Good day, ladies and gentlemen, and welcome to the Q3 2018 Xenon Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Ms. Jodi Regts. Ma'am, you may begin.

Thanks, Daniel. Good afternoon. Thank you for joining us on our call and webcast to discuss our financial and operating results for our third quarter ended September 30, 2018. Joining me on today's call are Dr. Simon Pimstone, Xenon's Chief Executive Officer; and Ian Mortimer, Xenon's President and Chief Financial Officer. Following this introduction, Simon will provide perspective on Xenon's progress, and then Ian will review our financial results. 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 cash to fund operations into 2021; the timing of IND or IND equivalent submissions with regulatory agencies; the initiation of future clinical trials; the efficacy of our clinical trial designs and anticipated enrollment; the potential efficacy, safety profile, future development plans, addressable market, regulatory success and commercial potential of our and our collaborators' product candidates; the timing of and results from ongoing clinical trials and preclinical development activities; our ability to achieve certain milestones, in both our proprietary and partner development programs; the plans of our collaboration partners and their interactions with regulatory agencies; the results of our research and development efforts; the status and timing of the potential addition of new programs to our pipeline and related development activities; the timing of our public presentation and potential publication in future clinical data; and the potential to advance XEN496 into a Phase III clinical trial and XEN007 into a Phase II clinical trial. 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 statement. Today's press release summarizing our third quarter results and the accompanying quarterly report on Form 10-Q is available under the Investors section of our website at www.xenon-pharma.com and filed with the SEC and on SEDAR. Now I'd like to turn the call over to Simon.

Thank you, Jodi, and good afternoon, everyone, and welcome to the Xenon call. This past quarter marked a number of achievements. Notably, we presented positive data from our XEN1101 Phase Ib transcranial magnetic stimulation, or TMS, pharmacodynamic study and provided an update on our XEN901 program at our European Congress on epileptology. We announced the pipeline addition of XEN496, which is a potassium channel modulator for the treatment of KCNQ2 epilepsy that we are developing and expect to initiate a Phase III clinical trial in mid-2019. And we significantly strengthened our balance sheet and anticipate having sufficient cash to fund operations into 2021. With our continued progress and growing momentum, we believe we're establishing one of the most compelling neurology pipelines in clinical development, with a number of programs that we expect to be mid- to late-stage clinical development in 2019. On our call today, I'll begin by highlighting the key takeaways regarding the newest addition to our neurology pipeline, XEN496. I'll then provide updates on the rest of our neurology pipeline before turning things over to Ian to provide a financial overview. In early September, we unveiled our plans for a Kv7 potassium channel modulator called XEN496, with the active ingredient ezogabine, otherwise referred to as retigabine. We believe XEN496 represents a perfect fit within our portfolio of ion channel neurology focused therapeutics. And we're excited that XEN496 provides us with the opportunity to move rapidly into late-stage development since we anticipate a Phase III start in approximately mid-2019. We intend to develop XEN496 using a precision medicine approach to treat a rare and severe pediatric epilepsy called KCNQ2 epileptic encephalopathy, also known as EIEE7 or KCNQ2-EE. By way of background, ezogabine is the only FDA-approved antiepileptic drug, or AED, with a mechanism of action that potentiates Kv7-mediated potassium…

Thanks, Simon. I'll start by providing an overview of our cash position and cash runway guidance, and then I'll provide a few highlights of the financial statements. In September, we significantly strengthened our balance sheet through the successful completion of an underwritten public offering of 4.5 million common shares at the public offering price of $14 per common share, providing us with proceeds of $59.2 million net of underwriting discounts and commissions, but before offering expenses. I'm pleased to report that this offering also resulted in the addition of new institutional shareholders to continue to support our strategic goals. Cash and cash equivalents and marketable securities as of September 30, 2018 were $127.1 million and this compares to $43.7 million as of December 31, 2017. Based on our current assumptions, and this includes fully supporting the planned clinical development of the XEN496, XEN1101, XEN901 and XEN007, we anticipate having sufficient cash to fund operations into 2021. And this excludes any revenue generated from either existing partnerships or potential new partnering arrangements. I won't spend any time going over the details of R&D and G&A expenses as they are included in both the press release and our 10-Q filing. However, I'll mention a onetime transaction that occurred during the quarter. Under other operating expenses in our income statement is the onetime $6 million payment to Valeant or Bausch Health. This payment was a buyout of all future milestones and royalties owed to Valeant with respect to our XEN1101 program. With this transaction, we now have a nominal future economics owed on our proprietary clinical pipeline of 4 assets. And this gives us tremendous flexibility as we develop these programs. So in summary, with the support of a strong balance sheet and foundation of leading expertise in ion channel drug development, we believe we have built one of the most exciting and innovative neurology pipelines currently in clinical development in the industry. We have built a balanced portfolio of assets that include both, new chemical entities, or NCEs, as well as drugs previously approved to address high unmet medical needs where we believe these products are well suited. We are particularly excited by the potential to leverage the unique mechanisms of action of the products we have in development and where appropriate, utilize a precision medicine approach to address extremely rare and difficult-to-treat pediatric epilepsies. We look forward to continuing to provide you updates on our progress. Operator, we can now open the call up for questions.

[Operator Instructions] Our first question comes from Stephen Willey with Stifel. Your line is now open.

Yes, good afternoon, guys. Thanks for taking the question. And congratulations on the progress. Maybe for Simon, just wondering if you can maybe speak to some of the inputs that are driving the decision-making process here behind the initial pursuit of Phase II 901 development in either adult or pediatric patients? Maybe if you can just kind of speak to some of the things that need to happen there in order to solidify decision as to which patient population you choose to proceed first?

Yes, thanks, Steve. Ultimately, I think we would like to test this drug in both adult indications as well as pediatrics. Obvious, pediatric indication being patients with mutations in the SCN8A gene, gain-of-function mutations in the channel that 901 blocks. The critical question for the FDA, which we hope can be resolved in the near term over the coming months, is, can this be more of a parallel activity or do we need to run a traditional step down. As you know, Steve, with previously approved AEDs, drugs have got approved and then were step down into adolescents and pediatrics in some cases, but not typically until the drug is achieved safety in a large number of adults with the disease. This is a slightly different issue, which we are looking to tackle, which is having a drug that's exquisitely well suited and in fact developed for precision medicine approach where kids who have mutations in this target, we think, would potentially preferentially benefit from a drug that directly modulates the pathology of the epilepsy. And so really the discussions coming up with the FDA will be around what the requirements would need to be to allow us to enter into the pediatric population. Of course, in our favor to date is the fact that -- and we've disclosed this and presented this, we've shown very good tolerability preclinically, both at the non-GLP and in the GLP setting. And we've disclosed publicly also before based on interim data presented at previous meetings that tolerability in adults in the Phase I volunteer study looks extremely good as well. And so really, we need to get clarity as to what else the FDA would want to see before we could expect to take 901 into a pediatric setting. Our goal, of course, is to do it in a way that we believe is safe, but to do it in a way that we think we can test the drug in this clinical setting, particularly the pediatric setting as soon as we believe we've concluded the necessary safety steps. And I think that's really the issue at hand. We intend to test the drug in adults. We haven't landed on an indication. Of course, sodium channel blockers are used first-line in focal epilepsy today. That maybe an indication. We'll -- I think, we'll come out with the final plans, I think, with FDA interactions having been held. So at least we know what the steps are to test the drug in the pediatric setting. Ian, did you want to add anything?

The only thing I would add is maybe just a little bit on timing. So we're -- we expect to have some feedback from regulators over the next couple of months. So it will be early in 2019 that, I think, we'll guide in terms of our timing for the different programs in pediatric and adults. Obviously, on the adult side, we can probably initiate a study more quickly once the Phase I is wrapped up, which will happen in the near term. On the pediatric side, we've done some work on the juvenile talks to start preparing for that, but more formal juvenile talks work would happen in the first half of 2019. So any pediatric development could probably start in the second half of 2019.

Got it. And with respect to a Phase II program in adult patients. Again, like you said Simon, this is a sodium channel blocker and these drugs are primarily used in frontline therapy. Would you be able to pursue a frontline patient population within the setting of Phase II development?

Yes, we don't know that, Steve. This is, obviously, discussions that are currently underway as to what a Phase II would look like if it were in focal epilepsy. As you know, most of these studies are add-on adjunctive. And I think, we would go into the initial thinking that, that would be the requirement at least in the initial Phase II. And there are some pros and cons in terms of that. I think it's a little bit too premature at this point to guide us to what that trial may look like. I think focal epilepsy would clearly make sense. I think the first IVa is probably going to be a smaller trial, more of a proof-of-concept IIa rather than a multi-dose ranging IIb study with larger numbers to support a pivotal program, just given the novelty of the approach. And of course, we'd have to think through with respect to the protocol the whole notion of whether patients have been on a sodium channel blocker or not. If they are on the sodium channel blocker, what does that mean? If they have failed a sodium channel blocker, what does that mean? And these discussions are currently underway amongst the group with our KOL panel.

Got it. And then just with respect to the 901 update at AES. Will that update include the subset of TMS data that you're generating?

We hope so. That is a work that's being completed. We hope that the analysis will be completed over the next few weeks. We have a call with our investigator actually in the next few days just to see where that's at. But we expect that we should at least have some preliminary data on TMS for 901 as well.

Our next question comes from Maury Raycroft with Jefferies. Your line is now open.

Good afternoon and congrats on the progress. First question is on the new 496 formulation. Just wondering, if you'll have to demonstrate comparability for that before starting the Phase III in mid-2019?

Yes, that's a good question, Maury. We don't know the answer to that in terms of will we have to do a bioequivalent study in humans. I think what we'll have to show at minimum is that the new formulation essentially performs similar to the prior form in both in vitro and in vivo models. And so looking at in vitro markers, like dissolution, kinetics and then looking at PK across species, I think, that will be important to show the new formulation behaves similarly to what's been reported previously. We -- based on that, if we do show very similar performance, our hope is, and we will not have to do a human bio-e study. If clearly the performance is different, we will need to do a bio-e study, we'll want to do a bio-e study. But that's clearly going to be a discussion point for the FDA. Our going in approach would be to do what we can to ensure similarity in both in vitro and in vivo models. And based on that, I think we can assume likely similar performance in humans for sure. If the performance is different across species or in vitro, then a bio-e in adult volunteers will likely be required. The current time line estimates around mid-2019 does not assume a bioequivalent study is being done. So if one were needed to be done, that would add a few months to the time line.

Okay. Okay. Great. And then for 007, are you leaning more toward running the Phase II on your own or with the physician sponsors? Or are you planning on both?

I think the initial thinking, Maury, at this point; again, we plan on giving a pretty comprehensive update on the program in the New Year for a variety of reasons. But the initial thinking is to run a few investigator-led studies across a number of different indications. I mean, one of the interesting challenges with this drug, it has been used quite extensively in a variety of neurological disorders with actually good effect. And so one of the challenges, I think, we have is where to focus development and why it taken us the last 6 to 12 months has really been as we work through this, both from a commercial side and a protection strategy as well as doability what are the right indications. And so our current leaning just strategically at a high level is to test the drug across more than one indication next year. These will almost certainly be investigator-led settings outside of the U.S. And based on that data advance the development plan through an IND to follow, which could potentially be a Phase II/III program. I think the investigator-led approach for us next year may also allow us depending on the ultimate final design, but we may see that there will be some open-label opportunities, and we can start to see some data with this drug, in fact, in 2019 potentially. We do plan in the New Year to have a more fulsome disclosure on the program plans. We are just waiting on some discussions that are currently underway at different levels.

Got it. That's helpful. And I do have a follow-up on that one just based on potential strategy to an IP, but I'm guessing that could potentially become in early '19 as well?

Yes, I think so. I mean, look at a high level, Maury, the composition of matter, obviously, is not what's going to protect this and there are multiple other ways. And I'm speaking very generically to provide protection to a molecule like this in terms of both orphan strategies, but also in enhancing intellectual property. And we're certainly aggressively pursuing enhancement of IP in addition to potential reliance on an orphan-exclusivity strategy. We'd like to have both to cover the product if possible.

Got it. Okay. And last quick question just on the AES conference. One reaping comment on whether we should expect when data cutting the AES abstract? And when that cutoff would be? And will we see more mature data at the conference?

Yes, you'll see -- so the abstracts for AES were submitted in the summer months. And so I would consider them more kind of placeholder abstract. So you'll definitely see additional data. So we have submitted 6 abstracts to AES. So you'll see 6 posters there, but you will see data that's in addition to what's in the abstract.

And I'm not showing any further questions at this time. I would now like to turn the call back over to Jodi Regts for any closing remarks.

Thanks for joining us today. Operator, we will now end the call.