously, the first half readout for the MDD study Exnova 2.

Thanks, Tucker. And then on the pain stuff, yeah, so we're, as I mentioned in the first question, you know, we're getting close to completion of those phase one studies. Then we'll have the complete data package, and then we can really talk about what we provide publicly. You know, these are competitive targets, and so, you know, I think we may be, you know, balanced in terms of how much information we provide publicly, but I think we'll be able to at least walk you through kind of our decision process on why we believe We have enough exposure in the appropriate safety profile to move into a proof of concept study. The proof of concept studies are still being designed right now for both XCN 1120, the KV drug, as well as 1701, the NAV 1.7 drug. But these will be acute proof of concept studies, so things like a bunionectomy or an abdominoplasty study. We'll have the final trial designs for those in the coming months, and I think part of that rollout will be able to Talk about the specific indication in the acute pain proof of concept, but importantly, the trial design as well.

Appreciate it. Thanks.

Your next question comes from the line of Brian Scorny with Baird. Your line is now open.

Hey, good afternoon, guys. Thanks for taking the question. My question is on the anticipated phase two proof of concept and acute pain. How are you thinking about design right now? If we look at the path Vertex took, they went head to head with low dose Vicodin and placebo, but restricted rescue to ibuprofen.

The Latigo program, which was published the other week, also went against low dose Vicodin and placebo, but allowed use of Percocet as rescue and maybe because of Percocet's efficacy showed a pretty disparate result.

Do you see any better value in one versus the other design in terms of using an opioid as a rescue?

Or are you thinking about something completely different?

Thanks, Brian. I'm happy to start. And then, Chris, if you've got anything to add. So, Brian, we're not quite there yet, as I just kind of answered on the last question. I know you've been thinking about this a lot, and I've had conversations about just the right design. for a phase two proof of concept. I'll take it a step further. You're looking at both what active comparators as well as kind of rescue. We also have to think just about how many active dose arms of the experimental medicine as we kind of really understand dose range finding and identifying doses to move forward in the future clinical development. So there's a number of things that we kind of want to answer within that phase two proof of concept study. We're still in the design phase. I don't think that there's going to be anything in this study that's going to be unusual. So, you know, I think it would be reasonably standard. But as you said, a few different sponsors have taken slightly different approaches here. But I think we're only a few months away being able to kind of walk you through what the trial design is and why we've made certain decisions in the trial design. Chris, anything to add right now from your perspective?

I'll just say that we're following the field closely, and of course, the studies that have been done recently will serve as guides for what we do eventually. You know, the advantage of using the opiate as a rescue is that you can show data with opioid sparing, so we're looking at that, but it's still in the works, Brian.

Okay, that's helpful. Thank you.

Your next question comes from the line of Joseph Stone with TD Cohen. Your line is now open.

Hi there. Good afternoon. Thank you for taking my questions and congrats on all the progress. Maybe first on depression, can you remind us the powering assumptions on HAM-D for Ex-Nova 2 and maybe any changes in the baseline depression severity versus the patients that you were enrolling for Ex-Nova? And then for AZK, this adoption by general neurologist seems to be a unique, exciting opportunity. Can you go into a little bit more detail on when you expect general neurologists to start adopting the therapy and maybe specific education efforts you can do to make sure they have a good initial experience?

Thanks. Thanks, Joe. Okay, why don't we do... I'm happy to start just on the powering assumptions. And then, Chris, why don't we broaden out? I mean, Joe's question is just on the AMD entry criteria from phase two to phase three, but I think it might be helpful just to walk through a bunch of the changes that we've made from phase two to phase three, because I think we learned a lot in the ExNova study that we're applying into ExNova 2. And then, Darren, jump in on your thoughts on general neuros and both adoption, but also I think some of the profile of AZK that is really the feedback you're getting from the general neuro interaction. And I know you've done some ad boards on the general neuro side as well. But Joe, just to kick off on the HAMD17, so we're powered, appropriately powered for a phase three study. So think about that kind of as 90%, excuse me, for about a two, two and a half point separation in that range based on our Ronsheim, and I think we have really good powering in the study. You know, it's 450 subjects. Exnova 2 and Exnova 3 are the same, meaning they're designed exactly the same as monotherapy studies, but I think well-powered to see that separation between active and placebo. Chris, do you want to go through the Exnova to Exnova 2 changes?

Yeah, sure, happy to. So obviously one of the things that we changed is we're including a larger sample size so that the power is higher. We decreased the number of active treatment arms from two to one, which in general saves you about a point on the placebo response, so that's favorable. We increased the cutoff a little bit so that we're collecting a little bit more of a slightly more impaired population with more depressive symptoms in phase three relative to phase two. We're focusing on adherence by using an app that captures adherence and allows for real-time feedback for subjects who aren't adhering. And then just overall, we're scrutinizing patient randomization even closer in Phase 3 than we were in Phase 2 using the safer criteria and then keeping a real close eye on the data in real-time to make sure that there isn't anything unexpected happening. But yeah, we don't share baseline characteristics as the study's unfolding. As you know, every patient that's added changes that. So we'll share that once the study's complete.

Thanks, Chris. Joe, it's Darren.

Yeah, Joe, regarding the general neuro, yeah, we think it's a pretty exciting opportunity. If you look historically at the most successful anti-seizure medications, Keppra, Vempat, Those were really embraced by the general neurologist, and we spent a lot of time understanding, you know, that history, but also then where does the Z2 calendar fit in with its unique characteristics? And Joe, you know better than anyone, it's a novel mechanism. We have ease of use attributes, really stellar safety and efficacy profile. So we've talked to a lot of general neurologists about this, and as Ian highlighted, and other one-on-ones. And when you couple the efficacy safety along with our open label extension seizure freedom data, it really is a package that they're really compelled by. I think we have this opportunity to do that. We're doing a lot of work now to kind of targeting, understanding where we're going to have our focus at launch. And so as you noted, kind of how do we expedite that utilization? That's something we're tremendously or highly focused on. The other piece of it is also how do you use the expression, make it a good experience for them? I think this is where we're trying to be and thinking about really being a little bit disruptive or innovative here, because I think traditional anti-seizure medication launches have gone a certain distribution route, have not really assisted the general neurologist in different things like prior authorization and helping patients get through obtaining the therapy. And also on the patient side where they may show up at a retail pharmacy, for example, and really struggle there. So we're really evaluating a service that we can wrap around both the general neurologist and the patient to make that experience a good one out of the gate. And so we think that based on our research and discussions, Those have been some of the barriers that they've encountered and that we hope to overcome. Again, we still have a lot of work to do over the next several quarters, but I think that we're in a really good position to really bend the curve if we can with the general neurologist. Perfect. Thanks so much.

Thanks, Joe.

Your next question comes from the line of Brian Abrahams with RBC Capital Markets. Your line is now open.

Hi there. Thanks so much for taking my questions and congrats on the continued progress. Two for me. First, can you characterize your payer conversations and just the latest views on the potential pricing benchmarks for Rosetta Kalner and receptivity to potential premium pricing, just given all of its profile advantages? And then secondly, how might your commercial strategy be affected if there looks like there could be a KB7 focal onset seizure fast follower competitor emerging? Thanks.

I'm assuming you want me to take that one. Yeah, well, I have both of them.

Yeah, yeah, both of them. Maybe I can start on a little bit, Darren. I'll start on the competitive landscape, and then you can go into kind of the specific question from Brian on kind of a fast follower as well as on the payer stuff, because I know you guys have done a huge amount of work already. Yeah, Brian, you know, look, there's more than 20 anti-seizure medicines available. Patients do kind of cycle through drugs. We do see drugs. If you look at sodium channel inhibition, multiple drugs of the same mechanism. And as Darren just talked about in the last answer, you have a drug like Venpath, which is the same mechanism and did incredibly well. And there were attributes of that medicine that I think were really important, specifically with the general neurologists. I think where we are today is we've set an incredibly high bar. So obviously, we will be the first KB7 drug on the market. I think we have an incredible profile. And when you look at, you know, the four doses on label that we're talking to the agency about, you've got a clear dose response, you've got 10 and 15 milligrams that show separation, but quite frankly have a really benign safety profile, very similar to placebo, a little bit higher in dizziness at the 15 milligram dose, and then as you go up to 20 and 25 milligrams, You get the opportunity in that dose response to see even better efficacy and seizure reduction. So I think we've set an incredibly high bar, but we do see in the epilepsy space that this isn't a zero-sum game, that multiple molecules can be successful together, and even multiple molecules within the same mechanistic class. But I really like the setup for where we are right now. But Darren, happy for you to add your comments to that, and then specifically on the payer side.

No, I think you've covered it on the potential other mechanisms. So Brian, regarding payer and price, as I remind folks, by the time we're approved and commercializing, it'll be almost a decade since the last focal onset seizure medication was approved. And so regarding the payer audience, our initial discussions really anchor around re-educating them about A, focal seizures, and B, most importantly, the unmet medical need. And when we put the product profile in front of them, they're very impressed. You know, they understand the difficulty in managing these patients, all the anti-seizure medications that patients cycle through, and quite frankly, with Zetucalner and the new mechanism of action, are excited. And so I think from that perspective, and we'll continue that dialogue with them, As we get closer to launch. But I think it leads to the second part of your question is, okay, what's the value then that they perceive of this new anti-seizure medication? So we have kicked off our pricing work. It's still ongoing. I think that I would characterize it that if you look at where we are today, when we launch, the efficacy and safety that is that to counter provides meeting still a tremendous unmet medical need. We feel early days that there is the opportunity to ensure we get the value out of a statute calendar, while also, though, ensuring that patients can access the drug and physicians feel confident writing it. So it's one of these things where we'll assemble all that data, and when we ultimately launch it, we'll price it, but we'll have a good idea as we learn more as we continue our work.

Super helpful. Thanks so much. Thank you, Brian.

Your next question comes from the line of Miles Minter with William Blair. Your line is now open.

Hey, everyone. Thanks for taking the questions. Just a confirmatory one. In the pre-NDA meeting, did you confirm that you've got a sufficient amount of data for review in some of the lower doses that I think you're going to go on label with alongside the 25 milligram? That's the first one. And then the second one is actually on the EXCEED trial in bipolar. I know you're certainly getting patients in that have depressive episodes on type 1 and type 2. The type 1 patients, like there is always a reasonable chance that there may be some mania in the trial and you have a year open label extension. How are you dealing with a patient that may experience mania? Do they drop out of the trial? or do they go on to like rescue medications like cariprazine? Thanks very much.

Chris, do you, these are, I think, all for you. Do you want to start with the pre-NDA and just, you know, our plan for four doses on label? Now, obviously, Miles, as you know, I think that's kind of where the question's coming from is that we have, you know, 10 milligrams was in the actual study. Ronsheim, 15 in EXTOL 2, 20 in EXTOL, and then 25 in both. So we do have different safety exposures at different doses, but obviously a lot of open label data at these kind of higher doses that would provide that coverage. But Chris, provide your perspective there, and then if you can go into the bipolar in terms of the patients that cycle into mania as well.

Yeah, I mean, Milo, thanks for the question. A lot of this stuff will be dealt with in the review, but there were no concerns from the agency specifically about inadequate exposures in any way. The details of that will be discussed as we go through the review process. We think we have a pretty robust package for all these different doses that supports getting all four doses approved. I mean, the 10 milligram dose was studied in a double-blind study, and it did separate from active, and it showed a really quite remarkable tolerability profile similar to placebo. So, we think we're in pretty good shape as far as all the different doses go. You know, it remains to be seen. We'll have to see how the review goes. The other, you know, the other topic, exceed BPD, I mean, that's starting to get into details about the protocol, but I'll just share with you that in general, most protocols deal with mania by defining it with a certain cutoff on the YMRS, and then if that's met, patients are discontinued. So we're taking kind of a standard approach to that.

Makes sense. Thanks.

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

Hi, this is Kevin Strangon for Paul. Thanks for taking our questions. Just a quick one on MDD. You talked about potential differentiation for AZK and sort of the rationale for KB7 there. Can you just sort of bookend what specific efficacy signals you might be looking for or thresholds when that trial rates out next year? Thanks.

Sure, I'm happy to start. And Darren, maybe you can provide your perspective commercially as well. You know, Kevin, in terms of the work that we've done with prescribers is obviously there's a significant medical need here and they want different options for their patients. And so drugs that are approved, i.e. they've shown statistical data, In clinical development, well, we find it's less around a specific separation on Hamd17 or Madras or even kind of drug to drug, but much more about the profile of the patient and what therapy may be prescribed. And as we've talked a lot, the feedback that we're getting is where AZK could really stand apart is a novel mechanism. So most of these patients will have exposure. to standard SSRIs or SNRIs or atypicals, but it would be exposure to a novel mechanism. It would have the opportunity, what we've seen for this mechanism is to have an impact on anhedonia, which other mechanisms don't seem to have that impact. And so we are looking at as a key secondary endpoint in the study, looking at the SHAP scale. It does what we see both across the epilepsy program as well as the psychiatry program, is the rapid onset of effects. So you do see the separation, whether it be in depression or epilepsy, between active and placebo at week one. And so for, again, some of the mechanisms in depression that take some time to work, this would work more quickly. And then a different tolerability profile. We don't, you know, to date haven't seen any notable sexual dysfunction or weight gain. So I think it's the kind of that package that the prescribers are talking to when we do TPP and market research to get the feedback and less around a specific efficacy measure. But Darren, I'm happy for you to provide your perspective as well.

I think you went through all the kind of the attributes other than, you know, it is still a tremendous unmet need. You know, it's a big market, you know, roughly 22 million Americans, you know, a little bit more than half. are treated with some kind of pharmacotherapy, and one out of three of those are not adequately managed and would be available for a branded and particularly a novel mechanism, which again, most of these are SSRIs. So it's really, really a great opportunity. And there is a lot when we go talk to docs, do some market research, a lot of excitement around a new mechanism in this space.

That's helpful. Thank you.

Your next question comes from the line of David Huang with Dosha Bank. Your line is now open.

Hi there. Thanks so much for taking my questions. So I just wanted to ask about so maybe two questions. So for focal epilepsy for the adolescent population there, what additional work would be required to get a label and extend down to adolescent patients? To what extent is the PGTCS indication and label important for AZK's overall profile and what would that contribute to the overall revenue opportunity?

Thank you. Thanks, David. Chris, why don't we start with just the, you know, our pediatric plans. Maybe, I know David's question was around adolescence, but we could probably just expand to kind of the pediatric Develoment that we've negotiated with FDA and EMA. And then, Darren, can you address the patient population for PG-GCS and how you see that commercially?

Yeah, sure.

Chris, to start?

Yeah, sure. Thanks. So we have agreement on the pediatric plan for focal onset seizures with both FDA and EMA, as Ian has said. For those of you who aren't familiar with that, you're basically capturing data that pertains to safety and PK, not efficacy. And you sort of start at the older patients, the adolescents, and then work your way down to patients who are younger over time based upon being comfortable with the safety and the PK data. So we have all that agreed upon. That's exactly what we're intending to do. To get sort of the extrapolation for the label down to a younger age than 18, which is what the studies are currently studying, at least in focal onset seizures. Darren?

Yeah, so regarding focal and then generalized, just to step back, there's roughly 3 million folks with epilepsy in the U.S., about 1.8 out of focal, and then roughly almost another million have generalized seizures. And so From a development perspective, if you look at the most successful ASMs that I referenced earlier, focal is the entry, and then you follow on with a generalized. I think in the marketplace, you do get some use in the generalized, but I think our development plan fits nicely with, if you think about a Z2 calendar being a broad spectrum anti-seizure medication, having that supplemental label expansion will be quite helpful. Ronsheim, particularly down the road for general neurologists who want to treat their patients and want to have the comfort that it can cover a broad spectrum. So it's important. I know the development plan is going well. There's a lot of excitement for a Z2 calendar in this space, and it'll be very beneficial for us.

Thanks, David.

Your next question comes from the line of Ben Burnett with Wells Fargo. Your line is now open.

Great, thank you. One question on XTOL3, just as this is enrolling, and I think you've mentioned this is expanded to include Japanese patients. What are you seeing in terms of baseline characteristics, or what are you expecting in terms of baseline characteristics Any differences that we should expect relative to XTOL2? It really just asks me if the different geographies being included or associated with maybe different treatment paradigms. And of course, could that lead to differences in these characteristics and maybe, you know, a different effect on the drug?

Thanks, Ben. Chris, do you want me to start and then you can jump in as well? So, Ben, I wasn't sure if you were referring to Do we expect with the inclusion of Japanese subjects whether the baseline characteristics would change or just generally XTOL3 versus XTOL2? Was there something specific on the Japanese side you wanted to understand? No, more just generally. Okay. Yeah, I mean, as these studies, I'll start and then Chris can provide additional detail. You know, as these studies are ongoing, you know, we don't comment and we didn't on XTOL or XTOL2 on baseline characteristics as we go along. Similar, I think Chris answered this question as it relates to, you know, a different question earlier, is that these things are changing all the time. Each patient has, you know, has an impact on that. So we're not going to go into the specific details. As a reminder, EXTL-2 and EXTL-3, it's an identical protocol. So by that definition, we expect a similar patient population in both. Once we unblind the data and we're done, would they maybe be slightly different depending on the jurisdiction and different sites? Yeah, they might be. But I think generally the expectation is that the patient baseline characteristics would be somewhat similar. Ronsheim, and many more. Thank you.

Major differences in sort of background medication, you know, with Xcopri and other medications that can maybe influence the drug profile?

Well, from phase two to phase three, the concomitant use of Sonobimate went up because its usage went up within the medical community.

But XTOL3 and XTOL2 have been run, you know, in parallel.

So I don't predict any significant differences between those studies.

Okay. Thank you. Thanks, Ben.

That concludes our question and answer session. I will now turn the conference back over to Mr. Ian Mortimer for closing remarks.

Thanks, operator, and thanks to everyone for joining us today. If we didn't get a chance to get to your question during the allotted time, happy to reach out directly and connect, and we look forward to continuing to provide updates as we advance our programs and deliver on important milestones through the remainder of the year. So operator, we can now end the call.

Ladies and gentlemen, that concludes today's call. Thank you all for joining you may now disconnect.