Xenon Pharmaceuticals Inc. (XENE) Q1 2023 Earnings Report, Transcript and Summary

Hello, and thank you for standing by. My name is Gigi, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Q1 2023 Xenon Pharmaceuticals Inc. Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Sherry Aulin, Chief Financial Officer. Please go ahead.

Thank you, and good afternoon, everyone. Thank you for joining us on our call and webcast to discuss the Xenon's First Quarter 2023 Financial and Operating Results. Joining me are: Ian Mortimer, Xenon's President and Chief Executive Officer; Dr. Chris Kenney, Xenon's Chief Medical Officer; and Dr. Chris Von Seggern, Xenon's Chief Commercial Officer. Ian will open today's call with a summary of our proprietary pipeline programs. Chris Kenny will provide an overview of our XEN1101 Phase 3 epilepsy program, as well as a brief summary of the recent oral presentation of supporting data from the X-TOLE open-label study that was presented at the American Academy of Neurology's Annual Meeting, or AAN. I will summarize our financial results, progress within our partnered programs and our anticipated company milestone events. Chris Von Seggern will be available during our Q&A session to address questions about commercialization strategies. 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 anticipated presentation of data from clinical trials, the potential efficacy, safety profile, future development plans, addressable market, regulatory success and commercial potential of our and our partners' product candidates, the efficacy of our clinical trial designs, our ability to successfully develop and achieve milestones in our XEN1101 and other development programs, the timing and results of our interactions with regulators, our ability to successfully develop and obtain regulatory approval of XEN1101 and our other product candidates, anticipated enrollment in our clinical trials and the timing thereof, and our expectation that we will have sufficient cash to fund operations into 2026. 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 Xenon's first quarter financial results and the accompanying annual 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 and on SEDAR. Now, I would like to turn the call over to Ian.

Thanks, Sherry. And good afternoon, everyone, and thanks for joining us on our call today. We are excited about the continued progress across our broad XEN1101 Phase 3 epilepsy program, including the recent initiation of X-TOLE3. All planned Phase 3 epilepsy clinical trials are now actively recruiting patients, including X-TOLE2 and X-TOLE3 in patients with focal-onset seizures, or FOS and X-ACKT, in patients with primary generalized tonic-clonic seizures, or PGTCS. XEN1101 is the only potassium channel modulator in late-stage clinical development, and we continue to build on our leadership position in the Kv field, driving our mission to provide new therapies for patients with epilepsy and other neurological conditions. Based on our experience with our X-TOLE Phase 2b study, which was similar in size to both X-TOLE2 and X-TOLE3 and supported by our continued relationships with key investigators, many of whom already have familiarity and experience with XEN1101, we maintained a high degree of confidence in our ability to execute on our XEN1101 Phase 3 program and we are pleased with our progress to-date. In addition to our ongoing Phase 3 epilepsy program in adults, we recently obtained feedback from the FDA that has shaped our strategy for our pediatric development plans for XEN1101. Progress and highlights from our XEN1101 pediatric plans include ongoing work on a pediatric formulation of XEN1101 for younger patients. We also expect to take advantage of the FDA's pharmacokinetic extrapolation rule for focal-onset seizures, which allows us to over time move into cohorts of progressively younger patients with focal-onset seizures, with XEN1101 in an open-label setting. And finally, we're in the process of expanding the X-ACKT Phase 3 clinical trial to include patients as young as 12 years of age, and this was driven by feedback from FDA. We believe XEN1101 has the profile and attributes to support broad development, including moving into younger patients with epilepsy, where there continues to be considerable need for new medicines. And so, after careful consideration, we are prioritizing our XEN1101 pediatric epilepsy development plans and will no longer pursue the clinical development of XEN496. We wish to extend our sincere gratitude to the patients and their families who participated in the EPIK clinical trial. We intend to work with study investigators to offer an option for continued access through a transition period for those patients currently on XEN496. Turning to non-epilepsy indications, our Phase 2 XEN1101 X-NOVA study in Major Depressive Disorder or MDD, continues to make good progress. Our decision to examine XEN1101 in MDD was based on encouraging published clinical results with ezogabine, as well as promising preclinical data with XEN1101. We were further interested in gathering additional data given that depression is a common comorbidity within the epilepsy patient population. X-NOVA, which as a reminder was initiated only 12 months ago, has progressed well, and we expect to screen the last patient next month in June. After the last patient goes through a screening period lasting up to 4 weeks and has been randomized, there is a 6-week treatment period and a 4-week follow-up visit, after which the database can be locked and the data analyzed. Given these steps, we are looking forward to a topline data readout for X-NOVA in the fourth quarter of this year, which is a slight shift in our previous guidance of topline data in the third quarter. These data will help guide our future plans for XEN1101 in MDD. In summary, we remain laser-focused on the continued advancement of our Phase 3 XEN1101 program, including X-TOLE2 and X-TOLE3 clinical trials in focal-onset seizures; and X-ACKT clinical trial in PGTCS; as well as executing on our pediatric development plans. We are also looking forward to the important data from our Phase 2 X-NOVA study in MDD later this year. Lastly, we continue to generate important long-term data from our ongoing X-TOLE open-label extension study that affirms the X-TOLE Phase 2b results, supporting our position that XEN1101 presents a novel compelling product profile with the potential to address some of the currently unmet needs of patients with epilepsy. And as Chris and Sherry will highlight in their remarks later in the call, we are excited to be entering a data-rich period for Xenon. Between now and the end of the year, we will present additional XEN1101 X-TOLE open-label data focused on quality-of-life measures at the International Epilepsy Congress in September, and 30-month OLE data at the American Epilepsy Society Annual Meeting in December, as well as the 2 Phase 2 readouts in the first quarter of this year, including data from our XEN1101 X-NOVA study, as well as data from our collaboration with Neurocrine. So I'd now like to turn the call over to Chris Kenney, who can provide additional details on the progress made within our Phase 3 XEN1101 program as well as recent and upcoming data presentations for XEN1101. Chris, over to you.

Okay. Thanks, Ian. I would echo that we believe the clinical data generated to-date support a very compelling product profile for XEN1101, and that the efficacy data from the Phase 2b X-TOLE study and the ongoing X-TOLE open-label extension, compare favorably to medicines currently available for focal-onset epilepsy patients. To briefly review the XEN1101 clinical trials within our robust Phase 3 program. As Ian mentioned, we now have initiated X-TOLE3, which is running in parallel to our X-TOLE2 study. Each of these studies will enroll approximately 360 subjects with focal-onset seizures who will be randomized 1:1:1 with once daily dosing of either 15 milligrams or 25 milligrams of XEN1101 or placebo. The primary efficacy endpoint is the median percent change or MPC and monthly seizure frequency from an 8-week baseline through the 12-week double-blind period with XEN1101 compared to placebo. We've also successfully executed on our plans to pursue another epilepsy indication, our Phase 3 X-ACKT clinical trial is expected to enroll approximately 160 subjects with primary generalized tonic-clonic seizures. Subjects will be randomized 1:1 for once daily dosing of either 25 milligrams of XEN1101 or placebo. The primary efficacy endpoint is the MPC and monthly PGTCS frequency from an 8-week baseline through the 12-week double-blind period of XEN1101, compared to placebo. I've noted that this parallel approach in both focal-onset seizures and primary generalized tonic-clonic seizures at this stage of development is unique. Our rationale is based on the Kv mechanism in the photo-sensitive proof-of-concept model of generalized epilepsy, favorable data in multiple preclinical epilepsy models and clinical data, including activity we saw across all focal seizure subtypes in the Phase 2b X-TOLE study. Our hope is that we are setting the groundwork for potentially broader use of XEN1101 in both the most common forms of epilepsy, should it be approved. We recently met with physicians and epileptologists at the Annual Meeting of the American Academy of Neurology, who continue to assert the need for new therapeutic options with differentiated mechanisms of action to improve upon existing anti-seizure medications. At AAN, in addition to a poster outlining our X-ACKT clinical trial design, we were thrilled that the XEN1101 program was selected for an oral presentation at this important neurology-focused meeting. Dr. Jackie French, one of the preeminent leaders in the epilepsy field, presented data from our ongoing open-label extension study with XEN1101. She outlined how these data build upon the strong efficacy data generated in the Phase 2b X-TOLE clinical trial. Importantly, she spoke about the data demonstrating continued seizure reduction and extended periods of seizure freedom experienced by patients in the open-label extension study. Her podium presentation outlined several key takeaways. During the open-label extension, there was a sustained monthly reduction in seizure frequency, specifically 80% to 90% seizure reduction as measured by median percent change from the double-blind period baseline. Also, seizure freedom for greater than or equal to 6-month and greater than or equal to 12-month consecutive durations was achieved in 17.5% and 10.5% of patients, respectively. XEN1101 continues to be generally well-tolerated in the open-label extension with adverse events consistent with prior results in other anti-seizure medications. Dr. French expressed that these data are encouraging for prescribing physicians who continue to seek new differentiated therapeutics that improve upon existing options and may provide further hope for the many patients who experience the debilitating impacts of focal seizures even while taking multiple anti-seizure medications. Looking ahead, our team is excited to continue to showcase XEN1101 at medical conferences later this year, including our presence at the upcoming 35th International Epilepsy Congress in Dublin in September, and at the American Epilepsy Society Meeting in December. At IEC in September, we have multiple podium and poster presentations highlighting our XEN1101 Phase 3 program as well as new quality-of-life data from the ongoing X-TOLE open-label extension. In addition, we are in the process of submitting abstracts to the American Epilepsy Society Meeting, including 30-month open-label extension data from X-TOLE supporting the long-term use of XEN1101, as well as important seizure freedom data. We look forward to keeping you updated on our progress on the XEN1101 Phase 3 epilepsy program, as well as continuing to build a profile of XEN1101 with physicians and the medical community. I'll now turn the call over to Sherry, who will give us a brief update on our partnered program with Neurocrine, before summarizing our first quarter financial results and upcoming milestones. Sherry?

Thanks very much, Chris. So beginning with our partnered programs, our collaborators at Neurocrine are conducting 2 separate Phase 2 clinical trials evaluating NBI-921352. One study is focused on adult patients with focal-onset seizures, and the other study is examining the use of NBI-921352 in pediatric patients with SCN8A-related epilepsy. We're looking forward to the results from Neurocrine's adult focal study, which are anticipated in the fourth quarter of this year. I'll now touch on some highlights from the financial statements and would refer you to our news release and 10-Q report for further details. Cash and cash equivalents and marketable securities were $687.3 million as of March 31, 2023, compared to $720.8 million as of December 31, 2022. Based on current operating plans, including the completion of the planned XEN1101 Phase 3 epilepsy studies, we anticipate having sufficient cash to fund operations into 2026. Before concluding our prepared remarks, I'll briefly summarize some of our goals and milestone events ahead, including, as Ian mentioned, a data-rich period for Xenon between now and the end of the year. We will focus on advancing our XEN1101 Phase 3 program, including our X-TOLE2 and X-TOLE3 clinical trials in focal-onset seizures, and our X-ACKT clinical trial in PGTCS. We are excited to present additional XEN1101 X-TOLE open-label extension clinical data at both IEC in September and AES in December. We anticipate topline results in the fourth quarter from our X-NOVA clinical trial in MDD, and we expect another data readout in the fourth quarter of this year from the adult focal-onset study conducted by our partner, Neurocrine. In closing, we believe that we have established an enviable leadership position in the Kv field, that's supported by our clinical development efforts and financial resources to help us execute on our ambitious plans. As we focus our efforts on our Phase 3 epilepsy program, I'm proud of the team we continue to build at Xenon. We are grateful to our employees across the business who are committed to Xenon's mission to deliver new neurology therapeutics to patients in need. I am excited by our success to-date and look forward to reporting our progress through 2023. I'll now ask the operator to open the line for any questions.

Thank you. [Operator Instructions] Our first question comes from the line of Paul Matteis from Stifel.

I had one question on the focal seizure Phase 3 program and one question on MDD. On Phase 3, it sounds like things are going well, but you aren't yet guiding to when you expect these results to be ultimately available. Ian, I was wondering if you could give just a little bit more color on what you're seeing on enrollment dynamics, and when do you think you're going to get to a point where you'll be ready to give us a more affirmative guidance? And then on the MDD study, I wanted to ask if you were willing to disclose anything about the patient population you've enrolled specifically as it relates to baseline severity. And the reason I was asking is I think your cut-off on HAM-D is a little bit lower than some of the other contemporary MDD trials. Historically, that can have some impact on things like placebo effect. And so, again, just a little bit curious on the population.

Thanks, Paul. Yes, I'm happy to address your first one and then Chris Kenny, maybe we can -- let's talk a little bit about the baseline MADRS score is kind of a cut-off and then kind of where we expect the patient population probably to come in. Like, your first question, it's a question we get a lot about just how we're doing in Phase 3 epilepsy and recruitment. And as I mentioned in the prepared remarks, we believe we're on track and progressing well. Maybe to give you a bit more granularity as you asked. So we track site initiations, we track patient screening and patient randomization. We've built a model based on our X-TOLE experience, both our experience and as well as with the CRO, and we track against that model to see how we're doing. And as we've talked about before, we do use the X-TOLE study as a bit of a proxy. Obviously, challenges in that study. It was run during COVID, and we didn't have the profile of the drug or at least the efficacy data on the molecule at that time, which we do today. In terms of forward guidance, yes, at some -- we will be providing guidance to topline data likely later this year. I think, we've been very consistent, and we wanted a couple of quarters of enrollment under our belt where we get the majority of sites up and running and then we can give some guidance on topline data. So, that to come. And, Chris, I'll pass it to you on the baseline characteristics going into the MDD setting.

Sure. Yes. So in terms of the inclusion criteria, patients have to have a Hamilton-D at screening of at least a 20. And the idea is to capture a population of depressed patients who are at least moderate. And then based upon that, we are keeping an eye on all baseline characteristics as more patients are being randomized and the baseline characteristics are largely following what we had expected. And we're hoping to share more details on that potentially, obviously, by the end of the year.

Anything you can say, Chris, on how these baseline characteristics compare to other studies that have completed in depression recently?

Very similar.

One moment for our next question. Our next question comes from the line of Brian Abrahams from RBC Capital Markets.

Congrats on all the progress. 2 from me. I guess, first off, as we get closer to the MDD results, I'm curious your latest views on depression as a primary indication for XEN1101 if the data were positive? Or how far behind would next-generation programs be, that could take advantage of the validation of the pharmacology? And then secondarily, what learnings from EPIK can you use to shape how to optimize the development of XEN1101 in kids?

I can address the first one and then I'm happy to make a couple of comments on EPIK. And, Chris Kenney, if you want to jump in as well, as we think about the pediatric development for 1101. So, Brian, in terms of MDD, obviously the data is going to be a critical input. We've really talked about that there's multiple paths here. One is, that we're continuing to generate data that would be important in an epilepsy call point, so we know that depression is the most common comorbidity in epilepsy, so generating data could be important. But we are interested, potentially, in doing, as you say, primary -- development in the primary indication of major depressive disorder. We're doing some additional work between now and topline data just to answer some of the commercial questions that we have internally, but we'll be in a position to, when we have topline data, also provide next steps in that program. You asked about next-gen compounds taking advantage of the Kv pharmacology. So obviously, we have significant efforts preclinically. None of those molecules have transitioned into the clinic, yet. Probably the first ones would transition sometime next year. So there would be a bit of a gap between XEN1101 and any of the backup molecules that would move into development. On the kind of EPIK to 1101 transition, I mean, the pediatric plans are very different. The XEN496 was being developed for a very rare pediatric epilepsy. That study was looking at KCNQ2-DEE, which is a very different population than the pediatric population, both in focal epilepsy and primary generalized tonic-clonic seizures. And maybe actually this is a good time we could talk a little bit about just the pediatric patients with epilepsy. And so, Chris Kenney, I don't know if you want to talk -- if you want to say anything more about just the learnings from EPIK into the pediatric development of 1101. But then, I think, Chris Von Seggern can provide some perspective on the market opportunity, or at least the patient population in focal and generalized for pediatric patients.

Sure. I would say the biggest feature that's feeding into the pediatric plans for XEN1101 is more about what we learned in the adult X-TOLE study, I would say, than necessarily in the EPIK study. To the extent, so the data from the EPIK study is still blinded. And to the extent that you can assess blinded data, it was largely consistent with what we would expect with ezogabine, so we'll unblind that data in the near future. But I wouldn't say that there is any particular learning from that study per se, that has illuminated the path for the pediatric development of XEN1101. Ian, would you want to add to that?

No. I think, that's really good. And Chris, on pediatric development and the patient population?

Yes, absolutely. Happy to share. So when we think about the current development plan focusing predominantly on the adult population, we have to remember that there are hundreds of thousands of patients, who are under the age of 18 in the United States that have epilepsy. So the -- in broad-reaching numbers, we're talking about 500,000 patients under the age of 18. And similar to the adult patient population, we see a bias towards more patients with focal-onset seizures than generalized seizure disorders. However, within this patient population, what mirrors very much the adult patient population is the high unmet medical need for patients who have difficult-to-treat disease. And we see a similar dynamic of a large percentage of those patients progressing on to second or third-line therapeutics. And just like the adult population, branded therapeutics tend to play a role in those more-difficult-to-treat patients. And as a result, we see a great opportunity for XEN1101 in the pediatric market. Our market research has suggested that the value attributes associated with XEN1101 are similarly positive in the pediatric patient population is what we've seen in the adult population, with actually a slight bias towards QD drugs as being even more beneficial for this audience where compliance becomes a bit more problematic than what we see with adult patients. So there is a great opportunity for XEN1101 as we continue the development in the pediatric population.

Thanks so much for the really detailed answers. That's super helpful.

One moment for our next question. Our next question comes from the line of Tessa Romero from J.P. Morgan.

So X-TOLE3 is off the ground now, which is really nice to see. How should we think about dynamics between enrollment for X-TOLE2 and X-TOLE3? And can you remind us how much overlap there is in the clinical trial sites there? And any color you'd provide us on, with respect to competitive enrollment dynamics for XEN1101 trials in FOS and PGTCS versus other programs at your clinical trial sites? And then, I have one quick follow-up.

Yes. So a lot there. I'll start. Chris Kenney, feel free to jump in and add as well. So just as a reminder for everybody, X-TOLE2 and X-TOLE3 are both in focal-onset seizures, they will not be at the same clinical sites. And so, X-TOLE2 started first, and we've said that we kind of biased X-TOLE2 in terms of starting first and a number of the sites that have experience with XEN1101 have gone into that study. For X-TOLE3, we are using some of the same sites from X-TOLE, but there is no overlap with the X-TOLE2 sites, and so each clinical site can only run one of those protocols. For X-ACKT, for the primary generalized tonic-clonic seizures, it is a little bit different. That X-ACKT study can happen at either X-TOLE2 sites or X-TOLE3 sites. And we think that's where we can get leverage, it's the same investigator, it's the same contracting, the same institution. And if they have a patient that's eligible in focal epilepsy, they can go into X-TOLE2 or XTOLE-3 as appropriate. And if they have primary generalized, they can go into the X-ACKT study. So that's where we get some benefit and some leverage over that. In terms of competitive drugs, obviously we're the only drug with, to our knowledge with compelling clinical efficacy data in a late-stage clinical development program. We know there are a number -- a few other molecules that are pre-efficacy, so they're just in their proof-of-concept Phase 2 studies. And so we haven't seen anything that's concerning from a competitive point of view in terms of patient recruitment. Chris, anything to add there? And then I know, Tess, you had a follow-up.

One thing, I would add is just that in speaking with investigators and epileptologists in general, there is a fair amount of enthusiasm about the data we've generated so far. So, I would say that the interest to participate in our trials is pretty strong. And that when you think of all the challenges that come along with completing a Phase 3 study, I don't see competition as a major factor.

Okay. Great. And then 1 quick one. That's helpful. Are you able to provide any further color on the ongoing pediatric formulation work you're doing there? And any kind of sense of how long that might take you to land on the formulation? And I was just thinking, can you kind of leverage the learnings that you had from formulating XEN496?

Yes. So I'll just state again what we had put in the press release and in the prepared remarks. For primary generalized tonic-clonic seizures, based on a request by FDA, we're going to go down to 12 years of age today, so we'll have that as an amendment to the protocol. And so, for 12 and above, we don't need a pediatric-specific formulation, we can use the same presentation that we use for adults. And then in focal epilepsy, there is this PK extrapolation rule where we can get into younger patients in an open-label basis, over time, and you go into progressively younger patients over time. In terms of the pediatric formulation development, I mean, we have -- yes, we have experience in this area. We do have quite a significant CMC group internally that works on formulation development for our preclinical programs as well as for 1101. So that work is already underway. I think probably we'll have a good idea, Tess, later this year on how we're doing in the pediatric formulation development, which we would be required to get into much younger patients. But there is still a fair bit we can do even before that pediatric formulation is required.

One moment for our next question. Our next question comes from the line of Jason Gerberry from Bank of America.

This is Dana [ph] on for Jason. Congrats on the progress this quarter. So we just have a couple of questions on the MDD X-NOVA readout. And so beyond demonstrating stat sig on MADRS and good monotherapy tolerability, what else are you focusing on in this readout? And since safety is a key area of interest, was 1101's AE profile a consideration when picking the 10-milligram and 20-milligram doses and were these chosen based on 1101's monotherapy healthy volunteer data? And then also just curious if you've looked at placebo response rates in patients that have clinically significant anhedonia and if they differ from the general MDD subjects?

Chris, why don't you tackle the last part on anhedonia. Maybe I'll talk about the totality of the data. And Chris Von Seggern, I know we've done some market research of looking at the kind of epilepsy adverse event profile into depression, so maybe we can talk a little bit about that as well. But, Dana, I would say in terms of kind of the go forward plan in MDD, we would be looking at the totality of the data. So you've mentioned, obviously we need to look at efficacy and adverse events as well, and kind of overall where we believe it would fit in, in terms of inputting into our decision for next steps. In terms of dose selection, yes, I mean one of the -- the X-TOLE data was informative, as was the healthy volunteer data, as you suggest, but the X-TOLE data was very informative for us as we chose dose selection for MDD. So the 20-milligram dose in X-TOLE was obviously an efficacious dose and we believe, well-tolerated. I think the 10-milligram dose was quite interesting, because we did see statistical significance on all seizure reduction endpoints at 10 milligrams in X-TOLE, but the AE profile was quite benign. And so that was a dose that we wanted to try and test as part of our MDD Phase 2 study. And so, we actually made a protocol adjustment before we had initiated the study to include a 10-milligram arm, and that's why we chose 10 milligrams, 20 milligrams and placebo for our MDD study. So maybe, Chris Von Seggern, I know we've looked at the AE profile, at least in epilepsy talking to some of the prescribers in depression. Maybe you can walk through some of those details, and then we can answer the anhedonia question.

Yes, absolutely. And I think what's important to note, to build on what Ian said is, the data coming from X-TOLE are studied in a highly refractory patient population with epilepsy with patients who are on multiple background therapies. So we do see an AE profile in epilepsy, which is generally higher than what you would see for most MDD products. But knowing that, we took the existing profile from X-TOLE into market research, for both the 20-milligram profile and the 10-milligram profile to understand whether or not clinicians would be comfortable with a product that offer a compelling efficacy with that associated AE profile. What we heard was, assuming that we have compelling efficacy, that there is an opportunity for a profile that looks like XEN1101 for patients. Remember, these are highly active CNS-penetrant drugs that are going to have some level of AE associated with them, but when you look across the range of approved MDD products, there is a balance of adverse events that one is looking into. And importantly, the major categories of drugs that are used today have both substantial sexual side effects and weight gain associated with the SSRI, SNRI class. So as physicians are looking for alternative mechanisms in later-line patients, they're willing to be a bit more tolerant of the AE profile, consistent with what we saw coming out of X-TOLE. But also, they are optimistic that perhaps in a monotherapy environment and a less severe patient population that the AE profile looks a bit different or perhaps a bit less -- has a bit less of an impact on some of the AEs coming from the epilepsy patient population. So, the totality of the evidence suggests that there is an opportunity, again assuming that there is compelling efficacy for the profile.

Thanks, Chris. Chris Kenney?

Yes. So the question, as I understood it, pertained to the placebo effect and kind of trying to draw a distinction between patients in the ongoing study who are depressed versus having anhedonia. So I'd give a similar -- we're looking at blinded data, right? So ultimately, we don't know exactly what's going on. But similar to the answer to Paul's question about baseline characteristics of the population, the scales are behaving in a manner we would have predicted, but given the caveat that of course, it's blinded data. To your question about making a distinction between kind of patients who may be more depressed and have more predominant anhedonia, I would say that it's hard to make that distinction, because once you use that cut-off that I mentioned earlier to enrich this population for patients who have moderate to severe depression, then most of those patients already have anhedonia. So in my mind, I wouldn't really necessarily separate those 2. Those 2 features seem to be happening fairly consistently together. And of course, we have no idea what the placebo effect is because we haven't unblinded the study, just yet.

Thanks, Chris.

Great. Thank you for the additional color and congrats on all the progress.

One moment for our next question. Our next question comes from the line of Paul Choi from Goldman Sachs.

This is Cade [ph] on for Paul. 2 questions for us. First, do any of the recent MDD failures from competitors' data cause you to change your thinking, your modeling regarding potential placebo performance for your Phase 2? And then, secondly is, how might R&D expenses, go forward R&D expenses change post XEN496 removal from the pipeline?

So, Chris, do you want to just maybe talk about MDD and placebo rate and how we've -- we can probably walk through the powering calculations, and how we're thinking about that. And then, Sherry, can talk about R&D expenses.

Yes, sure. So as far as protecting from the placebo effect, we've discussed this before, but largely has to do with choosing an experienced CRO, choosing experience to site making -- we're only running the study in the United States, making sure that there is an external evaluation of each patient, so that we're enrolling appropriate patients using the safer evaluation. Those are -- that's really the key focus in terms of minimizing the placebo effect in this trial. And of course, we keep an eye on the data in real time to make sure that at a patient level or at a site level, there isn't something unexpected happening that would be atypical. So, we're keeping an eye on all of that. Another thing that's happened is that we've gone through this -- we've gone through COVID, and that's had some impact on the patients who are experiencing depressive symptoms. And so, we've made sure that we have patients who have had depression before COVID, so that there is no strange sort of population being created. So those are all the things that we've been doing to manage the placebo effect, and I wouldn't be able to come up with anything more that we could be doing.

And, Cade, just to respond to your question on R&D expenses. So over the last couple of quarters, you all have seen that our R&D expenses are trending upwards, and that's largely driven by our initiation of our broad and ambitious Phase 3 program with multiple Phase 3 studies in the 1101 epilepsy program now underway, we're going to continue to see as we initiate more sites and enroll more patients that that R&D expense will continue to ramp upwards until we hit steady state later this year. You'll see that we've reiterated our cash runway guidance up into 2026, and so that remains unchanged with the recent strategic decision around 496.

One moment for our next question. Our next question comes from the line of Andrew Tsai from Jefferies.

So 2 on MDD. I understand it's about the totality of evidence, but is there a minimum MADRS delta that you want to see for you to continue pursuing depression in general? Obviously, the higher the better, but for instance is 3-point sufficient? Or should we be thinking something to where you actually power to 4, so maybe like 4 points? And then secondly, what specifically in the Phase 2 data will drive your decision to continue on with 1101 for depression, and what in the data will make you instead pursue a new Kv7 compound for depression?

Yes, we're -- we've said this a number of times. We're really looking at the entire data package when we unblind later this year. And as we've mentioned, we continue to do work on the commercial side as well to inform ourselves and provide input. So there isn't a single MADRS cut-off, that if we hit X, we're going to go ahead and if we don't, we're not going to go ahead. So it is a more complex question and we'll be looking at multiple inputs in making that decision. And that's really related to your second question as well. I mean, I think we need to look at the data in its entirety to make that decision on whether 1101 makes sense for continued development in MDD, or as you mentioned, whether we -- the nice thing at Xenon is we do have some of that optionality in terms of other molecules, and we talked about that earlier in the Q&A as well. So there isn't 1 specific answer I can give you. We really need to unblind the data, see everything in its entirety and then we can have that conversation. As I've mentioned earlier in this call, we'll be ready to have that conversation and communicate that at the time of topline data.

Makes sense. Very clear.

One moment for our next question. Our next question comes from the line of Joseph Thome from TD Cowen.

Maybe first one as it relates to the pediatric FOS plans. I guess, as you go into younger patients, do you need to adjust or consider any sort of dose titration before getting into the max dose given the age there? And then maybe second on MDD, obviously the payer landscape here is changing a little bit, it seems like payers want demonstrated failure of 1 or 2 generic SSRIs are SNRIs. When you think about development strategy, do you think the FDA wants to see demonstrated activity in treatment-resistant depression patients? Or is MDD kind of sufficient still?

Chris Kenney, why don't we start with you just in terms of dose. Probably not maybe specifically around titration per se, but obviously dose will be adjusted as we get into younger patients, but maybe you can provide a bit more context there. And then, Chris Von Seggern, why don't -- let's talk a bit about the payer environment in terms of kind of the previous generic drugs and where branded agents are used in depression. And then lastly, we can get to the TRD question.

Sure. So just briefly on titration, the programs right now using XEN1101 with a fairly long half-life, we are not using titration. And so, there is no intention to use titration. We don't have -- the data we've taken a look at suggests that there is no obvious upside to titrating. And one of the benefits of not titrating is that we're seeing efficacy really quickly, nearly the full extent of the efficacy that we see is present within 1 week, so no intention to treat the pediatric population differently than the adult from the standpoint of titration. Now, obviously as you go down in age, the body weight changes substantially right from the adult population down to the adolescents and then further into the younger kids. And so, that will have to be taken into account, and we've proposed specific things to the agency, and seem to have their agreement for that -- taking that sort of adjustment to account.

Thanks, Chris. Chris Von Seggern, on MDD and the payer environment?

Yes, absolutely. We have spent time and actually done quite a bit of work to better understand the payer landscape within the MDD space. And as Ian had mentioned, this is a space that is largely dominated in first and second-line by generics and the availability of multiple SSRIs and SNRIs, it results in fairly heavy payer management upstream, not dissimilar to what we expect to see in the epilepsy space as well with early-line treatment for established therapies before moving into the branded environment. And we've seen that in the MDD space and that's been well-established now for quite some time. What we are seeing though is more management in the MDD space than what we see in the epilepsy space. And with the new entrants, we do expect to see a slightly tighter management approach within the MDD category, as patients need to document failure, and different approaches from payer management tools. That being said, there still is a substantial refractory patient population that is accessible to branded therapies after the early-line failures. We haven't heard from our payer research the need necessarily to have demonstrated evidence in "treatment-resistant" depression patient population. So we have not heard the necessity for that for access for drugs in later lines. It's really based on the clinical profile that payers are thinking about how to approach payer management and what tools they might use to manage a product that looks like XEN1101 in the future.

And your last question on kind of other populations within depression. So our expectation is that we're not going to have to do specific work in TRD. I will say that post, this is a Phase 2 study, the current X-NOVA study, we have not had regulatory engagement in terms of what the late-stage clinical development plan would look like. So post-data, if we were to move ahead, our expectation is that we would engage with FDA and get better clarity on what late-stage development would look like.

One moment for our next question. Our next question comes from the line of Marc Goodman from SVB.

This is Rudy on the line for Marc. So, for the pediatric formulation, I think you mentioned that QD may be like more beneficial in those patients. Can you maybe provide more color on the key considerations for the development of this pediatric formulation like what are the key differences between the pediatric formulation and your current formulation?

Yes, I can address that. So it's really about as we get into younger patients, we need to have a dosage form that they can take. So it needs to be something, especially as we get into very young kids, that they can either -- it can be mixed into a solution, or it can be a solution, or it can be used in soft foods. So, today the formulation development is focused on the adult population. And as I mentioned, we can get into adolescents with that presentation. But as we get into younger children, we'll be coming up with a pediatric-specific formulation, so that work is ongoing. As we progress on that work, we're happy to provide future updates.

Got it. Thanks for the updates.

One moment for our next question. Our next question comes from the line of Danielle Brill from Raymond James.

2 quick ones from me. I'm just curious, if you could provide more color on the factors attributing to the slight delay and expected timing of MDD data. And then with X-ACKT recruitment expansion down to 12 years of age, do you anticipate that this will accelerate your recruitment timelines?

I think, the delay in MDD is really, really minor. We had the study just got up and running last summer. Screening and randomization has been really consistent throughout. We gave our best estimate when we put the guidance in place, this was a few quarters ago. It was our best estimate at that time. And now, just getting towards the end of screening, we've just refined that a little bit. So, last patient is going to be screened next month and then you can kind of just do the math forward from there in terms of the screening period, the treatment period, the follow-up and all the steps that need to be done before we can get to topline data. So instead of the data being available towards the end of Q3, it's just, it's been delayed ever so slightly into Q4. On X-ACKT, I think it's too early to tell. Obviously, the opportunity, you could make the argument that as we -- and then, that protocol into younger children, that opens it up, but I think it's a little early to tell on whether that's going to accelerate timelines overall. But as we move forward, and when we get some experience, we're happy to share that information as we go ahead.

One moment for our next question. Our next question comes from the line of Laura Chico from Wedbush Securities.

I just have 2. So first, do you have any data indicating kind of the split on the use of ezogabine in pediatric versus adult patients while it's still on the market, any idea about pediatric uptake? And then second, within the [COSD] study of ezogabine in depression, do you have a sense as to how adherent patients were in that study? And realizing it was a smaller study, but the reason I ask because they were using 300 milligrams TID, and they had to titrate patients up initially, so trying to understand what impact that might have had when we're thinking about contrasting it versus something like 1101 that's administered daily?

I'll make a comment on ezogabine. Chris Von Seggern, I don't know if you have additional information. I mean, ezogabine was approved in adult focal epilepsy and that's what the label was in. They would have been moving into younger patients likely under an agreed upon pediatric plan with regulators, but to my knowledge, I think, it was removed from the market for commercial reasons prior to getting into a younger population. But, Chris Von Seggern, I don't know if you have any different perspective on that?

Yes. The only thing I would add, Ian, is what we did see from actual scripts from ezogabine was that there was some pediatric use while they were executing against that pediatric plan, but it was minor. So as Ian had mentioned, it was [Technical Difficulty] probably a majority of patients were adults.

Thanks, Chris. And then, Chris Kenney, I know we've spoken with Dr. Murrough a fair bit about his ezogabine study. So just the question about tolerability and adherence ezogabine 300 milligrams TID in that population?

Well, I can only be sort of vague and speculate with limited information, but I mean obviously the study was pretty positive. I mean, with a relatively small number of patients, they hit on basically every efficacy endpoint that they looked at. And then, so that's one of the reasons that gives us some optimism and the reason why we're going forward. I don't know for sure what the adherence was in that study because I don't think they captured it beyond sort of pill counting and so forth. But I would just speculate that if you're doing a study like that 3 times a day, you're going to have as good or better adherence with a drug once a day. So I think we're in -- I think, it's less of a concern with once a day than 3 times a day, but of course there is nothing in that publication that really kind of quantifies adherence that I can remember.

Laura, does that address your question?

Yes, it does.

One moment for our next question. Our next question comes from the line of Charles Duncan from Cantor Fitzgerald.

This is Elaine Kim on for Charles Duncan. In the X-TOLE OLE study, what can you tell us about treatment persistence seen thus far? And are you continuing to see similar levels of seizure freedom? Additionally, have there been any safety factors, including changes in body weight?

Great. Chris, do you want to comment on -- obviously, we're communicating on the 18-month cut of the data from last September, and then we'll do an additional cut of the data for 30 months, as we mentioned, later this year. But, Chris, maybe a few comments on the X-TOLE Open-Label Extension? Yes. So we'll update all this information at the American Epilepsy Society at the end of the year. The data cut that we've done so far show that over the course of 1 calendar year, patients gained about 1 kilo on average, and so that's fairly modest, if you look at the publications that have talked about weight gain in the context of antiseizure medications. To the point about seizure freedom, the open-label is still ongoing. And if you think about it in terms of patient years for the X-TOLE study, we still have the ways to go. I mean, we're sort of just past the halfway mark. And so, as patients have a longer opportunity to be on the drug, the seizure freedom numbers can only go up, right? I mean if you have a patient who is experienced 1 year of seizure freedom, you can't take that away, you can only add to it. So we're optimistic about where it's heading. And I'll have to leave it at that until we share details at the end of the year.

One moment for our next question. Our next question comes from the line of Mohit Bansal from Wells Fargo.

Maybe a couple of questions from my side. So -- I think one of your peers is talking about a little bit of challenge in terms of enrolling epilepsy trials at this point given the competition for those patients. And then obviously a couple of geographies are not -- like Ukraine and Russia are not available anymore. So are you seeing any challenges like that in terms of initiating those centers or enrolling the trial at this point? And my second question is regarding the uptake of Xcopri. I mean, it seems quite interesting and fascinating that how well this drug is doing despite the safety burden and complications, because our conversation with [Quralis] said that they like drugs which are less complicated, but this is definitely not the one. So does it make you more comfortable around the launch? Or has this launch surprised you as well?

Yes, I'm happy to address your first one, and then Chris Von Seggern can talk a little bit about the cenobamate launch and how we're thinking about it and how that may inform as well in terms of the attributes that we have for 1101. So in terms of epilepsy clinical development and recruitment and enrollment, as we mentioned earlier, we are progressing as we would expect and we're not seeing those headwinds that maybe others are. I mean, obviously we have the benefit, when we compare at least our clinical trial currently ongoing with some of the other clinical trials that are ongoing, is we do have a molecule with very strong attributes and compelling efficacy and that's the conversation that we can have with investigators and sites. The other ongoing epilepsy studies are different -- just at a different stage of development much earlier that haven't shown any proof-of-concept efficacy, yet. So, so far, we're tracking where we would expect in terms of enrollment and not seeing those recruitment headwinds. Chris Von Seggern, comment on cenobamate?

Yes. So cenobamate is obviously doing a great job early in their launch and we would agree that they've done very well despite some of the limitations of the products. From our perspective, there is ample room for multiple branded products in this marketplace, and we wish them well along their trajectory in the early days. I think you highlighted though something that's quite important, which is that we hear from our market research that the titration profile and the burden associated with the titration is actually quite cumbersome for physicians and it does both limit the ability for the drug to be used more broadly, and we hear quite clearly that physicians in general are not getting to the top dose effects of Xcopri because of safety or tolerability issues during the titration schedule. I mean, that just creates an opportunity for us, when we think about the positioning of our product to move upstream. Our ease-of-use attributes we commonly hear are much better than the other available products. And that gives us an encouraging view on where XEN1101 will be positioned, really fighting upstream of a product like Xcopri, which today, despite its strong start, is still really used for last-line patients. And we believe that 1101 will play sufficiently upstream in the future.

Helpful.

Thank you. This concludes the Q&A portion of the call. This concludes today's call. Thank you for joining, and you may now disconnect.