Xenon Pharmaceuticals Inc. (XENE) Q3 2019 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by and welcome to the Q3 2019 Xenon Pharmaceuticals Inc Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Ms. Jodi Regts. Ma'am you may begin.

Thank you. Good afternoon. Thank you for joining us on our call and webcast to discuss our financial and operating results from the third quarter of 2019. 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 give an overview of Xenon's clinical programs, 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 data. Today's press release summarizing our third quarter 2019 results and the accompanying quarterly report on Form 10-Q will be made available under the Investors section of our website at www.xenon-pharma.com and filed with the SEC on SEDAR. I'd now like to turn the call over to Simon.

Thank you, Jodi, and good afternoon, everyone. Today I'll provide an update on each of our clinical stage programs including XEN496, XEN1101, XEN901 and XEN007. And I'll highlight some of the important milestone events anticipated this year. After Ian's financial commentary and a recap of our recent agreement reflection, we'll open the call for questions. So I'll start with XEN496, a Kv7 potassium channel modulator we're developing as a treatment for a rare pediatric neuro developmental disorder called KCNQ2 developmental and epileptic encephalopathy, otherwise known as KCNQ2-DEE, sometimes referred to as EIEE7. Ezogabine, which is the active ingredient in XEN496 was previously approved by the FDA as an adjuvant treatment for adult partial-onset seizures that was withdrawn from the market for commercial reasons in 2017. There's a strong genetic rationale to suggest that Ezogabine may be efficacious as a treatment for KCNQ2-DEE. This is further supported by non-controlled clinical studies, as well as anecdotal, parental and physician feedback, suggesting that XEN-496 may be well tolerated and reduce seizure burden with potential to improve developmental and cognition or development and cognition in this rare pediatric population. We recently conducted a survey of patients and caregivers in the KCNQ2-DEE community. And the feedback continues to support our rationale for developing XEN496 for this rare pediatric developmental epilepsy disorder. We'll be presenting details on our survey work at the upcoming annual meeting of the American Epilepsy Society or AES in early December. We obtained orphan drug designation from the FDA for XEN496 as a treatment for KCNQ2-DEE. In response to our pre-IND briefing package that included our proposal to study XEN496 in infants and children with KCNQ2-DEE, the FDA supported our proposed safety monitoring plans, including long-term follow up to monitor potential side effects and indicated that a single, small pivotal trial could be sufficient, provided we see substantial evidence of effectiveness in KCNQ2-DEE. The key hurdle to overcome was developing a formulation of XEN496 that would be suitable for administration to children including to infants. The original hard coated tablet was difficult to cut precisely thereby making accurate dosing a challenge. And in addition, the original tablets were unstable in solution when compounded often turning blue in color. We have now completed developments of a pediatric friendly formulation to advance into clinical testing. This has been a considerable amount of work this year, and we are very pleased with the attributes of the final chosen drug product. The XEN496 final drug product is a granule formulation that will be packaged as sprinkle capsules, giving parents or caregivers the ability to disperse the granules into the chosen semi solid or liquid food carrier. The in vitro and in vivo testing done to date demonstrates that XEN496 acts as an immediate release drug and has similar pharmacokinetics to what was observed with Ezogabine tablets. These results provide a high degree of confidence to advance this final formulation into clinical development and long-term stability studies, which are now underway. Our planned PK study in healthy adult subjects is being conducted in order to show that XEN496 is providing adequate drug exposure in humans. All subjects are expected to be dosed by the end of this year. And we anticipate that this human PK data will confirm what we have observed in the in vitro and in vivo work completed earlier this year. Based on the anticipated timing of data from stability studies ongoing for XEN496 and based on the anticipated timing of the PK study data in adult volunteers, we now expect to file an investigational new drug or IND application in the first quarter of 2020 in order to initiate a Phase III clinical trial in KCNQ2-DEE. We believe given our precision medicine approach, as well as our planned administration in the very young XEN496 in its new pediatric formulation offers children with KCNQ2-DEE, a promising chance of seizure control, as well as a transit disease modification, something not yet observed with any anti-seizure medication. As mentioned, the data recently obtained on the patient experience with Ezogabine from our KCNQ2-DEE patient survey is highly supportive of this approach, and will be presented at AES in early December. We look forward to working with the FDA and potentially other regulatory authorities on advancing XZN496 into an IND filing in the first quarter of 2020 to support a pivotal trial. Next up in our pipeline is XEN1101. The differentiated next generation KV7 potassium channel modulator being developed for the treatment of adult focal epilepsy and potentially other neurological disorders. Patient enrollment for our XEN1101 Phase IIb clinical trial is currently underway in the US, Canada and Europe. The trial is designed as a randomized, double-blind, placebo controlled multicenter study to evaluate the clinical efficacy, safety and tolerability of XEN1101 administered as adjunctive treatments in approximately 300 adult patients with focal epilepsy. The primary endpoint in this trial is the median percent change in monthly focal seizure frequency from baseline compared to treatment period of active versus placebo. To date, feedback from sites is positive, with investigators supportive of the KV7 mechanism of action in epilepsy. If approved XEN1101 could represent an only drug in class. We recently completed long-term six to nine months toxicology studies to support the planned 12 months open label extension for patients enrolling in the Phase IIb clinical trial. The long-term toxicology studies offered no new findings and support the ongoing advancement of XEN1101 into the open label stage of the trial. As previously guided depending on the rates of enrollment top-line results are anticipated in the second half of 2020. The third product in our portfolio of epilepsy programs is XEN901, a potent, highly selective Nav1.6 sodium channel inhibitor being developed for the treatment of epilepsy. The Phase I clinical trial was completed to evaluate XEN901s safety, tolerability and PK in both single ascending and multiple ascending dose cohorts of healthy adult subjects and included a pilot TMS pharmacodynamic read-out. As with XEN1101, the observe changes in TMS-EMG and TMS-EEG parameters suggest activity of XEM901 and the target CNS tissue. The FDA provided feedback on the requirements to support advancing XEN901 directly into a pediatric clinical trial, examining its efficacy and pediatric patients with SCN8A developmental and epileptic encephalopathy, otherwise known as SCN8A-DEE. As with XEN496, we developed a pediatric friendly granular formulation of XEN901 with good in vitro and in vivo characteristics. We also recently completed juvenile toxicology studies to support pediatric development activities. A PK study testing, the novel pediatric formulation is underway in healthy adult volunteers. Based on the anticipated timing of data from stability studies ongoing for XEM901 and final results of PK study data, we anticipate filing an IND or IND-equivalent submission in the first quarter of 2020 in order to start a proposed Phase II or III clinical trial in SCN8A-DEE patients. We also continue to evaluate plans to potentially advanced XEN901 into an adult study in patients with focal epilepsy. We continue to support initiatives that may help us in our novel product development and help patients with three forms of epilepsy, such as SCN8A-DEE and KCNQ2-DEE and on a last call, I briefly summarized a webinar that was hosted by the KCNQ2 cure alliance for patients and families within the KCNQ2 community. Similarly, we recently participated in an educational webinar hosted by a patient advocacy group called the Cute Syndrome Foundation, which is focused on raising awareness of SCN8a related epilepsy and supporting families affected by this disorder. Joining host to Hillary Savoie of the Cute Syndrome was Dr. John Schreiber, a well-known Neurologist and Assistant Professor of Neurology and Pediatrics at George Washington University, as well as Dr. Michael Hammer from the University of Arizona, who is creating an SCN8A registry to make available important information about the clinical features, causes and treatments of SCN8A epileptic encephalopathy to families and doctors and researchers. During the webinar, we delivered a status update on XEN901 program and discussed the importance of a brief Xenon sponsored patient survey. We encourage caregivers to participate in the survey, since we know from experience with the previously KCNQ2 survey that this data could be extremely useful to inform the design of a pediatric clinical trial for a SCN8A-DEE. We will present some of the SCN8A survey data at the upcoming AES meeting in Baltimore in early December. Just briefly I'd like to highlight that we continue to evaluate selective NAV1.6 compounds and Nav1.2/1.6 dual acting compounds for development behind the XEN901. And we also expect to highlight some of this exciting and novel preclinical work in poster sessions at the upcoming AES meeting in early December. The fourth clinical stage product in our neurology pipeline is XEN007 with the active ingredient flunarizine. XEN007 is a CNS-acting calcium channel modulator that modulates CAV2.1 and T-type calcium channels. Other reported mechanisms include dopamine, histamine and serotonin inhibition. Available in certain countries outside of the United States flunarizine has been reported to have clinical benefit in treating migraine and other neurological disorders. The FDA has granted Xenon the rare pediatric disease designation for XEM007 as a treatment of alternating hemiplegia of childhood or AHC, and previously granted Xenon orphan drug designation for XEN007 as a treatment of both AHC and hemiplegic migraine. Xenon has entered into key licensing and manufacturing agreements to support the advanced clinical development of XEN007 with a number of orphan pediatric neurological conditions and development pathways under consideration. During our analysis of potential neurological indications, we identified childhood absence epilepsy or CAE as a potential indication for XEN007. In CAE absence seizures are characterized by an abrupt impairment of awareness with arrest in behavior, staring, eyelid flattering, and automatism is associated with generalized 3 Hertz spike wave discharges on electroencephalogram EEG. A child may have one or many sometimes up to 100 absence seizures a day and have problems with attention and learning. Flunarizine has demonstrated efficacy and preclinical models of absence seizures and flunarizine has been shown to be well tolerated clinically. Flunarizine has significantly reduced the number and duration of spike wave discharges on EEG in these models as monotherapy, and when combined with valproic acid or ethosuximide significantly reduced the spike wave discharge to EEGs more than any drug alone. We are delighted to announce today that a physician led Phase II proof of concept study was recently initiated in Canada to examine the potential clinical efficacy, safety and tolerability of XEN007 as an adjunctive treatment and pediatric patients diagnosed with treatment resistant childhood absence epilepsy. We expect that the study will enroll approximately 20 patients with CAE in an open label manner of the failing standard of care because of lack of efficacy or because of adverse events. To provide a bit more background on CAE, approximately 10% of seizures in children with epilepsy are typical absence seizures, age of onset ranges generally from three to 13 years with a peek at six to seven years. Absence seizures can have a significant impact on quality of life. Episodes of unconsciousness may occur at anytime and usually without warning. Affected children need to take precautions to prevent injury during absence periods, and should refrain from activities that would put them at risk of seizures occurred. Often school staff members are the first to notice the recurrent episodes of absence seizures, and treatment is generally initiated because of the adverse impacts on learning. Of the estimated 40,000 to 50,000 CAE patients in the US, approximately 45% are considered treatment failures, defined by failures due to the tolerability or onset of generalized tonic-clonic seizures or the persistence of absence seizures. Results from this Phase II investigator led proof of concept study are expected in 2020. We are excited about the potential for XZN007 in childhood absence epilepsy, and believe this could potentially be a very interesting indication for future development, depending upon the results from the current open label proof of concept Phase II trial underway. So to briefly summarize the highlights from today's update, we continue to make strong progress in advancing our portfolio of neurology focused candidates. Patient enrollment is ongoing across sites in the US, Canada and Europe for our XEN1101 Phase IIb clinical trial in adult focal epilepsy with top line results expected in the second half of 2020. We have completed development of pediatric specific formulations for both our XEN496 and XEN901 programs. And we're currently conducting pharmacokinetics studies in healthy adult volunteers to support the anticipated pediatric clinical trials in both KCNQ2 and SCN8A related developmental and epileptic encephalopathies with IND of IND-equivalent filings expected in 2020. And we are excited to announce the initiation of the first Phase II trial for XEN007 with top line data expected in 2020. We have numerous activities and scientific posters planned at the upcoming AES meeting in Baltimore. And we look forward to presenting these in the near term. We're going into 2020 in an excellent position. We look forward to the continued advancement of our programs into mid and late stage development. Now I'll turn the call over to Ian, who will briefly recap our financial position and provide some summary commentary before opening up the call to your questions. Ian?

Thanks, Simon and good afternoon. The specific details within our financial statements are covered in today's press release and our 10-Q filing. So I'll provide an overview and conclude with a summary of upcoming milestones. Before I get into the financial update, I'd like to briefly summarize a recent partnering activity this past quarter when we completed a transaction with Flexion Therapeutics, giving them the global rights to develop and commercialize XEN402 NAV 1.7 inhibitor. Flexion new preclinical program known as FX301 will consist of XEM402 formulated for extended release from a thermo sensitive hydro gel. The initial development of FX301 is intended to support administration as a peripheral nerve block for control of postoperative pain. And Flexion has indicated that it anticipates initiating FX301 clinical trials in 2021. We believe that FX301s extended release formulation from this thermo sensitive hydro gel could be well suited for control of post-operative pain based on the in vivo data generated with XEN402 today. And we look forward to its progression through clinical development. In addition to the $3 million upfront payment, we're also eligible for up to $9 million in milestone payments through the initiation of a Phase II proof of concept clinical trial. We may be entitled to future clinical development and global regulatory approval milestone payments of up to $40.75 million, commercialization milestone payments of up to $75 million, as well as future sales royalties ranging from mid-single to low double digit percentages. So now moving on to our financials, cash and cash equivalents and marketable securities as of September 30, 2019 were $94.6 million and this compares to $119.3 million as of December 31, 2018. As of September 30, 2019, there were approximately 25.8 million common shares outstanding and approximately 1 million Series 1 preferred shares outstanding and these are convertible into common shares on a one for one basis at the option of the holder subject to certain limitation. For the quarter ended September 30, 2019, we reported total revenue of $3.5 million in connection with the transaction reflection. Based on our current assumptions and this includes fully supporting the planned clinical development of XEN496, XEN1101, XEN901 and XEN007, we anticipate having sufficient cash to fund operation into 2021 as previously guided, and this excludes any revenue generating from existing partnerships or potential new partnering arrangement. We will continue to strategically and prudently manage the business as we strive to reach a number of important anticipated milestone events, including completing the adult PK studies for the novel pediatric formulation of both XEN496 and XEN901, in order to obtain important de-risking data as we move these programs into later stage clinical development in genetically defined pediatric epilepsies, submitting IND or IND-equivalent submissions for both XCN496 and XEN901 to initiate pediatric clinical trials in KCNQ2 and SCN8A epilepsies respectively, continuing our ongoing XEN1101 Phase IIb clinical trial in adult focal epilepsy, with top line data expected in the second half of 2020 and supporting the investigator lead Phase II open label clinical trial of XEN007 as a treatment for CAE, with data expected in 2020. So in conclusion, we anticipate having multiple mid to late stage epilepsy clinical trials underway in 2020, putting us in a position to generate important clinical data across our portfolio. And for those of you on the call that are attending AES in early December, we look forward to connecting with you there. Operator we can now open the call up for questions.

Thank you. [Operator Instructions] And our first question comes from Paul Matisse with Stifel. You may proceed.

Hi, this is Alex on for Paul, thanks for taking the question, just a couple from us today. I was just curious if you could provide a little bit more detail on 901 development plans beyond SCN8A in the ways that you would think about studying other indications, some sort of multiple trials or a basket trial like that? And then additionally for 496 I'm curious if you could provide any more information on the Phase III design that you're thinking with your recent input from FDA? Thanks.

Okay, sure, it's Simon. Thanks, Alex. In terms of 901 the initial development plan for the pediatric indication won't be a basket study. The plan is to conduct this in a SCN8A-DEE cohort. These would be all mutation defined patients with gain of function variance in that channel. So the initial study from our standpoint, we'd like to have a focused study as focused as possible in the disease where the channel particularly is causal, based on the mechanism of 901 being a very potent inhibitor of that channel, we felt that was the right approach. Now, would we be interested in expanding and extending beyond that in time? Absolutely, but that's not the plan for the initial study. And so ideally, we would seek approval initially for an 8A indication with label expansion thereafter. As was mentioned in the updates of course, we are also managing plans internally, although we have not pulled the trigger on this yet around focal adult epilepsy for 901, but that's clearly an indication of great interest given that sodium channel inhibitors are the mainstay of treatments in focal epilepsy given the refractory population remains large. This is clearly an indication of great interest to us. The focus initially will be pediatric and we will update when we do decide to move into adults with updated guidance accordingly. In terms of the496 Phase III design, we have not made public disclosures around this yet and really, that's purely because we're busy finalizing what that design looks like. This has been, I would say a very, very interesting and educational six months as we've engaged really the world leading group in the space including experts from North America, Europe and outside on our steering committee. I think we're very close. I think what you can expect is a controlled study, so not an open label trial. I think you can expect a study that probably will have a few dozen subjects been asked this many times before on calls, certainly not less than 20, but probably not more than 40 plus, so in that range. It will probably be a global study with an IND, but also looking to have sites outside of the US as well. But in terms of details, primary endpoints, most likely will be medium seizure frequency rather than video but that's something to discuss with the FDA. But in terms of the specific details, the statistics, the duration of treatment, the dose escalation, I think will be well positioned to really disclose this one's final over the coming months. This isn't a gating issue right now, the gating issue is completion of the Phase I PK study of the pediatric formulation in the adult volunteers, as noted in the updates that will be completed this year. So really over the coming sort of six to eight weeks, the study will be finalized and we look forward to submitting the IND in the first quarter of next year for the pivotal start. So stay tuned. A little bit early to provide guidance on exactly what the study looks like. I've just given you a flavor of what some of the key elements of that study will be.

Yeah, I really appreciate the additional color. Thanks a lot.

Not at all.

Thank you. And our next question comes from Yatin Suneja with Guggenheim Securities. You may proceed.

Hey, yeah, it's Eddie on for Yatin. Thanks for the update today. A couple of questions, first for 496, looks like you're waiting on the adult PK data before moving into a pivotal study. Can you give us a sense of what you're looking for in this study and before you move it into the pediatric patients? And then in terms of the pivotal, I know you're not giving any details on the design, but can you give us a sense of what kind of benchmarks we should be looking for, should we look to those two case studies with ezogabine for sort of clues and just sort of what types of numbers you're looking for in terms of user adoption?

Two good questions, thanks Eddie, 496 in terms of the adult PK, essentially, I think we're looking to understand what the PK is like with this new granule formulation. The data generated to date both in vitro and animal in vivo PK strongly suggests this new formulation behaves like the prior tablet formulation that was the approved drug. And more importantly for us, was the drug that was then compounded and used and published in children with KCNQ. And so essentially the expectation is we'll see the granular perform in the adult similar to how the old Potiga tablets would perform. This isn't the head-to-head study; we would be comparing with historical literature reports. But that PK, obviously, if it's identical or very similar to it allows us to essentially replicate dosages that were used previously with the adults formulation when used off label in these children and that's published work with doses were used up to about 20, 21 milligrams per kilogram. Of course, if the PK is different, it's not a negative; it just allows us or ensures that we have to do dose adjustments on a milligram per kilogram basis to achieve the exposures that we're targeting. So look, an ideal result is it behaves exactly like or very, very close to the Potiga tablets did in adults, but equally a result that just shows good exposure will be helpful in allowing us to finalize the dosage. And again, one of the reasons we're hesitant to disclose the final study design including dosages, is because the outcome of this study could influence how long we touch rates, what we're trying to dose to, the duration of treatment, the ultimate milligram per kilogram, dose et cetera. So we'll have that data in hand, at least by the end of this year. In terms of the next question, Eddie, which was benchmarks from what was published and clues regarding numbers, I'm making an assumption when you're saying numbers, you're looking at response size or effect size, not numbers of patients. I think it's very difficult to use that data given it's uncontrolled, given its open label. It's non-randomized, they're different dosages used, different kids ages. So I think we're – I think what we will look to do in our statistical model will with the support of KOLs, our steering committee who, of course, will come with us to at least write letters in support of the study to the agency, we will make certain effect size assumptions that would be deemed as a clinically meaningful effect, and we would power the study according to those assumptions. So, the next question that's probably on your mind is, well, what do we think those effect size assumptions would look like? And maybe for now, until we sort of present a final study design, it's fair for me to say look, in adults with focal epilepsy, one typically sees in an active arm an effect size of between 30% to 40%. In the pediatric studies that have been published, if you look at Epidiolex and Dravet for example, probably 50 plus percent, fenfluramine was higher in Dravet, probably around 60% in their larger Phase III trial. So we're probably somewhere in that range. We're probably in – it will have to be at minimum sort of clinically meaningful in the sort of probably 30% to 50% or 30% to 60% effect size range. But this is a this is a discussion that KOLs will help us make with the regulator's as to what they deem clinically meaningful effect size, and it's probably more than what one might typically see in focal epilepsy. But I don't think you have to replicate a 60 plus percent Dravet finding and match that to deem a finding effective. So it's probably in that 35% to 50% range or thereabouts and that's – that'll be what we'll model this study on. So we'll be able to present more rigor around this when we guide on the study design in the coming months.

Great, that's really helpful. And then really quickly if I may for 1101, would you plan on tightening your guidance at all on the readout for that as you get a better sense of how the enrollment speed is going?

Absolutely, we do plan on tightening the guidance, probably in 2020, not this year. And we recognize it's important to do that. We recognize right now guidance is a bit wide as H2. As you know, enrollment is sort of roller coaster in any studies that you need to have a certain duration trajectory, I think to be able to really have a good feel for tightening that guidance. We don't want to tighten guidance more than once if we can help it, so I think probably sometime early in 2020 we'll be in a better position to be able to shrink that guidance and provide maybe a more accurate quarter.

Great, thank you guys so much. Appreciate it.

Thanks.

And our next question comes from Maurice Raycroft with Jefferies. You may proceed.

Hi, this is Swapnil on for Maurice. Thanks for the updates today. And thank you for taking my questions. So I had a few questions, first is, we notice that the initial IND guidance for 496 was 4Q and now it is 1Q '20. So is there any additional work that needs to be done before the IND filing that is causing this delay?

No and we highlighted in the update. Really, we wanted to wait for the PK study to be complete. The initial thought was maybe not necessarily having to wait. The other issue was stability given the jurisdiction of preference for our IND submission in the US one needs a minimum of one month stability. Those are really the two gating items to the IND submission. As I mentioned earlier, it's not the protocol, we expect to have at least the Phase I completed this year. We expect that stability early in the New Year, early in 2020. And we would expect to submit the IND thereafter.

Okay, thanks. And then we see like you have a very strong presence at AES as well. So do you think it might have any PK data from my 901 or 496 and if you could, like provide a little bit of more guidance on what to focus at AES based on the new pipeline assets.

Yeah, good question. So answer is no. We're not going to have final study reports and I don't think with final Q8 tables and data sets by early December. So I think we need to just be cautious about presenting data. Once it's really complete and final, so the answer's no, we won't be presenting intermediate data sets on the PK studies for either 901 or 496. The focus of much of AES presentations will be around what we've learned from our surveys on these programs, particularly in the developmental epilepsies of relevance to our study designs. Secondly, we will present data on next generation compounds outside of 901, which could be really interesting sort of second generation leads. We expect to move into development in the near term. We also are going to be sharing some really interesting physiological studies or electro physiological studies looking at the effect of these compounds, selective compounds versus non-selective compounds in slice experiments in neurons, showing differences in how the drugs work compared to non-selective blocking drugs, in inhibitory into neurons in pyramidal excitatory neurons to show a very, very clear novel mechanism of action to our drugs. So those are sort of – those are the flavor of some of the posters. I'm just going to look at Jodi and Ian to see if I've missed anything major.

No, no, that's it.

Okay.

Okay, that's helpful. And one final question on 007. So have you actually like started dosing any patients in this trial and although you said like the patients that you're going to enroll are going to be failures of standard of care, but not just making sure that these kids would not be on any background therapy during the trial?

Right, so this is – so the answer is yes, we have started enrolling and yes, we have started dosing. Again, it's an open label study. So this is not a placebo controlled trial. We felt appropriate because these kids would be included with a certain burden of seizures having been refractory to existing standard of care. Existing standard of care consists primarily of two agents, valproates and ethosuximide. As I mentioned in my update, about 45% of kids are overtime recognized as treatment failures, either because they don't achieve sufficient control or because in many cases, it's a tolerability issue. So the way – these are kids that have quite significant seizure burden despite having tried two or more of valproic acid or ethosuximide or lamotrigine. These are kids despite that would have at least 10 seizures a week absence seizures. These are kids that would have EEG confirmation of the 3 Hertz spike wave activity as well. They must be on at least one anti-seizure medicine within one month baseline with a stable sees account. So we can't have – they can be on adjuvant treatment, these kids are not typically enrolled refractory on nothing, they're on a drug, but it has to be stable drug for a month prior to enrollment. And again, we've got a good power around 80% power, if we see a 50% seizure reduction, we've got in fact, about an 80 plus percent power with an alpha level of less than 0.005. If we see a 50% reduction in their absence seizure counts, there is a one month baseline, there is a two months treatment period, and then a one month follow up. And the primary endpoint is really the absence seizure frequency between your visits. It's visits three and four, which is really the two months – one month to two month period, compared to the one month baseline. So the last month of the study versus the month of baseline, with the primary endpoint being the seizure frequency difference. We are looking at other endpoints like EEG for example, you’re in visits tolerability, et cetera, so we're hoping to have open label data in 2020. And depending on enrollment, this could actually go quite quickly with data earlier in 2020, rather than the latter part, so fingers crossed. These are four to 19 year olds children and adolescents. And as I mentioned, we expect to enroll about 20 subjects in the study. So it's about a four month period. The study per child is a month baseline two months treatments and a one month follow up, which has been the fifth visit end of study at the end of the one month, so I hope that that summarizes. And in terms of dosing they'd end up initially getting a 10 milligram dose at nighttime and depending on response if they haven't responded to the 10 milligrams at the one month visit on maintenance, they are escalated to a 15 milligram dose, which is then continued for the second month. So that's I think in summary, what the study looks like and so they will be – most likely will be on other meds. If they are - they have to be stable for a month during baseline or they might be in frequent cases where they aren't on adjuvant medicines, but they are having seizures, but they need to have failed to respond fully or to tolerate two of the gold standard drugs as which I mentioned these are ethosuximide, valproic acid and lamotrigine.

Okay, very helpful. Thank you very much for taking the questions.

Pleasure.

[Operator Instructions] And our next question comes from Antonia Borovina with Bloom Burton. Please proceed.

Hi, thank you for taking my questions. Just related to XEN007, you mentioned that in addition to modulating calcium channels that also has an effect on dopamine, histamine and serotonin. So I was just wondering whether the efficacy you're seeing in animal models of CAE, whether you believe that mediated solely by the calcium channel effects, or whether the other pathways you believe [indiscernible] as well.

Yeah, Antonia, it's a good question. I don't think we know today the full extent of the poly pharmacology of the drug for each of these indications, so just very hard to tease that out. So I don't think we can completely rule out efficacy through other mechanisms. Irrespective of that the drug seems to work in the model. It seems to work better as monotherapy than ethosuximide or valproate, both of which do work in the model. And then when added as an adjunctive therapy in that same model, there is enhanced benefit of just one of those drugs alone. So I don't really have an answer for your question. I'm not sure at the end of the day, it matters all that much in the sense that will you see this drug is working or not in this proof of concept study in which case will we'll take some decisions on whether this looks like the ideal development strategy. The fact we advancing it in CAE now certainly doesn't preclude the molecule advancing in other indications as we've talked about before. We just felt this was firstly well, well within our strategy as an epilepsy focused pipeline, secondly, a much larger patient population than either alternating hemiplegia or hemiplegic migraine, at least larger accessible patient population with a reasonably sized refractory population within that. So as we think about orphan drug designation, as we think about orphan drug exclusivity for the product that could be a primary means of commercial exclusivity. We like the concept of an orphan indication that has a fairly large number of addressable patients, rather than a much more challenging ultra-orphan population, when pricing issues become obviously – probably more challenging as one thinks about the long-term commercialization strategy. So we like CAE, we think it meets a lot of the objectives for us. We think it provides probably a simpler development strategy long term and pricing strategy. But the ultra-orphan indications we've talked about before is certainly still on the table and under review.

Okay. And I know it's still early days, but assuming that your investigator study is positive, what could a possible clinical path look like in this indication?

Yeah, look, I mean, I think we haven't really gone that next step. That's obviously work will be mapping out over the coming months in anticipation of data. But our idea would be to look at childhood absence epilepsy as a development strategy for the product. They have been a number of studies, although randomized controlled study is fairly small, but about 445, 446 CAE subjects have been dosed with current standards of care, ethosuximide, valproate or lamotrigine and that's sort of the data right size in terms of failure rates has come out of that. So I think we could have again a larger study that Phase II that looks at and well controlled, that looks at adjuvant treatment versus current standard of care in refractory patients. Now, whether this is some kind of crossover or whether it's a parallel and the sizes – patient sample size we need, I can't give you those facts today. But I think we can see a parallel blinded study versus a standard of care refractory patients on stable meds, having X number of seizures per week or per month, very similar in a way to focal epilepsy study might be structured. But of course, this is a very different indication. Just to remind you, we do have the rights to this drug exclusively for development in the US all non-clinical and clinical rights. And now as I said today, earlier, we are announcing for the first time the initiation of the first Phase II study with the strike. This is a drug that is – that has some tremendous history. It's very well known outside of the US. The drug works extremely well in a number of indications. It's on label for chronic migraine prevention. It's on label for vertigo. It's used off label extensively in a number of neurological disorders. And what's really interesting and exciting to us is that there is not a single, centrally acting CNS acting calcium channel modulator on the market in the United States. So we think this could be a really attractive strategy. Tolerability of this drug has been good. We can go through that with you offline at any time, but it's one of the real attractive features of flunarizine has been the safety tolerability, particularly in the pediatric and adolescent population and lots and lots of case series and study data available for this drug. We have rights to a lot of the data from the originator of the drug as well as the non-clinical data. So that's the thinking and I'm sure it will unfold over the course of the coming months as we get closer to the top-line.

Great, thanks.

Yeah.

Ladies and gentlemen, this concludes our Q&A portion of today's call. I would now like to turn the call to Jodi Regts for closing remarks.

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

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.