Ladies and gentlemen, thank you for standing by, and welcome to the Q3 2019 Xenon Pharmaceuticals Inc. earnings conference call. At this time, all participant lines are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Ms. Jody Regts. Ma'am, you may begin.
Thank you. Good afternoon. Thanks 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 our 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 investor 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, good afternoon, everyone. Today, I'll provide an update on each of our clinical stage programs, including XEN496, XEN1101, XEN901, and XEN007. I'll highlight some of the important milestone events anticipated this year. After Ian's financial commentary and a recap of our recent agreement with Flexion, we'll open the call for questions. I'll start with XEN496, a KV7 potassium channel modulator we are developing as a treatment for a rare pediatric neurodevelopmental 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 but 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 XEN496 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 one small pivotal trial could be sufficient, provided we see substantial evidence of effectiveness in KCNQ2-DEE. A 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. In addition, the original tablets were unstable in solution when compounded, often turning blue in color. We have now completed development 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 chance at 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 XEN496 into an IND filing in the first quarter of 2020 to support a pivotal trial. Next up in our pipeline is XEN1101, a 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 II-B clinical trial is currently underway in the U.S., 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 treatment in approximately 300 adult patients with focal epilepsy.
The primary endpoint in this trial is the median % 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 and nine-month toxicology studies to support the planned 12-month open label extension for patients enrolling in the phase II-B 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 and highly selective NaV1.6 sodium channel inhibitor being developed for the treatment of epilepsy.
A phase I clinical trial was completed to evaluate XEN901 safety, tolerability, and PK in both single ascending and multiple ascending dose cohorts of healthy adult subjects and included a pilot TMS pharmacodynamic readout. As with XEN1101, the observed changes in TMS-EMG and TMS-EEG parameters suggest activity of XEN901 in the target CNS tissue. The FDA provided feedback on the requirements to support advancing XEN901 directly into a pediatric clinical trial examining its efficacy in pediatric patients with SCN8A developmental and epileptic encephalopathy, otherwise known as SCN8A-DEE. As with XEN496, we've developed a pediatric-friendly granule 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 XEN901 and final results of the 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 advance 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 rare forms of epilepsy, such as SCN8A-DEE and KCNQ2-DEE. On our 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 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 our 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 our experience with the previous KCNQ2 survey that this data could be extremely useful to inform the design of a pediatric clinical trial for 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 XEN901. 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 U.S., flunarizine has been reported to have clinical benefit in treating migraine and other neurological disorders. The FDA has granted Xenon a rare pediatric disease designation for XEN007 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 fluttering, and automatisms associated with generalized three hertz spike wave discharges on electroencephalogram, or 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 in preclinical models of absence seizures. 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. When combined with valproic acid or ethosuximide, significantly reduced the spike wave discharge 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 in 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 after 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 3-13 years, with a peak at 6-7 years. Absence seizures can have a significant impact on quality of life. Episodes of unconsciousness may occur at any time, 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 if 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 impact on learning.
Of the estimated 40,000-50,000 CAE patients in the U.S., 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 XEN007 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. 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 U.S., Canada, and Europe for our XEN1101 phase II-B 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 are currently conducting pharmacokinetic studies in healthy adult volunteers to support the anticipated pediatric clinical trials in both KCNQ2 and SCN8A-related developmental and epileptic encephalopathies with IND or IND equivalent filings expected in 2020. 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 go 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. 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 and NaV1.7 inhibitor. Flexion's new preclinical program, known as FX301, will consist of XEN402, formulated for extended release from a thermosensitive hydrogel. The initial development of FX301 is intended to support administration as a peripheral nerve block for control of postoperative pain. Flexion has indicated that it anticipates initiating FX301 clinical trials in 2021.
We believe that FX301's extended release formulation from this thermosensitive hydrogel could be well-suited for control of postoperative pain based on the in vivo data generated with XEN402 to date. 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 %. Now moving on to our financials. Cash and cash equivalents and marketable securities as of September 30th, 2019, were $94.6 million. This compares to $119.3 million as of December 31st, 2018.
As of September 30th, 2019, there were approximately 25.8 million common shares outstanding and approximately 1 million Series 1 preferred shares outstanding. These are convertible into common shares on a one-for-one basis at the option of the holder, subject to certain limitations. For the quarter ended September 30th, 2019, we reported total revenue of $3.5 million in connection with the transaction with Flexion. Based on our current assumptions, this includes fully supporting the planned clinical development of XEN496, XEN1101, XEN901, and XEN007, we anticipate having sufficient cash to fund operations into 2021 as previously guided. This excludes any revenue generating from existing partnerships or potential new partnering arrangements.
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 formulations 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 XEN496 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. Supporting the investigator-led phase II open label clinical trial of XEN007 as a treatment for CAE with data expected in 2020.
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. 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. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Paul Matteis 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. 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 variants in that channel. The initial study from our standpoint, we'd like to have a 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. Would we be interested in expanding and extending beyond that in time? Absolutely. That's not the plan for the initial study. Ideally, we would seek approval initially for an 8A indication with label expansion thereafter. As was mentioned in the update, of course, we are.
Also managing plans internally, although we have not pulled the trigger on this yet, around focal adult epilepsy for XEN901. That's clearly an indication of great interest given that sodium channel inhibitors are the mainstay of treatment 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, we'll update guidance accordingly. In terms of the XEN496 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 interesting and educational six months as we've engaged really the world-leading group in this 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. Not an open-label trial. I think you can expect a study that probably will have a few dozen subjects. I've been asked this many times before on calls. Certainly not less than 20, but probably not more than 40 plus, in that range. It will probably be a global study with an IND, also looking to have sites outside of the U.S. as well. In terms of details, primary endpoint most likely will be median seizure frequency rather than video, that's something to discuss with the FDA. In terms of the specific details, the statistics, the duration of treatment, the dose escalation, I think we'll be well-positioned to really disclose this once 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 update, that will be completed this year. Really, over the coming 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. 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.
I really appreciate the additional color. Thanks a lot.
Not at all.
Thank you. Our next question comes from Yatin Suneja with Guggenheim Securities. You may proceed.
Hi. Yeah, it's Eddie on for Yatin. Thanks for all the updates today. A couple of questions. First, for 496, it 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? 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 into sort of what types of numbers you're looking for in terms of seizure reduction?
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. More importantly for us was the drug that was then compounded and used and published in "Children with KCNQ." Essentially, the expectation is we'll see the granule perform in the adult similar to how the old Potiga tablets were performed. This isn't a head-to-head study. We'd be comparing with historical literature reports. That PK, obviously, if it's identical or very similar to, it allows us to essentially replicate dosages that were used previously with the adult formulation when used off-label in these children.
That's published work, where 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. Look, an ideal result is it behaves exactly like or very close to the Potiga tablets did in adults. Equally, a result that just shows good exposure will be helpful in allowing us to finalize the dosage. Again, one of the reasons we're hesitant to disclose the final study design, including dosages, is because the outcome of the study could influence how long we titrate, what we're trying to dose to, the duration of treatment, the ultimate milligram per kilogram dose, et cetera.
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. There are different dosages used, different kids' ages. 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 or 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.
The next question that's probably on your mind is: Well, what do we think those effect size assumptions would look like? 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%-40%. In the pediatric studies that have been published, if you look at Epidiolex and Dravet, for example, probably 50%-plus. fenfluramine was higher in Dravet, probably around 60% in their larger phase III trial. We're probably somewhere in that range. It will have to be at minimum sort of clinically meaningful in the sort of probably 30%-50% or 30%-60% effect size range.
This is a discussion that KOLs will help us make with the regulators as to what they deem a clinically meaningful effect size. It's probably more than what one might typically see in focal epilepsy. I don't think you have to replicate a 60-plus% Dravet finding, or match that, to deem a finding effective. It's probably in that 35%-50% range or thereabout, and that'll be what we'll model the study on. 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. Really quickly, if I may, for 1101, would you plan on tightening your guidance at all and 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. 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 coast in any study, 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. 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.
Our next question comes from Maury Raycroft with Jefferies. You may proceed.
Yeah. Hi, this is Swapnil on for Maury. Thanks for the updates today, and thank you for taking my questions. I had a few questions. First is, we noticed that the initial IND guidance for 496 was 4Q, and now it is 1Q 2020. Is there any additional work that needs to be done before the IND filing that is causing this delay?
No, 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 U.S., 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 to have stability early in the new year, early in 2020, we would expect to submit the IND thereafter.
Okay, thanks.
Yeah.
We see you have a very strong presence at AES as well. Do you think you might have any PK data from 901 or 496? If you could provide a little bit of more guidance on what to focus at AES based on the new pipeline assets.
Yeah, good question. The answer is no. We're not going to have final study reports, and I don't think with final QA tables and datasets by early December. I think we need to just be cautious about presenting data once it's really complete and final. The answer is no, we won't be presenting intermediate datasets on the PK studies for either XEN901 or XEN496. The focus of much of the 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 our next-generation compounds outside of XEN901, 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 electrophysiological 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 interneurons, in pyramidal excitatory neurons to show a very clear novel mechanism of action to our drugs. 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, that's it.
Okay.
Okay. That's helpful. One final question on XEN007. Have you actually started dosing any patients in this trial? Although you said the patients that you are going to enroll are going to be failures of standard of care.
Right
You're just making sure that these kids would not be on any background therapy during the trial?
Right. 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, valproate and ethosuximide. As I mentioned in my update, about 45% of kids are over time recognized as treatment failures, either because they don't achieve sufficient control or because in many cases, it's a tolerability issue. These are kids that have quite significant seizure burden despite having tried two or more of ethosuximide, valproic acid 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 three hertz spike wave activity as well.
They must be on at least one anti-seizure medicine within one month baseline, with a stable seizure count. They can be on adjuvant treatment. These kids are not typically enrolled refractory or nothing. They're on a drug, but it has to be stable drug for a month prior to enrollment. 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 P 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-month treatment period, and then a one-month follow-up. The primary endpoint is really the absence seizure frequency between your visits. It's visits three and four, which is really the one-month to two-month period compared to the one-month baseline.
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 EEGs, for example, during visits, tolerability, et cetera. We're hoping to have open label data in 2020. Depending on enrollment, this could actually go quite quickly with data earlier in 2020 rather than the latter part. Fingers crossed. These are 4 to 19-year-olds, children and adolescents. As I mentioned, we expect to enroll about 20 subjects in the study. It's about a four-month period of the study per child. It's a month baseline, two months treatment, and a one-month follow-up, which is then the fifth visit end of study at the end of the one month. I hope that summarizes. In terms of dosing, they'd land up initially getting a 10 milligram dosed at nighttime.
Depending on response, if they haven't responded to the 10 milligrams at their one-month visit on maintenance, they are escalated to a 15 milligram dose, which is then continued for the second month. That's, I think, in summary what the study looks like. They most likely will be on other meds. If they are, they have to be stable for a month during baseline. There might be infrequent cases where they aren't on adjuvant medicines, but they are having seizures. They need to have failed to respond fully or to tolerate to two of the gold standard drugs, as which I mentioned, ethosuximide, valproic acid, and lamotrigine.
Okay. Very helpful. Thank you very much for taking the questions.
Pleasure.
Once again, ladies and gentlemen, if you have any questions, please press star then one. Our next question comes from Antonia Burina with Bloomberg. Please proceed.
Hi. Thank you for taking my questions. Just related to XEN007, you mentioned that in addition to modulating calcium channels, it also has an effect on dopamine, histamine, and serotonin. Just wondering whether the efficacy you're seeing in animal models of CAE, whether you believe that's mediated solely by the calcium channel effects, or whether the other pathways?
Yeah, Antonia-
are involved as well.
It's a good question. I don't think we know today the full extent of the polypharmacology of the drug for each of these indications. Just very hard to tease that out. 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. When added as adjunctive therapy in that same model, there is enhanced benefit over just one of those drugs alone. 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 we'll either see this drug as working or not in this proof of concept study, in which case we'll take some decisions on whether this looks like the ideal development strategy. The fact we're 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 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. As we think about orphan drug designation, as we think about orphan drug exclusivity for the product, that could be our 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. 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. The ultra-orphan indications we've talked about before are certainly still on the table and under review.
Okay. 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?
Look, I think we haven't really gone that next step. That's obviously work we'll 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. There have been a number of studies, although randomized control studies, fairly small, but about 445, 446 CAE subjects have been dosed with current standards of care, ethosuximide, valproate, or lamotrigine. That's sort of the data I cite in terms of failure rates has come out of that. So I think we could have, again, a larger study, phase II, 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 size of patient sample size we need, I can't give you those facts today.
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 our 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 U.S., all non-clinical and clinical rights. Now, as I said today earlier, we're announcing for the first time the initiation of the first phase II study with this drug. This is a drug that has some tremendous history. It's very well known outside of the U.S. 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.
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. 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. That's the thinking, and I'm sure it will unfold over the course of the coming months as we get closer to 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.