Good day, ladies and gentlemen, and welcome to the Xenon Pharmaceuticals Fiscal Year 2015 Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this conference may be recorded. I would now like to introduce your host for today's conference, Ms. Jodi Regts, Senior Director of Corporate Affairs. Ms. Regts, you may begin.

Thanks, Andrea. Good afternoon. Thank you for joining us on our call and webcast to discuss our financial and operating results for 2015. Joining me on today's call is Dr. Simon Pimstone, Xenon's President and Chief Executive Officer; and Ian Mortimer, Xenon's Chief Financial Officer and Chief Operating Officer. Following this introduction, Simon will provide perspective on Xenon's progress, and then Ian will review our financial results for the year ended December 31, 2015. After that, we will open up the call to your questions. Please be advised that during this call we will make a number of statements that are forward-looking, including statements about the sufficiency of our capital position to execute on our business objectives and our ability to operate in a capital efficient manner, the timing of IND or IND equivalent submissions with regulatory agencies, the initiation of future clinical trials, potential efficacy, future development plans and commercial potential of our product candidates, the timing of and results from ongoing clinical trials and preclinical development activities, the commercial launch of Glybera in the European Union, our achievement of certain milestones under our collaboration agreements, the plans of our collaboration partners and their interactions with regulatory agencies, the results of research and development efforts, and the status and timing of additional product candidates and related development activities. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control including the risks and uncertainties described from time-to-time in our SEC filings. Our results may differ materially from those projected on today's call. We undertake no obligation to publicly update any forward-looking statements. Today's press release summarizing our 2015 results and the accompanying annual report on Form 10-K will be made available under the Investor Section of our Web site at www.xenon-pharma.com. Now, I'd like to turn the call over to Simon.

Thanks very much, Jodi, and good afternoon everyone. Thank you all for joining Xenon on our conference call and our webcast today. We're very pleased with our progress in 2015. We executed well on our pipeline partnering and financial management strategies, while continuing to operate in a capital-efficient manner in order to achieve our near-term goals. We believe we are very well-positioned to build on our accomplishments going forward, and anticipate multiple milestone opportunities in 2016. These include data readouts and pipeline progress to fuel the growth and the expansion of our development portfolio. We believe that our business model of leveraging partnerships to participate in large market indications such as pain, combined with our focus on rare or orphan indications in our proprietary programs such as severe childhood epilepsy disorders enables us to pursue multiple diverse therapeutic and commercial opportunities. In this way, we intend to continue to grow and mature our company to expand our pipeline and to bring novel treatments to patients. To review our accomplishments in 2015, I'll start with our proprietary pipeline. We made very good progress with our lead proprietary development program, XEN801, a promising potential treatment for patients with moderate-to-severe acne. At the end of 2015, we completed the Phase 1 study. In February of this year, we achieved a major milestone by initiating the Phase 2 trial. By brief way of background, XEN801 is a novel, topically-administered selective small-molecule inhibitor of the enzyme known as stearoyl-Co-A desaturase-1 or SCD1, an enzyme involved in lipid synthesis that is expressed in sebaceous glands in the skin. We believe that XEN801 can have an impact on acne via two very distinct mechanisms. Firstly, by reducing monounsaturated fatty acids to reduce the production of sebum lipids, these are the lipids produced by sebaceous glands. And secondly,…

Thank you, Simon. For the year ended December 31, 2015, Xenon reported total revenue of $15.6 million compared to $28.4 million for the same period in 2014. Revenue in both periods was primarily derived from Xenon's collaboration agreement with Teva and Genentech. The decrease of $12.8 million was primarily attributable to a $7.9 million milestone payment recognized from Genentech in 2014 and revenue recognized relating to the upfront payment from the December 2011 collaborative development in license agreement with Genentech, which was fully recognized by December 2014. The remaining decrease was due to less full time equivalent funding from Genentech and Teva, and the change in foreign exchange rate between the U.S. and Canadian dollar. As previously announced, the first patient treated with Glybera as a commercially available gene therapy was announced by uniQure in November 2015 and enabled by its commercialization partner in the EU, Chiesi. Glybera is the first product whose active ingredient was derived from our platform to receive commercial approval, and is currently the only gene therapy product to receive approval in Europe. Glybera is specifically indicated for the treatment of a subset of adult patients diagnosed with the orphan lipid disorder Lipoprotein Lipase Deficiency, or LPLD, confirmed by genetic testing and suffering from severe or multiple pancreatitis attack despite dietary fat restriction. While we are eligible to receive royalties from the sales of Glybera under our license agreement with uniQure, we do not expect this royalty revenue to be significant in the near-term. Research and development expenses for the year ended December 31, 2015 were $15.2 million compared to $11.8 million for the same period in 2014. The increase of $3.4 million was primarily attributable to an increase in spending on our XEN801 program in preparation for clinical development which began in September 2015, and…

Thank you. [Operator Instructions] Our first question comes from the line of John Newman with Canaccord. Your line is open.

Hi, guys, thanks for taking my question. The first question I had was, I wondered if you could talk a bit about the endpoints that you'd be looking at in the Phase 2 acne study that's currently ongoing. And also, I wondered if we might expect a little bit more detail from Genentech this year regarding the indications that they're looking at for the Nav1.7 blockers. Thanks.

Thanks, John. It's Simon. Thanks for joining the call and for the question. So in terms of the endpoints for the acne trial, just to give you a brief overview, patients will apply the active ingredient or placebo topically to their face for 12 weeks. There will be a four-week follow-up. The primary efficacy endpoint, John, is the percent change in total lesion counts. This is the inflammatory and non-inflammatory lesion counts, comparing baseline to week-12. Secondary endpoints include the percent change in inflammatory and non-inflammatory lesions at different time points throughout the 12-week study, as well as a number of investigators' global assessment measures. And as mentioned earlier, we anticipate top line results towards the end of 2016, in the fourth quarter. With respect to the second question on Genentech, we do expect that in the latter part of the year Genentech certainly will look to communicate around their plans for the Phase 2 program. We will obviously update as we are able to, and as I think I've mentioned to you before, early in January, this was the first time at least Genentech gave us the ability to communicate around their intent to move the program into Phase 2. They're a very conservative company in how they guide, and so we felt this was a very good -- a good message. And so we feel quite confident that as the year progresses we will be able to communicate more than we have been able to. Genentech is obviously working hard in developing those plans around indication, around timelines, and we expect that we will be able to communicate that, John. And the timeline, we don't have precisely on when that will be, but certainly expect that that will be this year, before the study begins.

Great, thank you.

Okay.

Thank you. [Operator Instructions] Our next question comes from the line of Hugo Ong with Jefferies. Your line is open.

Hey, guys. Thanks for taking my questions. Just looking ahead for acne, are you guys likely to start a Phase 2b trial before moving into Phase 3? And if you are, maybe if you could tell us what that trial might look like?

Yes, Hugo, thank you. It's Simon. Thanks for joining as well. It's an assumption, I think, for now. And I say an assumption because we haven't had the regulatory interaction on this, that a Phase 2b is likely to be required, primarily because I think the agency is going to require some dose range finding prior to a pivotal trial. If you follow Dermira, they have done something quite similar and currently actually in the Phase 2b trial with their ACC inhibitor. In terms of the -- so we don't know that definitively that we'll require one, but I think we will assume for now that we will -- clearly, we'll have interactions with the agency to discuss that point. I think in terms of what the study will look like, very similar to what -- we expect very similar to what this Phase 2 study looks like, Hugo. The FDA guidance for acne studies is actually extremely clear. We are following that guidance in the Phase 2 trial. So I think what you might expect is a very similar study design in terms of endpoints, in terms of duration of dosing. Clearly, what will differ is the size of the study, number of patients recruited, and number of doses selected. So I don't see a significant deviation from the existing study design including the endpoints in the Phase 2b trial.

Okay, got it. And on your Nav1.6 program, just conceptually like how do you feel inhibiting Nav1.6 compares to other approaches towards Dravet Syndrome, such as cannabinoids?

Yes. I can't really speak to the cannabinoids in the sense of how we will believe the Cannabidiol as a drug is working. We believe Nav1.6 given it's expression in the neuroexcitatory pathways in the brain as a predominant sodium channel in those neuroexcitatory pathways, given Nav1.6 gain a function in humans results in epilepsy, given that Nav1.6 loss of function when introduced into a Dravet mouse correct epilepsy, we believe that Nav1.6 is very, very good, both animal and human genetic validation as a target. So we understand the mechanism. We understand where this target is expressed. We understand its role in neuroexcitation, and we understand from data we've generated and others that the target when altered can have a major impact on seizure phenotypes. We think this is a profound evidence of validation for this target and for a Nav1.6 inhibitor for the treatment of epilepsies. Now, how extensive that applies to within the world of intractable childhood epilepsy, of course, we don't know today, but we don't think there will be numerous opportunities to develop the product across different indications within the intractable childhood epilepsies. Dravet is an interesting opportunity. We've talked a bit that historically. We still believe that. And as we have just outlined briefly in this update, what we're getting particularly interested in now as well are these children who have severe childhood epilepsy that's actually caused by gain of function in this channel, as another potential development opportunity and commercial opportunity for the product. So I would say we believe this is a very, very well-understood target relative to, I think, the mode of action of the Cannabidiol, for example. And I think the genetic validation of this target in both animals and humans is profound.

Got it. Great. Thanks for taking my question.

Pleasure.

Thank you. And I am seeing no further questions at this time. I would now like to turn the call back over to Jodi for any closing remarks.

Thanks everyone for joining us today. We look forward to keeping you informed of our progress throughout the year. Operator, we will now end the call.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may now disconnect. Everyone have a great day.