Great, I'm one of the SMID-cap biotech analysts at B of A. So guys, thanks for joining us.
Thank you, Jason. Nice to be here.
Yeah. So maybe this first question is more of a recap, right? You know, as we look ahead to XEN1101?
1101. Yep.
I should know that. You know, the goals into the follow-on confirmatory trial, how important is it to replicate what was seen in the first pivotal trial? Is there some room to lose? You've seen really great results. You've got a solid profile. So, what are just some of the goals that you hope to accomplish with it? Is it just purely replicating the results that you've seen, and moving on to filing?
Sure. Why don't I start and just give. I'll give a little bit of overview, just to provide a bit of context to your question, and then Sherry can give some specifics on that kind of translatability of your question. From phase II to phase III. So, yeah, lead molecule XEN1101. We're actually starting to call it azetukalner. So that's the USAN or the INN name, which has been approved now. So you'll start to hear more of that from us as we move forward. But yeah, we.
It's really hard to pronounce.
I think we'll get used to it over time. We have all of us have used XEN1101 hundreds, if not thousands, of times, so we'll transition to azetukalner, but we can use them interchangeably this afternoon. So we're obviously in a broad phase III program in epilepsy. That's why you're talking about the reproducibility. We have three phase III clinical trials ongoing: two in focal onset seizures, one in primary generalized tonic-clonic seizures. And then, you know, kind of the big update from us over the last couple of months is we had our phase II data in major depressive disorder towards the end of last year. We've now interacted with FDA from an end-of-phase II perspective, and we're ready to get into a large phase III program in major depressive disorder for the same molecule. I know we'll talk about that.
And then the third thing that I think we're starting to talk a little bit more about and give a bit more profile to is just some of the early stuff we're doing from a drug discovery perspective. We can talk about some of those targets and molecules as well, but let's get to your specific question on just the reproducibility from phase II to phase III.
Yeah. So as we think about our strategy for X-TOLE2 and X-TOLE3, you know, X-TOLE, we had the best placebo-adjusted efficacy seen in a trial population in focal onset seizures, and we're really trying to replicate those data. So we've really designed X-TOLE2 and X-TOLE3 to mirror our X-TOLE study in order to be successful. And those studies have been powered, you know, based on the data that we generated in X-TOLE. So as we look at the 15 and the 25 milligram dose, both of those arms have more than 90% power. In fact, we have more than 99% power at the 25 milligram dose. And there's really very, very few elements that we've changed moving from phase II to phase III. So the studies are just slightly larger.
We are moving to a 12-week double-blind period from 8 weeks, but as you all probably know, we did continue to follow patients in X-TOLE after 8 weeks. Most of our patients did roll over into our open-label extension, where we continued to follow patients, and we saw that there was continued seizure reduction from that 8-week to 12-week period. So we're really confident going into the phase III program that we'll be able to reproduce those results. And just broadly speaking, we know that in epilepsy, there's good reproducibility or translatability from phase II to phase III. So again, we're feeling confident about our ability to hopefully replicate those results, Jason.
Mm-hmm. And, you, you guys have been pretty clear on enrollment trends and reiterated on the earnings call. As competitors come into the field and are starting to run trials with aggressive timelines, does this present a variable at all for you, or are you just kind of close to the finish line, and it's really less of an issue as we think about any possible variables that could come into play from enrollment? Which is always a sensitive topic in the world of epilepsy, since Cerevel had some challenges maybe a year ago.
Yeah. So let's maybe take a step back. We'll provide some broad commentary. I can talk about the competitive space as well. I think in any therapeutic area, it's rare that you're the only molecule ever in a certain therapeutic indication, right?
Sure.
So we see kind of the ups and downs of, of competitiveness over time, and I think there's enough patients out there for, for multiple drugs to be developed in parallel. As certain molecules or companies have had challenges, often that's very specific to them. So, you know, the benefit that Xenon has, I think, when we compare to some of the competitors that you're, that you're referring to, is that we do have the experience, right? I think we ran a very successful program in the phase II study. We're trying to replicate that. The size of phase III is not materially different from phase II, a little bit larger, but approximately the same number of medical centers, the same jurisdictions. We're leveraging a lot of the learnings that we had from phase II.
And if we just think about the overall competitive space, there's actually not a ton going on in focal onset seizures right now. Some of the competitive molecules are just starting in terms of their efficacy studies. But we definitely haven't seen any other drug that has shown the efficacy results that we have and the type of experience we have in running epilepsy studies.
Okay. And then once the data are in hand, I imagine you can file the NDA pretty seamlessly. Can you talk a little bit about sort of what you talked about with the FDA in terms of safety follow-up and any interrogation of... I know ophthalmic assessments were part of sort of an AE of interest given predecessor molecule. Just sort of what do you agreed upon with the FDA to submit, and just how timely you'll be able to submit that NDA post the data?
Sure, I'm happy to give a little bit of perspective on kind of the package and what we expect, and Sherry can walk through the timelines. So yeah, we had, I mean, our end of phase 2 meeting in epilepsy was a couple of years ago, but I think we have clear alignment from FDA on what the requirements are, both on the efficacy and the safety side. So on the efficacy side, we've really talked about using X-TOLE. This was a large, well-run study, 3 active doses and placebo, statistically significant at every seizure reduction endpoint. We're going to use that X-TOLE study, and that's why we often talk about this first phase 3 study, X-TOLE2, as being on the critical path, because those are the two studies that we're going to file on in focal onset seizures.
And then in terms of the safety data, I mean, there's a lot there. Obviously, we have all of the toxicology work that we need to do. You know, a huge amount of that is already in hand. Clinical pharmacology, so we know exactly what studies we need to run from a DDI, renal, hepatic impairment, all of those, again, we have clear understanding of what we need to do. And then just the overall size of the safety database. So because this is a large market opportunity, we really think about ICH guidelines in terms of 1,500 subjects of unique exposure and then the longer-term exposure.
With taking our X-TOLE phase II study and going open to open label extension, I think we've mentioned this a couple of times, you know, on different calls, but we now have over 600 patient years of exposure. We have patients that have been dosed more than 4 years, so we have a huge amount of long-term safety data. So in terms of those ICH guidelines of 6 and 12 months exposures, we're going to have a huge amount of that safety data available.
Yeah, so based on the fact that, you know, really critical path here is X-TOLE2 timing. We've done a lot of the work that Ian's described in parallel, and a lot of the work has been completed to date as we think about building that safety database. We should be able to get quite quickly to an NDA, and we're, you know, we haven't guided on any of this, so I'll just give you some rough timelines. But, you know, we probably expect some time somewhere in the timeframe of about six months from the time we have our X-TOLE2 data to be able to submit an NDA. And then this will be a standard review period from an FDA's perspective, and that typically will take about 12 months.
We are doing a lot of the work on the NDA as we speak, just given the fact that we have already completed one of our registrational studies, X-TOLE. We've already started, our team internally, started to put together that package, and so, that would be the rough timelines that we would expect.
Okay. And where does the OUS partnership effort kind of fall within the sequencing of events? Is this sort of a post-data consideration for you guys versus go it alone? Can you maybe just.
Yeah, that's a great question. I think we've been pretty consistent with communicating our strategic objective, which is that we would like to commercialize azetukalner ourselves in the US. At this stage, you know, we've been consistent in saying that we're not looking to build that commercial infrastructure ex-US, just given the capital requirements and some of the complexities that come with that. We feel that those markets would be better served by an experienced partner, and whether that is regional partners or one ex-US partner is to be determined. But something that we're continuing to evaluate, you know, we are talking about timelines as well.
Obviously, we don't guide on this, but, you know, we don't currently need the capital or the capabilities to be able to do the development that we have committed to. And so we don't really see this as a near-term need for the company, but definitely something that we'll continue to evaluate and probably delve into more extensively post-phase three data.
Got it. Okay. And then maybe thinking ahead to launch, right? You know, as you, I think, have talked about with us in the past, this is a space where, you know, payers are typically covering one brand. I think you want to win in the third-line-plus setting. That, that kind of puts you squarely against maybe XCOPRI. So is that the right way to think about, you know, sort of you want to operate kind of mainly in that third, fourth line kind of setting and get the dominant share there, and how you think your profile stacks up against XCOPRI?
Yeah, absolutely. Look, I think you hit it on the head here with the fact that, you know, patients have to go through one or two generics before they're going to be covered for a branded agent. So as we think about that future branded space, it will likely be azetukalner and XCOPRI that are competing for patients in that third-line-plus stage. Look, I think XCOPRI, relative to its profile, we think is doing well. SK Life Science, who markets that drug, has guided to $300 million-$320 million in sales this year, and they're about 3 years post-launch. They did launch during the pandemic. They've also guided to reach $1 billion in sales before the end of the decade.
So we think for the profile of the drug, the fact that XCOPRI is not a novel mechanism, it has a fairly involved titration schedule of 12-16 weeks to manage the rare risk of DRESS, and that drug hasn't seen a mood benefit per se. You know, we think our profile stacks up really well against XCOPRI. So as we go across all of the different elements and, you know, we've confirmed this through various market research, Jason, as we you know, again, look at the novel mechanism of azetukalner, which is really important in this space as you get to third line and beyond, where you're really thinking about polypharmacy and layering additional mechanisms onto a backbone of probably, you know, sodium channel inhibitors.
And you look at the ease-of-use attributes, the QD dosing, no titration, rapidity of onset... we had best-in-class efficacy, the OLE data that we've generated with very high rates of seizure freedom in a difficult-to-treat patient population, and now the added element of a positive mood effect with the X-NOVA data. We really feel that in that jump ball scenario, azetukalner has a very high chance of winning against XCOPRI.
Okay. Yeah, and so, I think you, in the past, have generally talked about this as something that you view as a, a blockbuster drug. To be a blockbuster drug, you need about 25% share of the treatment-resistant space and XCOPRI, but for you ever launching, seems like they're on a trend to getting there. So like you said, you know, a drug with your profile, then you throw a mood benefit on there. Not looking for guidance, but, maybe if you can just sort of frame how you're thinking about sort of, maybe the, the, the peak sales potential of the drug.
Yeah, I'm happy to make some comments. You know, a couple of things. One, if you look at a drug like Vimpat, which I think is an interesting comp as well, last full year of branded sales was 2021, $1.8 billion in sales. I think, again, you know, Sherry walked through all of the attributes of azetukalner, and I think the drug stacks up really well against Vimpat as well. And Vimpat, based on our calculations, probably had less than a 10% share. So I think you can have a very large commercial opportunity without us having to have a significant amount of penetration into the market, just given the number of patients that there are.
I mean, you know, it was at the end of last year that we had the data for azetukalner in major depressive disorder, and then what we've done more recently over the last couple of months is we've now updated our TPP and tested that with epileptologists and neurologists. And the commercial opportunity in terms of our modeling based on that new TPP has gone up with all of the things that Sherry went through, from mechanism to efficacy data, to long-term extension, rapidity of onset, all of those things. We add antidepressant properties to the drug. We think it's gonna have a significant impact and to the commercial opportunity, and a good comp for that is Lamictal, right? You know, lamotrigine was a drug that physicians believed had a mood benefit and that had a significant impact on the commercial opportunity.
Can you remind me of the numbers involved here? I think the in the past, there's some literature to suggest 40% of the focal onset patients have unipolar depression. Do they have a diagnosis for unipolar depression, or is it just, you know, I don't know, a discussion with their clinician that they're suffering from depression, but maybe not a formal diagnosis, and they're not seeing a psychiatrist? I'm just wondering if you can maybe unpack that a little bit?
Yeah, we can give you some perspective, but I still think, this is an opportunity where we can provide a real leadership role in medical communications to the field as well.
Yeah.
So if you go back to the literature, the literature would suggest it's a little bit all over the map, that somewhere between 15%-50% of patients with epilepsy will have comorbid depression. If you talk to epileptologists, especially those that are treating those patients that are later in line, they will talk about the percentage of their patients that have comorbid depression as being much higher than that. We did a burden of illness study, which we've presented those data at the American Epilepsy Society meeting last December. So there's a poster that people can go and take a look at, and based on the work that we've done, it suggests that likely many of these patients are underdiagnosed.
Mm-hmm.
For their depression as well. And so I think all of that provides us an opportunity to continue to educate the epilepsy community about comorbid depression, the risks associated with that, and maybe some tools that can help physicians in that area.
Okay. And where does generalized fit into all this? Right, you know, you have your study, and I would say that, broad-spectrum ASMs have done pretty well. So it's not a bad thing to have, but it's also, when you talk to physicians, may be framed as a lower unmet need relative to focal onset. So how important is that? And so, what are some of the goals, I guess, as you think about a trial? Or is it just literally we have a solid FOS drug, and we're just. If we have a broader label, we think that that gets us some incremental revenue.
Yeah. So just as a reminder, we are running a single phase III study called the EXACT study for PGTCS. We're looking at the 25 milligram dose, which is our high dose versus placebo. That study is ongoing. You know, we have good, I think, rationale for pursuing PGTCS. As many of you probably know, most drugs that work in focal-onset seizures work in PGTCS, with the exception of carbamazepine and the carbamazepine derivatives. You know, there's other kind of pieces of evidence that substantiate our belief that azetukalner should work in this indication. We have broad preclinical activity, which is often a good sign with azetukalner.
We also looked at one of the subtypes of seizures that we measured in X-TOLE were they were focal-onset seizure patients, but they had a subtype of seizure that were started as a focal and extended to a bilateral seizure, and we had really good efficacy in that subtype, actually, more than 80% reduction in those seizures. So we have good evidence to support it, Jason, and we'd generally kind of think of the effect size that we would expect to see in this patient population as being roughly the same as what we would want to see in FOS, so about a 30%, you know, delta between active and placebo.
So look, you know, we'll continue to enroll in the study, but we're confident it should work, and it should increase the total addressable market. PGTCS is the second-largest category of adult epilepsy patients, as you think about the overall, you know, basket of 3 million adults with epilepsy, roughly about 30% of them have generalized epilepsy, and the largest proportion of those patients have PGTCs. So it should increase our TAM, and we hope to get that on label earlier in the product life cycle than we've seen with other anti-seizure medications.
For most successful ASMs, think something in the 20%-30% of revs typically coming from generalized, the rest coming from FOS?
That's probably a fair statement.
Okay. Maybe shifting gears to the MDD. You know, when we first started covering the company, I remember, you guys weren't totally sure which way this was gonna go, but what got you over the hump, right, when you saw your phase two data to go all in on this indication? Ultimately, was it what you saw on the tolerability, or sort of the combination of that and other factors?
Yeah, for all this stuff, we're always going to look at the totality of the data, right? So let's review a little bit of the phase 2 proof of concept data from the X-NOVA study. I mean, the things that we saw that we were able to talk about publicly, which I think gave us confidence, was obviously we saw a clear dose response of the drug, definitely, an increase in activity from placebo to 10 milligrams, 10 milligrams to 20 milligrams. That was clear. We had clear separation between active and placebo. We were statistically significant on MADRS at week one. We narrowly missed significance at week six. When we looked at HAMD-17, which is another clinical endpoint of depression, we were statistically significant at week six.
We were stat sig on anhedonia as well, which I think is a key opportunity here and differentiator for this mechanism versus some of the drugs that are currently available to treat depression. So when we looked at all of those data... And then on the safety side, I think the expectation going in is that the tolerability may have not been as good in depression versus the epilepsy patients. And what we found actually, that it was—we saw the same side effect profile, so we're not seeing new adverse events in depression, but the overall levels, with the caveat that this is a cross-trial comparison, but we saw the levels of those adverse events lower in the depression studies than we've seen in the epilepsy studies. And we're not seeing some of those adverse events that are concerning to some of the patients that are being prescribed the currently available antidepressants in terms of sexual dysfunction and weight gain.
So when you look at all of that, I think we truly have drug activity. I think this is important in the epilepsy space we've talked about, but I think there was enough there for to give us confidence, and when we spoke with shareholders, to give them confidence as well, to help support us to do late-stage clinical development. So now, as I mentioned at the outset, we've had our regulatory interaction, and we're ready to run late-stage clinical development in depression.
Just to add to that point, you know, we did a lot of commercial work before we actually unblinded X-NOVA, just thinking about whether there would be a path forward commercially for azetukalner, both in epilepsy as well as in depression. So, you know, what we found through our work, which was looking at, you know, pricing dynamics between the two therapeutic areas and understanding the payer dynamics, was that we could, in fact, reconcile those two because there are no other drugs that have, you know, both labels. And so we needed to make sure that we were comfortable in that respect, that there was a path forward versus potentially pursuing this with a follow-on potassium channel modulator. And the other point that, you know, also works in our favor here is that a lot of the work that we're doing on the broader development plan for the epilepsy package.
So as we think about the work that Ian mentioned earlier on the clinical pharmacology studies, the toxicology, the CMC work, a lot of that can be leveraged in our MDD program, which is great, and we've now confirmed that as well in our end-of-phase two interaction with FDA, that we recently held in discussing our broader MDD program.
Yeah, the market you mentioned, it's obviously very big, but it's getting more complicated in some ways. The first couple of lines, you know, you'll cycle through SSRIs, SNRIs. You get kind of like to the later lines, you get an adjunct with an atypical, but kind of in between, is that kind of where you see the opportunity with some white space to play? You see a drug like AUVELITY launch is probably like the recent new mechanism to the space and launching reasonably well. You know, is that a fair way to kind of just directionally think about the space you see playing and that there's appetite for different mechanistic alternatives given the churn?
Yeah, absolutely. I mean, I think there's no doubt this is a massive market, right? There's north of 20 million Americans that suffer from depression. North of 50% of them are on pharmacotherapy. A third of those are not well controlled- on current medication. So a massive opportunity here for a lot of players, and we are not surprised that it's, call it, sort of more crowded from a competition perspective as compared to focal onset seizures. But we just think that there's such a big opportunity and so many patients that, you know, there's room for multiple branded agents to play together in this space. And again, as we think about the emerging profile of azetukalner in depression, we feel like there are many elements that make the profile stand out relative to everything else out there. So again, novel mechanism here is really important.
As we know, depression is heterogeneous, and there are going to be many patients who don't respond to certain mechanisms or perhaps don't tolerate them. We have the rapidity of onset, which we hope to replicate in phase III, as well as, you know, potential benefit on anhedonia, which could be really important commercially as we think about that being a key comorbidity, that's not appropriately addressed by the standard of care, SSRIs and SNRIs. And then a differentiated tolerability profile, which is another important component as a lot of patients will cycle off of those SSRIs and SNRIs because they don't want to deal with the burdens that come with some of those tolerability issues, whether it's weight gain or sexual dysfunction, which we haven't seen with azetukalner.
So we absolutely think that, you know, big market. We expect to see more competition. We know it's a difficult space, so not all of them will end up getting across the finish line, but we think there's a great opportunity here for our drug.
Mm-hmm. Okay, and it sounds like the end of phase 2 meeting was kind of largely a formality, and it doesn't seem like there were many surprises. You have good data. You're moving forward with a pathway that's pretty well trodden. Is that fair summary? I don't want to diminish, you know, the step per se, but it doesn't seem there were a lot of big surprises to come out of it.
Yeah, and we didn't think there were going to be big surprises going in. I don't think the asks were unreasonable on our side. It was more, all of our regulatory interaction historically had been through neurology.
Mm.
Right? And psychiatry is different, and so we wanted to interact with psychiatry. To the point, we mentioned this on our quarter last week, we actually didn't have the phase 2 meeting. So we submitted the briefing book, we submitted our questions, and giving our perspective, and we had written responses from FDA that addressed all of our questions. And so those written responses become the formal minutes, and we had the opportunity to actually cancel the meeting. So to your point, I'm not sure formality is the right word, but I think it was a necessary step. But really no surprises coming out of that. I think we have good alignment as we move into the phase three program.
You know, as you think about the anhedonia angle, which I know you guys have talked about as, you know, potentially differentiating, it strikes me as like, not really an area that you can really enrich for because it's like most patients anyways have anhedonia. So it's, seems like you kind of go at it from perhaps maybe a statistical powering perspective and make it a key secondary endpoint. Is that sort of how you guys are thinking about from a trial design perspective, but otherwise just run three consistent trials like most companies in the space, to mitigate your risk of a high placebo effect in one, and that's, that's sort of a broader kind of framework to think about it?
Yeah, I think you've characterized that correctly. So, we'll always power for the primary endpoint, which we've chosen HAMD-17 as the primary endpoint in our phase 3 program. You're right. As you... And one of the adjustments that we're making from phase 2 to phase 3 is we're gonna increase the cutoff criteria of entry into the study, which means we will bias the study a little bit more to moderate to severe patients. As you move patients moderate to severe on clinical scales of depression, they will be anhedonic and have increased scores on scales of anhedonia. So you're right. Essentially, that's not two different populations; that's the same population.
I mean, we were statistically significant on SHAPS, which was a scale that we used to measure anhedonia in phase 2, and although we haven't given the final sample size calculations for phase 3, it will be a multiple of the size of our phase 2 study. So from a powering point of view, we feel very comfortable both with the primary endpoint of HAMD-17 as well as other endpoints, including anhedonia.
Yeah. Okay. Maybe last couple minutes here, Nav1.7's an area of high interest, and I know you're doing some work pre-clinically. How early could you expect to be in the clinic with that? And your just general thoughts on, you know, Nav1.7 versus 1.8, in terms of maximizing the analgesic potency of a therapeutic option.
So, I often say that Nav1.7 is near and dear to our hearts. At Xenon, we were the first to clone the gene many years ago. We've been working on the target for some time. It's a challenging target from a chemistry point of view. I think we've made some real advances, real kudos to the team internally on the drug discovery side at Xenon. What we said for both Nav1.7 and two other targets that we're looking at pre-clinically, Nav1.1, and our additional Kv molecules. For all of those, we're kind of at candidate selection, which is a reasonably high bar, for us at Xenon, but that's that transition from non-GLP into GLP toxicology.
So you should expect multiple molecules on those three targets in GLP toxicology studies this year and next year, followed by IND filings and getting those into clinical development. You know, I think in terms of compare and contrast, I think it's great to see selective sodium channel inhibition, providing analgesia that we're seeing in the Nav1.8 program from Vertex. I would say that from our perspective, Nav1.7 is a better target from a genetic validation point of view. The genetics are extremely strong on this target, both on the loss of function and gain of function side of things. So we're really excited about the target. Both are involved in pain signaling. I think both can be, you know, interesting targets long term.
But given the genetics on 1.7, we're really excited to have the right chemistry, the right molecule to run the human experiment, to see if we can really move forward with a non-opioid novel mechanism in analgesia.
Great. And so sort of an open-ended timeline on that ultimately still?
Yeah. I mean, as I mentioned, we should have candidates move into toxicology studies with INDs, you know, in 2025. I think for a target like this, even for other ones, I think you're gonna see multiple candidates from us, not just one candidate move forward. And then as we fast-forward into human clinical development, obviously, we need to get it through healthy volunteer studies. But the nice thing about pain is we can do early proof of concept studies that are quite quick to run, where you can see whether you're having an effect. Usually, that's in a model like bunionectomy.
Okay. Well, great. We're out of time, but thank you so much for joining us.
Great.
Thanks, Jason.
Thank you.
All right.