Okay. Thanks. We're going to go ahead and get started with our next session. I'm Andrew Tsai, Senior Biotech Analyst at Jefferies. Thanks for tuning in. It's my pleasure to have the Xenon team with me to my direct right, Ian Mortimer, CEO, and to his right, Sherry Aulin, CFO. Welcome, both of you.
Thanks, Andrew.
Thank you.
As always, maybe briefly spend a couple of minutes talking about the Xenon story, what you're working on, and milestones that we can expect over the next 12-24 months.
Perfect. Yeah. Can everyone hear me okay? Great. So thanks, Andrew. Thanks very much for hosting us. It's a really pleasure to be here. So I'll provide a quick overview of the company and the focus of the portfolio, and then Sherry will walk through some of the milestones. I think this is a really great time to be here. We've had a good 2024, but I think 2025 is really setting up for an incredibly important year for Xenon with a lot of clinical data coming. So for many people that know the company well, there's really kind of three things that we focus on right now. The lead molecule, which is a potassium channel modulator that we call azetukalner. There's two big activities at the company. One is in epilepsy.
So we have a large phase 3 program ongoing in both focal onset seizures as well as a second type of epilepsy called primary generalized tonic-clonic seizures. So there's three phase 3 clinical trials that are ongoing in parallel right now. And then the second big part of the organization and focus is broadening azetukalner outside of epilepsy into psychiatry. We're going to run three phase 3 clinical trials in major depressive disorder, with the first one that's going to start in the near term. And then what you're hearing a little bit more from us is on our early stage discovery portfolio, which is maturing very nicely. We should see multiple INDs next year. There's really three targets that we care a lot about. One is Kv7. So these are additional molecules on the same target as azetukalner.
We think we can have some nice therapeutic diversification as well as backup molecules for our lead asset. The second is a sodium channel called NaV1.1, which we think is really important in both seizure disorders, but also potential for disease modification in Dravet syndrome. And the third target is probably where we spend more of our time in terms of the discovery portfolio. It's a sodium channel called NaV1.7, which is involved in pain signaling, and we have identified candidates, and we should have an IND in that program next year as well. So I know we'll dig deeper in all of those, but I think we have really a leading asset in epilepsy on the backs of really strong phase two data called our X-TOLE study. We have a broadening interest in psychiatry, and then we really have a nice maturing early stage portfolio as well. Sherry?
Thanks, Ian. So just to reiterate what Ian said, 2025 is really going to be a pivotal year for Xenon as we unblind X-TOLE2 which is our first phase three focal onset seizure study. That study is really what is between us and an NDA filing and commercial launch in the U.S. in the FOS patient population. So we're really looking forward to those data coming next year. On the depression side, we'll get more into this, but we are embarking on a large phase three program in MDD off the backs of our X-NOVA data, which read out last year. So our first of three phase three trials is expected to initiate later this year, so before the end of this year, and then we'll have the next two studies initiating likely sometime in 2025.
We also have an investigator-sponsored study with our lead molecule azetukalner in MDD as well. That study has completed enrollment, and we expect to have those results in the first half of 2025, and then, as Ian mentioned, a lot happening on the preclinical side, so we now have multiple Kv7 candidates in IND-enabling studies, and we have a lead candidate nominated in our NaV1.7 program that's in IND-enabling studies, so there we'll expect to see multiple IND filings and hopefully initiation of some phase one studies next year, and then just to wrap things up from a balance sheet perspective, we're in a great financial position. We ended last quarter with north of $800 million in cash, which fully funds us into 2027.
So that covers us both on the broad epilepsy program as well as the phase three MDD program and includes as well maturation of our preclinical pipeline over this timeframe. So we're excited to execute on our pipeline, Andrew, and to talk to you more about some of the details.
Wonderful, and I'm excited to follow all the progress coming up. There's a lot to come, and typically you've had an update. You provided updates around another broker conference in January. Can we expect another kind of splash potentially in terms of perhaps what indications you want to pursue with your Kv7s and all that, or even indication expansion opportunities for azetukalner?
Yeah, I think we always kick off the new year with a roadmap for the upcoming year. So that will be no different. I don't think you're going to see anything really new from us. I think we've been really consistent in our disclosure, the focus on the lead molecule, the phase 3 program in epilepsy expanding into MDD. You did mention, is there indication expansion outside of epilepsy and MDD into other psychiatric conditions? Probably. We've been doing a lot of work. We truly believe potassium channel modulation and specifically Kv7.2 has broad applicability. We do believe that this is a pipeline and a mechanism. So you are going to see more from us as 2025 unfolds. Obviously, it's going to be a big year for clinical data as well.
In terms of the early stage pipeline, we'll start getting more granular, not necessarily at the beginning of the year, but as the year unfolds, as those molecules move into human clinical development. Obviously, initially we would start with healthy volunteer studies. But yes, I think on the Kv7, the opportunity is to go much broader than we've done with azetukalner. And the nice thing is because, as Sherry mentioned, we have multiple chemistries, multiple candidates that we can start differentiating therapeutically candidate by candidate, which is a little bit different than what we've done with azetukalner.
A teaser or a flavor of what you could pursue indications for the Kv7s?
Sure, so we're always thinking about both genetic validation and pharmacologic validation. At the top, we still think of seizure disorders, so we think we have an incredibly valuable asset in azetukalner, and maybe this is a good opportunity to just take a step back and review why we're so excited in epilepsy, so in our phase 2 data, which is our X-TOLE study, on a placebo-adjusted basis, we have seen the best efficacy ever seen for an anti-seizure medicine in the most common form of epilepsy, which is focal onset seizures, and then you add all the other attributes of the molecule. This will be an only-in-class mechanism in a therapeutic area that is treated with polypharmacy. We have statistical significance at week one because you don't need to titrate the drug. You are on your therapeutic dose on day one.
We see clear separation between active and placebo right away. We're starting to see mood benefit of the drug as well. We know that mood and depression is a key comorbidity for this population that's having a seizure disorder. We just think when we line up all of the attributes of azetukalner in epilepsy, it's really the strongest profile we've ever seen when we look back at all of the other anti-seizure medicines that are available. At the top of the validation, I think is epilepsy. We will do more work in epilepsy with the mechanism. Then in psychiatry, we've talked about MDD. I think there's good rationale for anti-seizure medicines in bipolar depression as well. Then there's good rationale in pain. There was a Kv7 drug a number of years ago that was approved in pain. It's no longer commercially available.
So we think there's some good therapeutic validation in pain. There are other diseases that are interesting with the mechanism. There's been some literature on motor neuron disease like ALS, on tinnitus, and some other areas. So I think we have really this richness of chemistry, which allows us to pursue a lot of different opportunities as we move forward.
Great. Interesting. I'll be patient for the updates. So speaking of epilepsy, phase 3 data, second half 2025, do you plan to press release when you announce enrollment completion?
So typically what we've done is we've provided guidance on top line. And so today we've said top line we anticipate will be second half of next year. As we get closer, Andrew, we expect to refine that timeframe. So we'll probably drill down to a specific quarter as we get closer to, and then maybe could refine even further to a window within a quarter is what we would normally think about doing.
Makes sense. And as I think about potential risk to the study, not that I mean, I have high confidence it's going to work. Placebo, I mean, maybe placebo has crept up over the years in seizure studies. So how have you tried to control your best for placebo?
Yeah, I mean, one of the nice things about epilepsy in the field of neurology is reproducibility and consistency is probably the highest we see in CNS indications. And so drugs that work in phase 2 work in phase 3. You get this real nice consistency across studies. So we have high conviction going into the phase 3 readout. There is a placebo rate in these studies. I think we did a really nice job of managing that in phase 2. You're right in some of the meta-analyses that have been done. It does look like placebo rate has gone up over the last couple of decades. Usually people are modeling around a 20% placebo rate, so a 20% reduction in the baseline seizures in the placebo group. We were at 18% in our phase 2 study.
We're not really doing anything different in phase three than we're doing in phase two. We had an excellent outcome, and really phase three is about reproducing an experiment that worked really well rather than introducing changes, so the phase three inclusion-exclusion criteria are the same. We have a little bit more sample size per arm, but the power is excellent. At our low dose in phase three, we have more than 90% power, and at the high dose, we have more than 99% power based on the effect size in phase two.
How similar are the baseline characteristics looking in the phase three compared to the phase two?
Yeah, so we absolutely have blinded baseline demographics, but as everybody knows, those demographics can change over the course of the trials as we enroll more and more patients. So our practice is that we don't speak about those baseline demographics publicly for that reason because they do obviously evolve over the course of the trial. But it is something that we look at on a blinded basis. And to date, we haven't had to make any adjustments within our trial to account for anything that we're seeing that is concerning or stands out to us. We do disclose baseline demographics when we actually announce our results. So you can expect to see very similar disclosure on baseline demographics from us as what you have seen in our other studies.
If X-TOLE2, which is reading out second half, is successful, how quickly do you file that NDA? And would you file an EMA or sorry, MAA application right away as well?
Yeah, great question. So we're waiting for X-TOLE2 data for our NDA. And we've really put together all of the other work. So in addition to the randomized controlled studies, there's also a number of other work that needs to happen in parallel, including a number of clinical pharmacology studies, toxicology studies, for example, two-year CARD. All of that work is well underway and nothing is gating to our NDA. So as soon as we have the X-TOLE2 top line results, we'll be in a position to be able to work towards that NDA. I mean, we haven't provided specific guidance, but generally you'd sort of think about roughly six months from those top line data to an NDA filing. And then on the topic of European approval, so that's really the key purpose for X-TOLE3, Andrew. We don't expect to require X-TOLE3 data for FDA approval.
It won't form part of our expectations for the NDA package. So that study is really predominantly for ex-US jurisdictions. We did receive scientific advice and engage with European regulators after our end of phase two meeting with FDA. So we feel that we have good alignment there on the study design and the program that we're running with respect to X-TOLE2 and X-TOLE3. So really once we have X-TOLE3 results, we would expect to pursue European approval and approval in other Ex-US jurisdictions. We haven't yet provided guidance on timing there, so I won't comment more, but I think you can expect to hear more from us on that point in the future.
Andrew, maybe just to add to Sherry's comments, because I think it's important, we've been very clear on our strategic objective, which is to forward integrate and commercialize azetukalner ourselves in the US. We're not going to build that infrastructure outside of the US. So although we've had European regulator interaction and we know what would be required for filing in Europe, at some point we will access European markets through a partner.
Thanks. As I think about the competitive landscape in focal epilepsy, I mean, there could be two other programs with phase 2/3 data readouts in 2025, 2026. So what would you say about competition, your view, why azetukalner stands out basically?
Yeah, I mean, there's lots of drugs that are currently available to treat focal onset seizures, and we still have 30%-50% of the market that's not well served. So if you just do the math in the U.S. and you look at the 3 million patients that have a diagnosis of epilepsy, you look at those that have focal epilepsy and those that are not getting good seizure control, and you add in some adolescent and pediatric patients, it's about a million patients in the U.S. that are not getting good seizure control. So even the drugs that have been really significant blockbusters, whether it be a Keppra or a Lamictal or a Vimpat, even those don't need to get significant market share to be very, very successful drugs. So overall, a comment is this isn't a zero-sum game.
These patients are on polypharmacy and different drugs and different mechanisms are going to work for different patients. If we think about where azetukalner fits in, all of the attributes that I had mentioned earlier, I think are critically important. Being an only-in-class mechanism, all of these patients that are getting a branded anti-seizure medicine are on polypharmacy. So we want to combine different mechanisms together. And then if we look at the efficacy profile of the drug, I think it completely sets it apart. So yes, there are other drugs in development in focal onset seizures. None of them have shown in any efficacy data in a randomized placebo-controlled study. I think we've set an incredibly high bar for those that are coming behind us.
In addition to the double-blind data that we talked about at the American Epilepsy Society meeting next month, we now have an open label extension cohort where the entire cohort is more than three years of dosing. So we have patients that are over five years on drug, and we'll have over 150 patients that have been more than three years on drug. So nobody can catch up there. So we have this incredible robustness of long-term exposure. That's important on the safety side. I think we have a really good idea, as does the epilepsy community, of the profile of this molecule. But we're also seeing these prolonged periods of seizure freedom for the patients that have been on the drug longer.
I think there's just so much that we have generated in terms of the data package for azetukalner, which is just so materially different than anyone else that's currently in development.
Right. Agreed, and so then switching gears to major depression, you have three phase 3 starting up as early as year-end, I guess. You mentioned earlier there is a separate third-party IST data set coming in first half 2025. My understanding is handled by academia, but you will have access to that data and top line release. So how detailed of a top line release can we expect?
Yeah, that's a great question. And maybe before I answer the very direct question, I'll just give a little bit more background on that IST. So these are two very important KOLs in the space, Dr. James Murrough and Dr. Sanjay Mathew. And they've done a lot of the early work with this mechanism in major depressive disorder. And so yes, we are supplying them azetukalner for the purposes of this academic study. And really their main kind of hypothesis or key question that they want to answer is how the mechanism works in the reward circuitry of the brain. And so the primary endpoint here is actually a functional fMRI endpoint. And so they will answer that question. And then as part of the study, they're also looking as secondary endpoints at the clinical scale of depression using MADRS as well as anhedonia, using the SHAPS scale.
It is a very small study run out of two academic centers. So it's 60 patients total, one-to-one randomization, 20 milligrams of azetukalner versus placebo. So 30 patients per arm, which is smaller than the study that we ran X-NOVA that read out last year where we had north of 50 patients per arm. So it's not power to see statistical significance on those clinical scales. Nevertheless, we will, of course, work with them to come up with a strategy to disclose those data. We have said it'll be in the first half of next year, and we are refining those plans currently. So yeah, you'll see probably more from us on that point, maybe a refinement of those timelines, but we'll expect to see at least data on those key secondary measures that people will be interested in.
And again, we don't necessarily expect to see stat sig, but we do hope to see a drug effect.
Right. As another data point to support your MDD program potentially. Yeah. So then for the phase three depression, you've changed the primary endpoint to HAM-D17. And what are you going to power the study to show on HAM-D17?
Sure. So we learned a lot from the phase 2 readout, which was just about a year ago. So that was our X-NOVA study. It was a proof of concept study, a little bit smaller. What we found when we read out that study is there's two key endpoints that you can use for clinical scales of depression. There's either the Montgomery scale, which is called MADRS, or the Hamilton scale, which we use HAM-D17. Both of those are recognized by regulators. It is clear in the literature that the HAM-D17 scale is a little less variable. These are asking, these are clinically a clinician-administered scale asking questions of a patient on how they're doing in terms of their depression. So we had about a three-point separation both on MADRS and HAM-D17.
We had less variability, so a lower standard deviation in HAM-D17, and we were statistically significant. We also saw on the MADRS endpoint, we were statistically significant at week 1. We were also statistically significant on this key comorbidity of anhedonia. So there was a lot to like about the data. As we move to phase 3, a couple of things. We're going to use HAM-D17. We saw less variability in those data. We are going to increase the cutoff for the severity of the disease in terms of inclusion criteria. That means we'll have a little bit more of a severe depressed population in the phase 3 program. And then your specific question around powering, we're looking at 450 subjects in a 1-to-1 randomization. In phase 2, we had two active doses, 10 and 20 milligrams versus placebo.
We also know based on the literature that as you move, as you add an active dose to a study, that has an impact on placebo rate, and so we're moving from a two-to-one randomization active to placebo to one-to-one randomization as well, so we've chosen the 20-milligram dose versus placebo, 450 subjects in total. That'll give us about 90% power for about a two- to two-and-a-half-point separation, which we think is what would be required for statistical significance, as well as what would be required in terms of talking to the community.
Great. And then maybe last three minutes or so, let's talk a little bit more about your ion channels and other ion channels in development, namely the NaVs. Sounds like you're moving forward into phase 1 in 2025, but high level, what are you trying to achieve in terms of the value proposition compared to other NaVs out there?
Sure. And we actually have two different targets we're looking at in terms of sodium channels. One is NaV1.1. I know your question is probably referring more to NaV1.7, but NaV1.1 is an important target in a pediatric epilepsy called Dravet syndrome. The children with Dravet syndrome are haplo-insufficient in NaV1.1, so they're a loss of function. They have 50% of the protein. And what we can do with our potentiators of the channel is we can hold the channel open longer, and we can increase current through the channel back to wild type. We're going to have some more data at AES, the Epilepsy Society meeting next month, where we're going to show some survival data in the genetic animals. I think it's really strong validation of the approach.
And because we're getting at the underlying etiology of the disease, our hypothesis is not only could we have seizure control, but we could also have modification of the underlying disease, which would be really exciting and really important for these children. Your question on NaV1.7, so NaV1.7 is a pain target. We've been in this field for quite some time. Actually, Xenon started as a genetics company, and we were the first in the world to clone the gene. The gene is called SCN9A that encodes for the protein. And genetically, it's an absolutely remarkable target. So if you have no NaV1.7 in your body, you do not feel pain regardless of noxious stimuli. There's also gain of function phenotypes. So if you have a gain of function in the channel, you feel spontaneous, non-precipitated pain. And so it's a remarkable phenotype, remarkable channel and target.
It's been incredibly difficult to drug, and I think we have chemistries that have really addressed some of the previous challenges in the field, and as we mentioned, we're at candidate selection, and we should have molecules that'll head into the clinic next year. Often we get questions about the difference between NaV1.7 and NaV1.8. We like NaV1.7 for a lot of reasons. We think the validation is better genetically. Even in the role in pain signaling, we think that NaV1.7 has real promise, so we're excited for those chemistries to transition into human clinical development.
When I think about Vertex's clinical development path for their 1.8s, they did have multiple iterations over time, but maybe even simultaneous. Is that something you'd consider for your 1.7s?
Yeah, I think on all of our preclinical programs, we're never one and done with a candidate, right? You never quite know how these drugs are going to do when they transition from animals into humans. So we always have multiple chemistries and multiple molecules within a certain chemical scaffold. So you'll see a lot of diversity. Obviously, these kind of come in series. But yes, we'll have multiple backup molecules on 1.7. How quickly those progress really is more about do they meet our criteria for candidate selection and can move into toxicology studies.
Okay. Wonderful. Thanks for sharing the updates. I look forward to our next discussion, and thanks everyone for tuning in.
Thank you, Andrew.