Hi, everyone, and thank you for joining us at our 2026 TD Cowen Neuropsychiatry Summit. I'm Joe Thome, one of the senior biotech analysts here on the team at TD Cowen, and it is my pleasure to have with me today two members of the management team from Xenon. We have President and CEO, Ian Mortimer, and we have CFO, Tucker Kelly, with us today. Thanks, guys, for joining us. Thanks to the investor audience. Investors, if you do have questions, please feel free to throw them in your chat box and we can try and work those into the discussion. Maybe, Ian, if you want to start off just a little bit at a high level, maybe touching on the progress of the company, across 2026 and maybe what we should be looking for.
Obviously we'll touch on the update from last week as well, but maybe at a high level, you can just kick off.
Yeah, that'd be great. Thanks, Joe, and thanks very much for hosting us, and good afternoon, everyone. As we've talked about in the past, there's really three parts to Xenon right now that we spend a lot of time with investors on. The lead molecule, azetukalner, in epilepsy, the expansion of azetukalner into the psychiatry program, and then I think we have a really interesting and evolving and maturing early-stage portfolio. We've put three molecules into phase I studies over the past 15 months, and I can touch upon those as well. I think obviously we'll spend a lot of time on the psychiatry program through Q&A, so maybe on the overall remarks, I'll focus a bit more on epilepsy and the pain portfolio, and then we can go a little bit deeper in psychiatry. Obviously we've made tremendous progress this year in epilepsy.
Azetukalner, we had incredibly strong phase IIb results a few years ago from the X-TOLE study. We were really trying to replicate that in X-TOLE2. Those results were released in March, and we exceeded, I think, all expectations, our internal expectations and your expectations, Joe, and others on the street, where we had this incredibly robust separation between 25mg and placebo. Actually, the best placebo-adjusted efficacy we believe has ever been demonstrated in a focal-onset seizure study. Since March, we've really been working to get the NDA filed, and that's what we announced last week. So we filed our very first new drug application for azetukalner in focal-onset seizures, obviously backed by two robust randomized placebo-controlled studies, X-TOLE and X-TOLE2, incredibly strong efficacy, a really well-understood safety and tolerability profile. A couple of things now, obviously we'll get into the FDA review process.
The other update that we had last week as it relates to epilepsy is just how many exposures we have. We announced that we have 1,500 patient years of exposure in epilepsy. Obviously, the double blind are eight or 12-week studies. We have a significant amount of data in open label. From X-TOLE, we now have patients that have been on the drug more than five years. X-TOLE2 patients are also on open label. Really exciting. We'll have an update at the American Epilepsy Society meeting in December of this year as we mature that X-TOLE open label data another year. It'll now be 60-month data. The efficacy in the long term, obviously, we're seeing really strong seizure reductions, and we're seeing these longer periods of seizure freedom, which is really important for these patients.
Then as we think about preparation for commercial, we hired Darren Cline as our Chief Commercial Officer. He's built out his commercial leadership team, and they're really excited as we think about there hasn't been a focal-onset seizure launch since 2019. This is a novel mechanism. Really, we haven't seen enough innovation in epilepsy in the more common forms of epilepsy like FOS. So we're bringing a novel mechanism. We've talked about the profile from an efficacy and safety point of view. Then just for the general neurologists, and Joe, you and I have talked a lot about this, we think this is going to be an important medicine for the specialists, the epileptologists, but also for the general neurologists, and that's because of how the drug is used. It's one pill once a day. We don't have to titrate the drug.
Really, no risk on the DDI side, so you don't have to back-titrate other medicines. So when we think about that overall profile, we think it's going to be really successful in epilepsy, and we're excited to get through the FDA review process and get this drug available for patients. As I said, we've been expanding azetukalner into psychiatry. We had an update last week, which I know we'll go into. We're getting close to the X-NOVA2 data, and we have decided to wrap that phase III program up. We'll talk about that, and we'll talk about the pause that we've had in the rest of the program. So I know you'll have a bunch of questions there, and we'll get to those. Then in the pain portfolio, I think we've made tremendous progress. We think novel analgesics and non-opioid pain medications is a tremendous opportunity.
Our lead programs are just finishing phase I. One is a Nav1.7 molecule, an inhibitor called XEN1701, and then we have a KV7 drug called XEN1120. Those will be in phase II proof of concept pain studies next year. Then we have another one seven molecule that just went into phase I. So I think you're going to see more data from our early-stage portfolio as we head into next year.
Perfect. Excellent. Great start. I guess just given the topic of the day, we'll start maybe on the neuropsychiatry things with the update from last week. Obviously indicating that you're seeing some AEs that are not atypical to azetukalner itself, but in the context of MDD and BPD, led to the pause here. Maybe can you just walk us through sort of the timeline cadence of what led to the pause and maybe what you know and what you don't know? Because obviously still the data are blinded, so kind of what do we know about these events and maybe what don't you know yet?
Sure. Happy to provide an overview, then we can go a little bit deeper in some of the Q&A. Maybe just even before we get to last week's announcement, I think it'd be helpful just to take a bit of step back. What was the history of this molecule and this mechanism in psychiatry? Then bring us forward to today. I'll give some updates on what we talked about last week, then obviously we've had lots of investor engagement over the past number of days, so I'll weave through some of the questions that we're receiving and some perspective on that as well. Obviously, this mechanism is well understood in epilepsy, and that's been a huge part of our development. We really believe the opportunity for potassium channel modulation has good rationale in both major depressive disorder as well as bipolar depression.
We started a number of years ago to start testing that hypothesis. That started with a phase II proof of concept study in major depressive disorder called the X-NOVA study. I would've called that more of a proof of concept, so a little bit smaller in terms of the sample size, just over 50 subjects per arm. We looked at 10mg and 20 mg versus placebo, so a three-arm study. Those data were available a couple of years ago, and we found, I think, some interesting conclusions from that study. Number one, we saw a clear dose response. So 10mg separated from placebo, and 20mg separated from 10mg . We saw a clear dose response. The primary endpoint was a clinical scale of depression called MADRS. One of the secondary endpoints was a different scale of depression called HAM-D17.
The reason I mention that's the endpoint we're using in phase III. This mechanism also, we believe, has the opportunity to have an impact on anhedonia, which is an important comorbidity for these depressed patients. So we looked at an endpoint of anhedonia, which is measured on a scale called SHAPS. So out of that study, we believe that we had clear drug activity, clear separation, and a dose response, and we believed we had all of the information to design a phase III program. That was on the efficacy side on those key endpoints. On the safety side, the safety of azetukalner in that X-NOVA study, it was really well tolerated.
It was better tolerated, again, a cross-trial comparison, so the caveats that come with that, but it looked like it was better tolerated in that MDD study than what we were seeing in the epilepsy studies. That was a surprise to us at the time, and I think it was a surprise to people outside the organization as well. Obviously that was part of the decision-making as we moved forward. We are now in a large phase III psychiatry program. We have two phase III MDD studies, X-NOVA2 and X-NOVA3, and we have an ongoing bipolar depression study, which we call the X-CEED study. We initiated these studies. X-NOVA2 was about 18 months ago, X-NOVA3 last year, and X-CEED a little bit more recently. Now we have overall hundreds and hundreds of patients that have been enrolled in that phase III program.
Just like normal drug development, we are looking at blinded data on an ongoing basis, and we are sharing those data also with a DSMB, just in the normal course of running those studies. Really one of the emerging profiles in phase III is that the safety in the phase III psychiatry program is starting to look more like the phase III epilepsy program and probably a little bit different than what we saw in phase II. I will go into a little bit more detail there. This is a very potent mechanism and a very potent drug in terms of reducing hyperexcitability in the brain. What we find is that the safety profile is really well understood, that there is a dose and exposure relationship here. We have some more common adverse events, things like dizziness and somnolence. These are very common adverse events for anti-seizure medicines.
Then we have some adverse events that are less than 10%. They do show up, but they are less common, and those are some of the adverse events that we talked about last week. We put them broadly in the category of neuropsychiatric adverse events. It may be some confusion or concentration, aphasia, word finding. Then we have some very rare adverse events, and SAEs are quite rare as well when we think about the overall profile. As this adverse event profile was really being evaluated in phase III, in discussions with a regularly scheduled DSMB meeting, the discussion was can we improve the tolerability profile in psychiatry? The decision was to pause the study to see if we can incorporate changes in dosing, and we are really focused on dose escalation.
We believe that based on data that we have available to us, that that will improve tolerability. As part of that discussion and decision, as a sponsor, we were looking at the totality of the data package, and we have made excellent progress in X-NOVA2. That study was more than 80% enrolled, really well powered. Anytime we want to have a discussion around expanding the therapeutic opportunity for a medicine, in this case, azetukalner from epilepsy into psychiatry, we want to understand the entire benefit-risk profile of the drug. This was an opportunity to get to unblinded efficacy data in X-NOVA2 a little bit more quickly, and that will be in Q1 of next year. When we unblind the data in X-NOVA2, we have a well-powered efficacy phase III study.
We'll have an understanding of the impact on the clinical scale of depression in anhedonia, and we'll be able to unblind and have a really good understanding of the safety profile as well. In the meantime, we'll work to make some adjustments in terms of dose escalation across the program in psychiatry. I just want to be clear, there's absolutely no changes to the epilepsy program. Maybe I'll pause there because I'm sure there's a few things I've mentioned that you probably want to go a little deeper on.
Yeah, I guess we're also getting some investor questions. Maybe the investor questions that we've gotten since the announcement are basically if this is looking similar to what you're seeing in FOS, maybe why the pause in depression? I think you hit on a couple ways where you think you could probably just do better for this patient subset, but maybe can you talk a little bit about these are discrete patient populations and probably are used to different AEs, and maybe what's more expected in an FOS patient versus an MDD patient? I guess anything on that might be helpful.
Yeah. I think it's a really good question. We've had this conversation with a number of investors. Just to be clear, these aren't new adverse events.
Right? Although the data are blinded data in psychiatry, in looking at the data, we're very comfortable in saying these aren't new adverse events for the mechanism and for the molecule. We don't believe that there's any differences in the rates of these adverse events or the severity of these adverse events. As I mentioned earlier, it really feels like the psychiatry program and the safety profile in psychiatry is looking more like the safety profile that's incredibly well understood in epilepsy. Your question is, okay, if that was to be expected, then why did you pause? Again, based on our Phase II data, we actually saw something different.
We were guided by our phase II data. As this profile emerged in phase III, that was the conversation with the DSMB. I think you hit the key point. These are different patient populations. In epilepsy, this safety profile, if you look at all of the epilepsy labels, and I know you've done a huge amount of work in epilepsy, both speaking with KOLs and prescribers, but also looking at the different drugs and the different mechanisms, we're very comfortable with the safety profile in FOS. As we go to depression, it's a different patient population, and our belief is we can make some adjustments to improve the tolerability profile, which would be important for that patient population.
Great. I guess, can you talk a little bit about next steps, sort of updates from the program? Will we hear about some of the program implementation steps to adjust maybe the dose titration, or will the next thing we hear from the MDD side of things maybe be the Q1 X-NOVA2 data? Just laying out the path forward for us.
Sure. Maybe let's talk about that outside time point, which would be Q1. So in Q1, we'll have unblinded data. So we'll be able to have a really robust conversation with you and with investors on what's the benefit risk once we've unblinded a large phase III clinical trial in major depressive disorder. Between now and then, we're going to be working on the dose escalation schema and what we believe is appropriate adjustments in the program. I will mention we have some data and information to inform that, and there's really two pieces of information that I think are really valuable here. One is we've had a number of patients in the epilepsy program move from a double-blind period to open label. Our open label rollover is incredibly high in the epilepsy studies, so we have patients that move from 15mg up to 25mg .
So we get a good understanding that if you started as a lower dose and then went to a higher dose, what's the impact on the tolerability profile? We've also done a huge amount of clinical pharmacology work that is required to support the new drug application. As some of those clinical pharmacology studies, we've also had dose escalation within those studies. So those data we haven't made publicly available, but we're very comfortable that in dose escalation that you can improve the tolerability profile, which is actually a very common statement across CNS in general, right? Many, many drugs are titrated in these indications to help with tolerability. What's interesting about azetukalner is all of the doses we've tried in epilepsy and in depression are efficacious doses, right? They do separate from placebo.
We are actually starting at an efficacious dose and potentially moving up to a higher dose over time, which we believe will have an impact. In terms of next steps, we need to do the work to determine exactly what that is. Then once we have made that decision, then we would update all of the regulatory documents, so protocols and other things that would be filed both with sites in terms of IRBs and going through sites approvals as well as regulatory approvals. That will take over the coming months to get through a lot of that work. Practically, these things may converge in terms of the X-NOVA2 data and all of the work we are doing to get X-NOVA3 and the X-CEED study up and running as well.
But I think over the next number of months, we will be able to provide continuous updates and where we are in that decision-making process in getting these studies back up and running, and obviously trying to get to the X-NOVA2 data as quickly as possible as well.
Perfect. I want to make sure we hit on the epilepsy indications and pains. Maybe we will move on to FOS and the filing. I guess maybe if you could touch a little bit about how many doses do you think your physicians might be able to use in the real-world setting? Because as you mentioned, there is not necessarily a dose titration in the trial, but obviously, in the real-world setting, that might be a want, I guess, for KOLs. If you could talk a little bit about that and then we just get a few questions on standard versus priorities. Standard, sort of the expectation for review, just given the number of agents that are out there or how are you thinking about that?
Sure. I am happy to tackle the first one. Then, Tucker, do you want to jump in on timelines and then how we expect that this would play out over the next little while? Yeah, I think your question is a really important one on doses and doses available. We have filed on all four doses, so 10, 15, 20, and 25mg . We have talked to the Street about this for some time, and this was a discussion we had with the FDA, both at our end of phase II meeting as well as our pre-NDA meeting. We think that is really important. If you just think about how these patients are currently treated and how the prescribers use medications, the vast majority of epilepsy drugs are titrated. They are started at a non-efficacious dose, and you titrate to tolerability, and/or efficacy, and you make adjustments as necessary.
And often, you are adjusting other background medications. One of the benefits of azetukalner is regardless of which dose you are starting on, whether it is 10, 15, 20, or 25, that is an efficacious dose. We have statistical significance at all of those doses in separation in terms of seizure reduction between the active dose and placebo. The general mantra for a lot of these prescribers is to start low and go slow. That is how they have been trained, and that is how they incorporate new medicines into their practice. With the not having to titrate, not having to make adjustments for DDIs and a novel mechanism, we think this is going to be a very easy drug to prescribe.
But given that background and how the epileptologists and general neurologists are trained, in all of our market research, all of our advisory boards, and I am sure a lot of the discussions that you have had, is our expectation is that the starting dose in patients is going to be one of the lower doses and likely 15mg . I think that is really important. If you look at the 10mg and 15mg doses of azetukalner, they are almost indistinguishable with placebo when you look at the safety tables. A little bit more dizziness in the 15mg dose, but if you look at almost any, you know we have published significant amounts of data on safety, all of those safety tables. You look across 10mg , which was used in X-TOLE, or 15mg that was used in X-TOLE2. Really, it is tough to distinguish between that and placebo.
So an incredibly well-tolerated dose and an efficacious dose and likely where patients will start, and then the prescriber, in discussions with the patients, will move appropriately depending on how much seizure control they are getting at the dose, what types of seizures they are having, and whether there is an opportunity to move higher. So I think it is really important we have four doses on label, so it gives patients a lot of opportunity to move up and down as necessary. But we think likely the starting dose is going to be 15mg , which is a really well-tolerated dose. Tucker?
Yeah. To your second part of the question, Joe, look, we feel really good about the benefit-risk profile we have in epilepsy, and we have got the best placebo-adjusted MPC. We have got a novel mechanism and a drug that we think is going to be really impactful for patients when we get it on the market. Though when you look at standard versus priority, it is a high bar, as you mentioned.
There are a lot of ASMs out there approved today. So our expectation going in is that it is going to be a standard review, so 12 months from our filing here in September of 2026. But we will always advocate strongly for the drug. We think it is going to be a really important addition to the treatment paradigm, and we will do everything we can. But for today, we think it is likely to be that kind of 12-month review cycle.
Plus, in the back end, most ASMs are scheduled, so DEA scheduling is an additional three months post NDA approval.
How should we think about the initial launch cadence here? Is XCOPRI kind of a good model? Obviously, that has a much more challenging titration and DDI profile, and azetukalner might be more applicable or, I guess, received by, as we mentioned, the general neurologist. So I guess how do you want to set expectations for what you can see out of the gate here?
Yeah, I can take that. Look, we think ultimately this is going to be a really big drug, and as Ian said, one that's going to really work across both the epileptologist call point as well as the general neurologist. Whereas when you look at something like XCOPRI, they're very much relegated to more the specialist and the epileptologist, given their profile. So we think ultimately, we've got a much larger opportunity that we can capture with azetukalner. We don't have a lot of data points in terms of ASM launches. XCOPRI was the last one, as Ian said, back in 2019. As you mentioned, there are challenges around that, from the titration required to the down-dosing of ASMs. They launched during the pandemic, so we don't have a lot of good analogs.
But we'll continue to do the work on the commercial side as our team puts together their go-to-market strategy and finishes off their pricing and demand work. So we don't have any guidance for you today. I think ultimately, look, when you look back at prior ASM launches, there's a kind of narrative out there they've been low and slow, and it is a relatively conservative physician base across. But we think we've got opportunity with azetukalner to do better than that, how much better we can bend that curve. That's why I think what our team is really focused on, and as Ian mentioned, we've built now the core of our commercial team. We think we've got an excellent group that can help make this up-shift good, but it's not going to be a rare disease launch, right?
This isn't something where you're going to see a real spike and then a plateau. These are drugs that typically are a little bit slower to launch but always go to LOE and continue to grow. Stay tuned for a little bit more guidance qualitatively over the next nine- 12 months as we approach that NDA approval, hopefully this time next year.
Perfect. I wish we had another half an hour, but maybe in the last minute or two here, we could just touch on pain. Ian, you mentioned advancing some candidates into phase II. I guess maybe what did you see in the phase I experience that gave you the confidence to move that forward, and what will the investors see, I guess, in terms of data expectations at all from this? Or is the phase II kind of the next big reveal here?
I think we'll walk through the phase I data when the time's appropriate, which I think will be really informative, and different for the two different programs.
Nav1.7, I think is clearly an important target from a genetic point of view, right? The genetics associated with that are really, really strong, both on the loss of function and gain of function. For 20, 25 years, pharma, including Xenon, has tried to drug this target, and it's been incredibly challenging. I think we have chemistries that have never been tested before. The profile of these chemistries have never been tested before in humans. I think we've had significant learnings. But really the two key things that we want to learn from phase I is, one, are we getting enough receptor occupancy that we can mimic the human genetics to have an analgesic effect? We believe we're there, which I think is really important. Then two, what is the safety profile?
Because if you do inhibit the target very, very quickly, some previous drugs have seen some cardiovascular events, things like orthostasis and orthostatic hypotension. We will be looking at that as well. I think these chemistries and what we know about them and the work that we have done in non-human primates as we have been ready to get into phase I, is that we absolutely believe there is a therapeutic index and that we can dose high enough to get really good receptor occupancy and exposure to really try to run the experiment that the field has been trying to run for decades. Which is, if you can get good inhibition at the target with the right pharmaceutic profile, can you have an analgesic effect for this really high, high quality genetic target?
I think we are just in a leadership position there and really excited to get into phase II. On KV7, it is a little bit different. KV7 doesn't have the genetic story associated with it, but the pre-clinical efficacy profile in pain models is very, very strong. There was a previous potassium channel molecule called flupirtine that had some strong pain data a number of decades ago. In phase I, we are really measuring, are we getting enough exposure in a human that we believe based on our pre-clinical data would predict an analgesic effect? We have achieved that in phase I. I think there is going to be a little bit more data that we can share between now and initiation of phase II.
The nice thing about the phase II proof of concept studies in acute pain, we look at these post-surgical studies like bunionectomy or an abdominoplasty, is those studies can move quite quickly, and you can get to a readout quite quickly.
Great. Awesome. Unfortunately, we are out of time, but thanks guys for joining us, and thanks to all the investors for listening in today.
Thank you, Joe. Appreciate it.
Thanks, Joe.