I think we're going to go ahead and get started. Thank you for joining us in the room and online at TD Cowen's 45th Annual Healthcare Conference. I'm Joe Thome, one of the Senior Biotech Analysts here on the team at Cowen. And it is my pleasure to have with us today the team from Xenon for a fireside chat. We have Ian Mortimer, President and CEO, and Sherry Aulin, the CFO of Xenon. So Ian, maybe just to kick things off, we're going to dive into the individual programs, but obviously a lot ahead in 2025. So if you want to give maybe just a brief state of the company and kind of what investors should expect throughout the year.
Yeah, for sure. And thanks for hosting us today, Joe. We really appreciate it. And I know maybe it'll come up throughout. I think you guys are doing some really interesting KOL panels also, which are really valuable. Many of those in the audience know the Xenon story well, but let's just take a bit of a step back in terms of what we're building as an organization, what our strategic objective is. I can give a little bit of an overview of the programs and what's important coming up. And then Sherry, if you want to jump in with some milestones, cash runway, and other things to look forward to. For those that know us well, we're a neurology company, really deep expertise in drug and ion channels in the CNS. We're in a large Phase III program in both Epilepsy and Psychiatry. I'll come back to that.
The strategic objective of the organization is to build a fully integrated company. We discover, develop, and want to commercialize our own molecules. These are all small molecules on ion channels in the CNS. We really think about the business in kind of three big verticals. One is our lead molecule, Azetukalner. A zetukalner in Epilepsy. This is a Kv7.2 modulator or opener, we're in a large Phase III epilepsy program off the backs of some really impressive Phase II data called the X-TOLE program. And the big, I think, driver for us is that we'll have our first Phase III focal onset seizure readout later this year. The second big driver is Azetukalner in Psychiatry and in other indications. So both Epilepsy and Psychiatry and Epilepsy, we're moving outside of focal onset seizures into Primary Generalized Tonic-Clonic Seizures. And then we have a large Psychiatry program ongoing as well.
And this is off the backs of our X-NOVA data in a Phase II proof of concept study in MDD. So we started our first Phase III clinical trial in Major Depressive Disorder that started at the end of last year. We'll get the second Phase III in MDD up and running in the next few months. We're guiding around mid-year. And then we just announced last week that we're going to do a registration program in Bipolar Depression as well with the first Bipolar study up and running around mid-year. And then the third real driver of the business that we're super excited about is what we're doing on the drug discovery side. That's matured really nicely. Three targets that we care a lot about, additional molecules on the Kv7 target, but we also care a lot about Nav1.7 and Nav1.1.
You'll see multiple INDs from Xenon this year as those molecules advance into clinical development. I think we've done a lot of really great work over the last couple of years and very different. Some of those, Nav1.1 is obviously an epilepsy target. Kv7, we think, has broad mechanistic rationale across different therapeutic indications. And then I would say we spend a fair bit of time now on Nav1.7 and talking to investors about what we think is an incredibly well-validated target genetically in the treatment of pain. And we should get that in the clinic this year as well.
Sherry?
Yeah, so as Ian mentioned, really a critical milestone for us is going to be Phase III epilepsy data later this year. That is the catalyst to us filing an NDA and launching the drug, Azetukalner, in focal onset seizures in the US. So one of our key strategic objectives is to launch Azetukalner in epilepsy independently. So we're very much looking forward to that data event later this year. 2024 was really an execution year for us. As we turn to 2025 and beyond, we're going to have a lot of catalysts coming up in the next few years. So as Ian mentioned, now with the broadened expansion into neuropsych, by the end of 2025, we're going to be in six Phase III studies across the Azetukalner program.
Looking forward to 2026, 2027, we're going to be seeing Phase III data on a regular basis over the next number of years. That's really exciting. Then as we look to our preclinical pipeline, as Ian mentioned, we're focused on three key targets, expecting a number of INDs this year across our Kv7 program, which is the same mechanism as Azetukalner, as well as our Nav1.7 program, and then expect to nominate a candidate in our Nav1.1 program and hopefully be able to initiate IND studies shortly thereafter as well. From a cash runway perspective, we're very well positioned. We have cash into 2027. That includes full development for all of the Azetukalner programs, including our recently announced Bipolar Depression program and the continued maturation of our preclinical pipeline.
So a really strong cash balance and a good position to continue to execute on a great program.
Great. And obviously reaffirmed guidance for the Phase III data this year, but obviously the question we always get is on enrollment. I guess, what are you seeing in terms of enrollment overall in focal onset epilepsy and maybe as it relates to the X-TOLE II study as much as you can kind of comment on that?
Yeah, I mean, I think we're in this position where Xenon has done more epilepsy drug development in focal onset seizures over the last five years than any sponsor globally, right? So I think we have a really good handle on what the trends are, what the drivers are. We just know practically in this therapeutic indication, we need a number of clinical sites in order to run these studies. You only get a handful of patients per site. And that's just the inclusion-exclusion criteria of running a focal onset seizure study. We need these patients to have a minimum of four seizures every 28 days. Many of them have more than that, but that's to do the statistical analysis.
So naturally, given the number of sites and the number of patients, we do get some ebbs and flows of patient screening, but I think we're well into the Phase III program and we have got confidence around the guidance. The guidance hasn't changed in some time for us to have our first Phase III readout in the second half of this year.
Great. And obviously you saw the very strong Phase II results. What are you looking for from an efficacy standpoint in the Phase III? Do you just need to hit stats on the primary? And can you kind of walk us through what the powering assumptions were when you designed the study?
Yeah, happy to answer both of those very specific questions. I think I may even take this as an opportunity to just step back a little bit on the molecule because I actually think when we launch in focal onset seizures, there's a continued medical need. There's still a huge percentage of these patients that are having breakthrough seizures and not getting good control, and when we think about Azetukalner and we think about the value proposition and the attributes that this drug has, I don't think we've seen this type of innovation in epilepsy in quite some time. These patients are treated with polypharmacy. This will be the only potassium channel modulator on the market.
On a placebo-adjusted basis, and this kind of gets to your question in Phase III in a minute, but on a placebo-adjusted basis, this is the best efficacy ever seen in a focal onset seizure study in a patient population that was the most refractory or most impaired as we measure that by the number of background medications that these patients have failed, the number of con meds they're on, as well as their baseline seizure burden. So a very tough population with incredibly robust efficacy in Phase II. We also saw rapidity of onset. It's rare that this drug does not need to be titrated. You're on your therapeutic or efficacious dose on day one. And at least in the Phase II program, we saw statistical significance at week one.
Now that we've been following these patients in a seven-year open-label extension for many, many years, we're seeing these large periods of seizure freedom and the patients that have been on the drug longer are doing incredibly well. So we've got really impressive efficacy both in the short term as well as in the long term. We have the novel mechanism, we have the rapidity of onset, and we potentially have mood benefit. And we know the psychiatric comorbidities are really important for this patient population. As we now take all of that information that we have and we think about Phase III, I think one of the benefits we have is we've completed this study, which is part of our filing package. So when we have conversations with FDA and we think about the label, this will be the first study on label.
So we're in this really fortunate position that a lot of the things I just talked about are known and that'll be part of the regulatory dossier and part of the label discussion. Then as we think about the Phase III program, really stat sig is what we need to move forward with filing an NDA and getting this product approved. So I think that is the bar. The bar is statistical significance as we move forward. Again, as we think about Epilepsy as a therapeutic indication, we do see good consistency and reproducibility across studies. So that gives us confidence going into this as well.
Because the Phase II data were so robust, if we take those data and we use those as our input into our powering model, which is the best information we have on the molecule to answer your powering question, at the high dose in Phase III of 25 milligrams, we have more than 99% power to show statistical significance on the primary endpoint, which is called the MPC. This is a Median Percent Change. The way these studies are done, it's very standard. The regulatory endpoints are well understood. Is the patients count seizures through a baseline period, then they're randomized, they count seizures through the double-blind period. You can compare those two and you can come up with this Median Percent Change for the individual arms of the study.
We have more than 99% power at the high dose of 25 milligrams and we have more than 90% power at the second dose in the Phase III study, which is 15 milligrams.
Just to add to Ian's point, as we look forward to the commercial landscape where Azetukalner is going to be launching into, the only other branded agent that's going to be on the market is Xcopri or cenobamate. I mean, if you look at how that drug is doing, we think it's doing relatively well from a commercial perspective given the profile. But as you stack up all of the attributes of Azetukalner vis-à-vis Xcopri, we really are favorable in almost every category. Novel mechanism, all the things that Ian went through, no titration. Xcopri has a 12-16-week titration to manage a severe rare drug allergy that was seen in clinical development. It's not a novel mechanism. It has mixed pharmacology and also has some DDI concerns.
We hear from physicians that there is really a requirement to adjust some of the other background medications that patients are on. As we think about the jump ball scenario where physicians in a commercial setting are thinking about what is the next drug that I'm going to have my patient try, we do feel that given the totality of the profile of Azetukalner, that that would be the choice.
Perfect. And maybe on that point, that is what our KOLs kind of bring up is they want a drug that's efficacious, low or no titration, once daily dosing and plays well with others. I guess maybe on what you're seeing in Xcopri, where does that not play well in terms of tolerability? What will you be looking for in terms of tolerability? Maybe if that folds into what you've seen with the AES data, I know there were some interesting results on long-term Phase II data and kind of how Azetukalner plays with other mechanisms.
Yeah, happy to start and Sherry can provide her perspective on some of the commercial dynamics as well. Yeah, let's review the AES data, so one of the benefits that we have as being a leader in the Kv space in epilepsy is all of those patients that finished the double-blind in the Phase II X-TOLE, so 97% of them rolled over into Open Label Extension, so if you finish the double-blind, almost everyone went to Open Label Extension. We started that as a one-year OLE. We've extended it multiple times because patients are doing incredibly well. We now have a seven-year Open Label Extension. We have a real good long-term feel of what the adverse event profile is. The entire population in Open Label Extension from Phase II has been out a minimum of three years. We've got now patients out five years of dosing.
When we total all of that up, we have over 700 patient years of exposure. The adverse event profile that we're seeing in Open Label Extension is consistent with what we saw in the double-blind in terms of some of those CMAX-related CNS adverse events. If you have a drug that's very active in the Central Nervous System, you are going to see some amount of dizziness and somnolence and fatigue. We see some other adverse events at a lower level as well. All of those AE tables have been published. In terms of the efficacy side, what I think is really impressive about this molecule is as the patients stay on drug longer, they are doing even better than what we talked about in the double-blind. When we look at the population, the population now out three years has about an 85% reduction in seizures.
Actually, if you were only on one or two background medications instead of three, and that comes to the severity point. So if you're on fewer background medications, one or two, and you are at three years, you are a 100% seizure reduction. So that population is actually seizure-free. And then when we look at the whole population of open-label, if you've been out three years of dosing, there's a one in three chance, so it's just above 30%, there's a one in three chance that you are seizure-free for 12 months or more. And I just want to put that into context. The patients coming into this Phase II study, the median patient had 13 and a half seizures per month. So that's per 28 days. So that's a seizure every other day. They failed six drugs. They've had the disease for 20 years. They're on three.
The median patient is on three background medications. They're having a seizure every other day. And now we're getting one in three patients are getting 12 months of seizure freedom. It's actually quite remarkable data. And how that translates is into changes in Quality of Life. We're hearing that from physicians, but we also can measure those data as well. These patients are doing better and feeling better and gaining more independence. And those were the data that we were able to share last December at the American Epilepsy Society meeting.
And maybe can you talk a little bit about your go-to-market strategy? How are you initially going to target that? And maybe for Sherry, how does that fall on the backdrop of your current funding dynamic?
Yeah, I mean, our first launch is going to be in focal onset seizures. And we very much feel that this is a market that we can tackle independently in the U.S. Obviously, that's the biggest part of the global market. We estimate about 80% of the global market is in the U.S. And we've talked about this before, but our strategy ex-U.S. would be likely to partner, although we haven't guided on specific timing there. But our development plan is a global development plan. So we have spoken to regulators outside of the U.S. and feel comfortable that our development plan does tackle the requirements of the EU and beyond. So when we think about the call point here, it's really neurologists and then a subset of neurologists that are focused on epilepsy patients, so epileptologists. We are going to be focused on those prescribers of branded agents.
It's really kind of a subset of that group. And we're going through and doing a lot of that analysis right now to really understand what that looks like. There's probably about 10,000 neurologists in the U.S., and we would be probably targeting about 2,000 of those that are really the high prescribers of branded therapies, including the level three and level four centers. So what we think from a commercial infrastructure perspective would be a sales force of about 100 to 120 sales reps, as well as a small medical field team would be about the size of what we would be looking to build, very achievable for a company of our size and stage. From a capital perspective, I mentioned earlier, we're well funded for our development plan. We believe we'll have access to capital to build what we need to from a commercial infrastructure perspective.
So a lot of that work has actually already started as we think about the pre-commercial activities and building our commercial teams, our medical teams, as well as the backend corporate infrastructure of systems and policies and processes. A lot of that is well underway. And we expect to be able to continue to build that over the next couple of years as we get to data and an NDA and eventual launch.
And Joe, maybe just to add to that, because you were at AES in December, so I think you could see kind of the Xenon presence there. So as we think about what we want to do on forward integration, we're already making a lot of those investments at risk given our confidence in the Phase III program. So we have a field-based medical team already. So we built that early to really continue to build relationships with the community. I think the epilepsy community is a really special community. It's a small community. And the relationships between drug developers and the KOLs and the epilepsy community, I think are really important. We've been early in building that. We had a huge presence last year at AES. That'll continue to build.
I think there's a tremendous opportunity given the profile of this drug and I think the deep scientific work that Xenon does that we can be a leader in the field.
Perfect. Maybe we'll jump over the neuropsychiatry side of things, but you released the phase 2 data a little over a year ago now for MDD. Didn't quite hit the MADRS, but you did show benefit on the HAMD. Can you kind of walk us through maybe what about that measure maybe lends itself a little bit more to Azetukalner's Kv7 mechanism and what led you to kind of flipping that to be the primary endpoint of your Phase III program?
Yeah, so Jo's referring to our X-NOVA data. That was truly a proof of concept study just based on the size of that study. And I think we learned a ton in that program as we've transitioned from a Phase II proof of concept to now a large registration program. So there's many things that we've made adjustments and changes. I would say on the epilepsy side, the Phase III studies look exactly like the Phase II studies on the depression side. We've changed things quite significantly. One you've mentioned, so there's two clinical scales of depression that can be used as primary endpoints in these studies. It's either the Montgomery scale or MADRS or the Hamilton scale, the HAM-D17.
Interesting, we saw a three-point separation, which is clinically meaningful on both scales, but we were a p-value of less than 0.05 on HAM-D17 where we were just above that on MADRS. And so I think everyone in this room will know the difference there comes down to the variability or the standard deviation. So what we found with HAM-D17 is HAM-D17 is the right endpoint for this mechanism and this molecule where we saw less variability. You actually, if you look in the literature, HAM-D17 does have less variability as an endpoint, but I think that was also very clear to us when we even look at the subdomains within the scale or the individual questions within the scale. So we're moving to HAM-D17. We're extremely well powered in the Phase III program. We've moved from a two-to-one randomization active placebo to a one-to-one randomization.
We've increased the sample size more than 3x. We've increased the severity of the patients. We know in depression studies, you want patients that are more on the severe side. Those milder patients, you can get some definitely increased effects on placebo. And so there's a number of things that we're doing to ensure that moving from phase two to phase three we've made those necessary adjustments, including the HAM-D17 endpoint, as you mentioned.
Yeah, and maybe something to add around the context with respect to efficacy in this patient population. We've done a lot of primary market research in this space, and what we found, which is consistent when we talk now to physicians and KOLs still, is that efficacy is really not a key driver in prescribers' decision-making in depression. As you think about the unmet medical need, it's really about having a novel mechanism because depression is so heterogeneous that if patients haven't responded well to standard of care or to some of the new mechanisms that have come out, then it's another alternative. There's also polypharmacy in the space that's used. So bringing a new mechanism is important, and as we think about the tolerability profile, standard of care here includes some undesirable tolerability implications such as sexual dysfunction, weight gain.
We haven't seen any of that with Azetukalner in this patient population. And then we do believe that Azetukalner has a positive effect on Anhedonia, which we saw in X-NOVA. We are measuring that again in Phase III. And that's a common comorbidity of depression where patients feel less depressed, but they still don't have that motivation and that enjoyment and pleasure that people that don't have depression experience in their day-to-day lives. And then the rapidity of onset. So standard of care can take anywhere kind of between four to six weeks to take effect. And Azetukalner, we've seen consistent rapidity of onset both across our epilepsy as well as in our X-NOVA depression program. So as you think about those attributes, there's really a lot of unmet medical needs that we would be tackling with Azetukalner.
Of course, as Ian mentioned, we feel that our Phase III program is well designed in order to be able to hit that bar for two Stat Sig studies.
Perfect. Yeah, and our Neuropsychiatry panel, KOL Panel said that for you guys this morning that you just have to hit and then get the drug on the market and they'll use it. So I think that's good to see. They were also supportive of KV7 in Bipolar Depression. And you indicated last week that you're going to start two Phase III studies in Bipolar Depression. Can you maybe go into a little bit of detail why you like the KV7 mechanism in Bipolar Depression? And obviously, we've seen others in this space look at the other side, Bipolar Mania. Why depression and not mania for you?
Yeah, I think a lot of the things we've already talked about over the last kind of 10 minutes fit in Bipolar Depression like they do in Major Depression. There's a significant unmet need. There's a need for novel mechanisms. There's a need for drugs that work more quickly that have a different adverse event profile. So that's consistent. We think there's both on the Azetukalner data as well as there was a Kv7 molecule that's no longer available called ezogabine. When we look at the ezogabine data, the Azetukalner data, so we look at the data on the mechanism, we think there's better rationale in Bipolar Depression than in mania. There's also some genetic evidence and some literature out there on the depression side. So all of the information we know, we were very clear last week, even before the bipolar mania readout yesterday from a competitive company.
But everything we knew, we were committed to Bipolar Depression. We think that's the place to go outside of MDD in terms of the continued development of both Azetukalner and the mechanism.
Perfect. And you've also indicated that you do have some other Kv7 drugs that are in preclinical development. How did you make the decision to go forward in Bipolar Depression with Azetukalner versus maybe some of these other agents?
Yeah, there's always trade-off decisions that we're making. We truly believe, we've said it multiple times, but we think that this is a mechanism that can be used broadly in terms of potassium channel modulation in the CNS. There's a whole bunch of different places where we could potentially take the mechanism. Then there's always trade-offs, right? We know a lot about Azetukalner. Azetukalner, as we've mentioned, has been in hundreds and hundreds of patients. We have long-term safety data. We have data both in epilepsy. We have data in depression. There's a lot we know about the molecule. So it's always that trade-off. What are you going to continue to do with your lead molecule versus maybe what are you going to lifecycle manage around a backup drug?
We think for both epilepsy, MDD, and BPD, it's right for Azetukalner to do the broad development there based on what we know about the profile of the lead asset. I think what you'll see in our Kv7 program, we're going to get a number of those molecules into the clinic starting this year and over the subsequent years. You're going to see clinical development for those molecules both in the areas we've talked about as well as some potentially new areas as well.
We've also thought a lot about the commercial dynamics, right? As we're thinking about therapeutic areas for one particular molecule, there needs to be reconciliation from a commercial standpoint. So there we did a lot of work to really understand the pricing dynamics, the reimbursement landscape, and we can reconcile. We've talked about this a lot over the last year as we got into MDD, as we could reconcile epilepsy and MDD, and Bipolar Depression is an easy add-on there, and of course, we would be able to leverage the commercial infrastructure that we would be establishing for MDD given that we're addressing the same call point.
Perfect. And maybe on pain, the last couple of minutes here, you have the Nav1.7 and you have the Kv7. How are you thinking about prioritization of those for pain and kind of what should we expect this year in terms of advancement of those programs?
Yeah, so as we said, both for the Kv next-gen molecules as well as Nav1.7, we expect to be filing INDs or equivalents this year. We expect to be getting into clinical development. We believe that pain is a good therapeutic area for the Kv mechanism. And obviously, it's the kind of core area for Nav1.7. We think Nav1.7 may be a little broader than pain, but the genetics teach us that if you're homozygous loss of function in Nav1.7, so you don't have any of the protein in the body, you do not feel pain regardless of noxious stimuli. So it's just one of the best, I think it's one of the best targets from a genetic validation, full stop. And I think it's been, we were the first to clone the gene more than 20 years ago. We've been in the space longer than everyone else.
It has been a challenging nut to crack, and I think we have some chemistries and approaches that are clearly differentiated than what's been happening in the field historically. I think with the Vertex NaV1.8, suzetrigine, we've seen that selective sodium channel inhibition can lead to an analgesic effect. We really like the Nav1.7 target over NaV1.8. We couldn't be more excited than trying to get that into the human proof of concept study to see if we can really take all of the learnings in the field and the genetics and bring that forward. I did sit through your pain KOL Panel yesterday.
And I think the one takeaway that definitely landed with me is the number of patients that are calling their pain physician and saying, "Tell me more about these non-opioid pain mechanisms and the opportunity there." So I think it's an earlier stage program, but we've made tremendous progress and we're really excited to get that into the clinic.
Awesome. Well, I think we're at time, but a lot to look forward to this year. Thank you for joining us.
Thanks very much.
Thank you, Joe.