All right, great. Thanks everyone for sticking around for the last fireside chat of the day. Happy to be here with the Xenon Pharmaceuticals management team, Ian Mortimer, President and CEO, and Tucker Kelly, Chief Financial Officer. I'm sure folks who are listening in or here in person know the company decently well, but maybe, guys, you could just kind of give a quick rundown of the recent updates. You submitted the NDA, right? You've got some data coming up the end of this year. Recently made some progress with pain, but maybe just give us some highlights and then we'll do Q&A.
Yeah, sounds great.
Thank you.
Thanks, Paul, for having us. We had earnings this week on Monday, so we gave a really good update there, but I'll provide a quick overview. We really think about the business in three main components: azetukalner in epilepsy, the expansion of azetukalner into psychiatry, and then the emerging pain portfolio, where we've had some updates across all of those over the last couple of months. We'll spend some time in Q&A just on the profile of azetukalner in epilepsy. Obviously, we've completed two large randomized placebo-controlled studies. I think the profile in epilepsy is excellent from an efficacy, novel mechanism, ease of use attributes. We had our X-TOLE2 data earlier this year, and that set us up to file the new drug application in September.
It is really exciting to be now in front of the agency in terms of filing our NDA and really getting ready to commercialize this medicine. We spent a lot of time thinking about how can we do this differently in a market where there are lots of generic drugs, but I think there is a need for innovation, and I think we are bringing innovation to the epilepsy community. We have been looking at azetukalner in psychiatry as well. We can go back through a little bit of the history. We had a voluntary pause on our phase III program in September. The update we provided this week is that we will unblind that first phase III MDD study, which we are calling X-NOVA2, and we will see data next month. I think that is going to be really important to inform.
Now we will have unblinded efficacy and safety data to inform the program going forward. That is next month, and then we will be able to talk about that moving forward. I think we have made excellent progress on the pain portfolio. We were at an international pain medical congress in October where we were able to show the phase I data from our two assets. One is called XEN1701, which is a NaV1.7 inhibitor, and the second is XEN1120, which is a Kv7 modulator. Both of them met kind of the TPP or what we thought about the profile coming out of phase I, and both of those molecules will enter phase II proof of concept studies in acute pain next year.
Awesome. Great. I want to spend mostly time on epilepsy and pain, but maybe let us just cover this upcoming MDD update. Maybe to start, what more do you plan on disclosing around the safety profile with the top line update?
Yeah, I think it is probably worth maybe to take a few steps back—
Sure.
—to frame it, then we'll talk about what we'll have in December. We believe that Kv7 modulation, and specifically azetukalner, have antidepressant effects. I think there's enough data out there pre-clinically and clinically. There's been four different clinical studies run with this mechanism. All have shown separation. The three placebo-controlled studies all showed separation between active and placebo. When we ran our phase II study, which was a smaller proof of concept study, just over 50 subjects per arm, two doses versus placebo, that was our X-NOVA study we unblinded a couple of years ago. We saw clear separation on both MADRS and HAMD-17, the two scales of clinical depression, and also a clinical scale of anhedonia, which we call the SHAPS scale. 10 mg, which was the low dose, outperformed placebo, and 20 mg, the higher dose, outperformed 10 mg.
Clear dose response, clear separation with placebo. What was interesting about the study when we unblinded is the safety profile was really benign in that phase II study. I remember at the time talking with many people on the street and talking with you as well, that the tolerability was better than we expected. It was those data that we now moved into a large phase III program. What we found in phase III, blinded data, but what we're seeing in the phase III psychiatry program, it looks like the safety profile is more similar to what we see in the epilepsy studies, and not what we were seeing in the phase II X-NOVA study. Still blinded data, but we are seeing some of the adverse events that are more consistent with the epilepsy profile.
We've had lots of questions on, "Are you seeing new stuff or different stuff?" No, we're seeing what we would see in the epilepsy profile, and we've been in well over 1,000 patients in epilepsy. We've had patients that have been on the medicine for more than five years, so I think we have a really good understanding. What we'll see next month when we unblind is obviously the efficacy data. The primary endpoint is being HAMD-17 at six weeks. We'll also look at SHAPS, which is a scale of anhedonia, but we will have the unblinded safety data. I think anyone that still has outstanding questions on the safety profile of the drug as it relates in psychiatry, we'll be able to answer all of those questions.
We'll provide those data publicly, then we can move forward either to continue to develop in psychiatry or we really focus azetukalner on the epilepsy launch.
Yep. Okay. Makes sense. On the safety side, I think the one AE that has spooked people the most, because at face it can vary in the level of severity of it, is psychosis. Can you talk a little bit more about what you saw there? I guess, for investors who say, "Okay, hey, this happened. Is there read-through to epilepsy?" Maybe you can give a little bit of context on other AEDs and the sort of background rates of these psychiatric events and sort of how AZK compares.
Sure. If we look at potassium channel modulation overall, or azetukalner specifically, this is a very potent mechanism, and this is a very potent drug. We see, as we're trying to dampen hyperexcitability in the brain, you're going to see adverse events. What's very clear now that we've looked at multiple doses in phase II and phase III, in epilepsy, we've looked at 10 mg, 15 mg, 20 mg, and 25 mg. The 10 mg and 15 mg of the drug look very placebo-like, very difficult to indistinguish between active and placebo at those two dose levels. As you move to 20 mg and 25 mg, you get better efficacy. It's almost linear in terms of seizure reduction, and you do see higher rates of adverse events. The most common adverse events for a drug that's very potent and active in the CNS are things like dizziness, somnolence, fatigue, and headache.
Those would be the adverse events that we see above 10%. If we go kind of below 10%, you start to see, as you dampen hyperexcitability, you see some events, things like word finding or confusion or concentration difficulties. Again, very consistent with azetukalner at higher doses and consistent with other anti-seizure medicines. Then you see the really rare events, and these can be SAEs, and they're usually like one patient in a study or two patients in a study, depending on the event. Then you see these rare events of a psychiatric adverse event, like a psychosis. This has all been published with the molecule. Even if you go back to the ezogabine days, it would be consistent with that. Even the most highly prescribed anti-seizure medicine today, which is levetiracetam or KEPPRA, has just under a 1% rate of psychosis.
Actually, psychosis is something that's seen in this patient population, even postictal. So postictal, after someone has a seizure, they can have other events. Obviously, they're very tired. Sometimes they are confused, depending on what the seizure phenotype was, and sometimes you can see these psychiatric events associated with that as well. I think we have a really good understanding. It's all been published. We've shared these data with the epilepsy community and the prescribers, and it's something that they're very comfortable with.
Yep.
The only thing just to add on there, I think that's important to note is that, we don't see any long-term sequelae. These patients resolve. They don't have any long-term issues with it. Again, it's well-known, well-understood, and it doesn't have any kind of lasting impact either.
Okay. Thanks, Tucker. If this MDD study does work and you show a clear effect size, and maybe there's a secondary endpoint or two that's corroborating, do you think that there's a clear path forward in MDD?
Yes, I think there will be a path forward. The question is, what is that path forward depending on the data? Let's walk through a couple of different scenarios. If the drug works and shows separation, but we still feel that it's going to be challenging to continue to do development, then I think that's really helpful to publish those data, as we think about epilepsy.
Right.
Right, in terms of medical communication. The patients that are refractory in epilepsy that are having breakthrough seizure, there's just a really high percentage of those patients that have the comorbidity of depression. As we know, most antiseizure medicines are neutral. Some are what we call mood negative, that have negative mood symptoms associated with them. Very few have any positive symptoms. It's really just lamotrigine that physicians will point to. To have a drug that we can communicate in terms of appropriate medical communications and publications in terms of an effect on depression, I think would be really helpful in the epilepsy call point.
Then as we think about the development and the primary indication of major depressive disorder, obviously we would need to see appropriate benefit risk from X-NOVA2, and then we'd want to go and speak with FDA in terms of the development plan going forward.
Okay. So if you're moving forward in MDD, the step after these data would be to meet with the FDA before resuming?
Correct.
Okay. Have you guys had much engagement with the FDA about this yet?
We've had interaction with FDA since September. So on September, based on a regular scheduled DSMB and in consultation with the DSMB, we didn't enroll new patients into the study. Patients that were on drug continued on drug. We have had FDA interactions since then to provide them an update on what we're doing. We also wanted to ensure that they knew that we were going to complete enrollment in X-NOVA2 at a sample size that was a little bit smaller than originally designed, and our plans forward to unblind those data and then share those data with the agency. So those conversations have taken place, so they're well aware of the plan.
Okay, great. All right, last MDD question before we switch to epilepsy. I guess my perception is, even in the smaller sample size, this is still a pretty big MDD study that is still, I do not want to say overpowered, but fairly well-powered for even a smaller effect size of what we have seen for approved ADs. Is that fair?
Yeah. Sorry, you caught me there because you said AED.
Sorry, ADs. I meant AD, antidepressants.
Yes. Sorry.
I am confusing myself with the acronyms, but yeah.
No, yeah. I agree. Originally, we had designed it as quite a large study. It is still a large study, approximately 360 subjects randomized, one-to-one randomization, active and placebo, which, based on the standard deviation, and we have been looking at the blinded data to make sure that it is tracking appropriately, that we have about 90% power to show a 2.5 point separation, which, yes, is clinically meaningful and I think a well-powered study.
Yeah. Okay. That is great. All right. The NDA review continues to progress. Maybe talk about what you are working on over the next six to nine months to prepare for the launch.
Yeah, so the team has been hard at work for quite a while, and certainly after we had the X-TOLE2 data, they have done a lot more work with the kind of full package that we have that we submitted in September with the agency. So, it kind of goes across a variety of things. So one, market access team is doing a lot of work with payers to really focus on, like, what is the right price? We think we have got a great drug here. We think it can help a lot of people, and we want to get the price right. It will be a key decision we will need to make.
They're doing a lot of work testing out different profiles and price points to figure out what we can do from an access standpoint so that we get the drug to as many patients as we can and facilitate that kind of uptake. In addition, obviously working on our demand forecast to kind of marry with the pricing work. We think we've got a really good opportunity amongst the core epileptology call point, but what's going to make this a bigger drug is being able to get into the general neuro. I think our targeting work that we're doing for physicians to figure out how we best access those and at what point during the launch, and building out the team. There's a lot of operational work.
Our CCO now has his total kind of senior management team in place, and we'll be filling out the balance of the team across market access, commercial operations, sales, and marketing. Then obviously we'll bring on the sales force as we get closer to launch, which we're expecting a standard review, and then we've got DEA scheduling that's likely, so we probably won't be kind of in market until kind of early 2028, and probably January.
Okay, makes sense. You guys have suggested before that you feel like with the data coming in better than expectations in phase III that you might have better pricing power. I mean, obviously better pricing power, but that there might be a way to go higher than some of the market comps. Is there any other detail you can add there at this point?
Yeah. We think we've got a really good clinical benefit. We've got a good value proposition for payers and physicians and patients, and so we think we're entering into it with a position of strength. We got the best placebo-adjusted efficacy that's been seen in FOS study. We've got good ease of use attributes, good safety and tolerability for an anti-seizure medication. So we've got a good package, I think, to start with, which is really important. This is an area where there hasn't been innovation. The last drug to launch in focal seizures was back in 2019. That's cenobamate. Right now, they're priced at about $15,400 roughly on an annualized basis gross. What we've said is we think we can do better than that and better than what BRIVIACT, which just went off patent earlier this year, did. That was priced at around $18,000.
We think we have a really good story to tell and a good way to try and create value for patients and physicians. We are going to work hard to figure out what that right price point is. The other good news is that in the landscape today, there are a lot of generics, so people often ask us, "How are you going to price well given that there is a wider range of medicines that are out there today that are not branded?" One, they cluster in a couple of mechanisms, so there is not another potassium channel modulator out there. Two, the way clinical practice works and the way that we expect azetukalner to work is that we are not asking and do not expect to be the first drug somebody gets when they are newly diagnosed.
Just in general clinical practice, they are going to be usually having at least one, if not two, generic agents at first, usually an SV2A or a sodium channel blocker. As we talked about on our call earlier this week, we do want to move up to that first add-on where we are the first agent that they are putting on top of another antiseizure medication. That means that they are already going to step through two generics, right, even when we get to that earlier line of therapy. I think we are stepping into a good treatment paradigm that sets up well for us in addition to the kind of strong clinical package.
We have talked a lot about before, Ian and I have talked a lot about this, about how just the reality is with this category, if you look at VIMPAT and KEPPRA, year one sales can be low to mid-single digit percent of peak. To what degree is that just systemic to this category, and to what degree are there things in your control to try to buck that trend?
Yes, so that is certainly what the history suggests, and I think it comes from partly it is a relatively conservative physician base. They have the mantra on their prescribing world of low and slow, and I think that has kind of been grafted over onto the commercial uptake side. Our goal is to sort of take that launch curve and sort of bend it up a bit. It is not going to become a rare disease launch. It is not a hockey stick. The team is still doing work on the demand forecast side. We think this is going to be a big drug. We think ultimately it is going to get wide adoption amongst epileptologists, general neurologists, and be a really important part of the treatment paradigm, but it is going to take a little bit of time, and particularly to broaden out that usage into the general neuros.
They don't often prescribe brandeds. They're not really prescribing cenobamate today, the last remaining branded. It'll take some work to get that, and we'll provide some kind of qualitative guidance heading into launch as to how we think it'll go. But I think that's a reasonable assumption that this is not going to be a launch that it's going to be a RevMed type launch where out of the gate you're doing huge numbers. But that doesn't mean by any stretch that we think this is not going to be a really big drug and that we've got a great opportunity ahead of us with AZK.
Going to the thesis around general neurologists being comfortable prescribing this medicine, should the label call out some of the AEs, like, "Hey, there could be a risk of psychosis, or there could be a risk of cognitive issues," and things like that? Would that put you in any sort of compromised position to drive that broader prescribing, maybe? If not, what are the sort of analogs or comps we should look at?
Yeah, we don't think so. As Ian touched on before, these aren't atypical for what you see with other anti-seizure medications, the biggest selling one, right? KEPPRA, as you mentioned, has just under 1% of psychosis. And we've tested this profile now for a long time, right? Even before with the X-TOLE2 data, the profile hasn't changed, and we've talked about it with both epileptologists, general neurologists, advanced practice providers, and we get consistent feedback that they're comfortable with the profile. We don't think that that's going to be a barrier. When you look across the labels, right, there's some that have it in warning precautions. There are others that just have it, even like cenobamate that's in the kind of post-marketing experience. So no, we don't think that's going to be a barrier. It's something that they're used to dealing with in both call points.
It's not just epileptologists, but general neurologists, even outside of the epilepsy drugs they may or may not prescribe. They're used to dealing with CNS-related adverse events like this. We don't think that's necessarily going to be a barrier. What's often more difficult for general neurologists to use a drug like cenobamate are things like the long titration, so you have to start at a low dose that's sub-therapeutic, and they titrate up to 11 weeks and getting into a more efficacious dose. Even more than that, we often hear that general neurologists don't have really the time or the familiarity to figure out how to regulate other anti-seizure medications that these patients are on and down dose other ASMs. The epileptologists are comfortable with that, but the general neurologists don't, in general, have that familiarity and sort of time to put toward that.
AZK is a much easier drug to use. We start at a therapeutic dose no matter where you start, and we expect to have four doses on label at the outset, so you can start at 10 mg, 15 mg, 20 mg, or 25 mg. You, again, do not have to modulate any other ASMs that they may be on when you put them on AZK. We think that's a really good profile for general neurologists, and the other adverse event profile that we've talked about before, we don't think that's going to be a barrier.
Okay, great. Maybe let's cover some pain stuff in the last couple minutes here. I mean, you guys just put out a lot of data and some interesting posters. Maybe let's start with the NaV1.7 program. Happy to hear you reviewed the thesis there, Ian, but I think what I'm the most interested in is just going into this phase II study now that you'll be starting next year, maybe talk, one, around what we know around the therapeutic index, and two, your level of confidence that the doses you'll be selecting in the study are saturating the target to a necessary degree in the brain.
Yeah, I mean, we've been interested in this target for quite some time. I think the genetics are really as good as it gets, right? It's just an exquisite target. We now have patients that have been seen that either have 100% loss of function or somewhere between 75% and 85% loss of function, and they have a phenotype where they feel no pain regardless of noxious stimuli. It's a remarkable phenotype for these patients. You also have gain of function in the channel. If you have too much activity in NaV1.7, you feel too much pain, non-precipitated, based on stimuli, and so conditions like inherited erythromelalgia. The industry has been trying to drug this target for many, many years, and I think we're probably on kind of, I don't know, the third or fourth generation of chemistries and really addressing all of the challenges of previous approaches.
If you truly think about therapeutic index, it's fascinating. You can have patients that have complete loss of function, and other than not feeling pain, they're otherwise normal. When you think about it, at least in these genetic patients, we really shouldn't be seeing issues around therapeutic index. What was interesting about some of the earlier molecules, and we believe the hypothesis is that if you hit the target very fast, you saw some autonomic effects, and those were seen as things like heart rate changes or orthostatic hypotension. So that was something that we were paying very close attention to in our phase I clinical trial. The chemistries that we've moved forward have exquisite selectivity and potency on target.
They have enough free drug to interact with the target, both in the peripheral nervous system as well as in the central nervous system, and we were paying close attention to see if we saw any of the autonomic effects. Now that we are through phase I, we believe we can get high receptor occupancy. We have shown some tables in our phase I data where we are well above that 75%. At the higher doses, likely above 90% receptor occupancy over a 24-hour period, and we are not seeing any of the autonomic effects that were seen with some of the previous molecules. I believe we have a chemistry that is never been trialed in a true proof-of-concept study, and that really achieved all of our objectives in phase I to move now into phase II.
Okay. Maybe talk about just the thought process on the right phase II design to show proof of concept.
Yeah, I mean, I think one of the things that the field has done well probably over the last decade or so is these phase II proof-of-concept studies in acute pain. Things like bunionectomy or an abdominoplasty are becoming pretty standard studies. I think the CROs are getting better at running these studies. Obviously, these patients, depending on what the surgery is, is either under a local or a general anesthetic. As that wears off, you want the experimental medicine to show an analgesic effect. So the way we are thinking about it is those type of indications, looking at multiple doses of the active drug so we can look at dose range finding, but also having an active control.
Again, as we have seen the studies being run over the last 10 years by other companies, I think those are pretty standard studies and a playbook that we will be looking at.
If you are successful in a study like that, how straight of a line can we draw then to chronic indications like neuropathic pain or osteoarthritis?
For NaV1.7, we found these patients that feel no pain. The case studies are all about acute pain, right? They have a fall and they do not feel it. They break a bone or they have a nail in their foot and they do not feel that as pain. We have not seen patients that have nerve pain and are NaV1.7, that are NaV1.7 deficient. There is nothing in the target based on where the target is expressed and how the target signals pain that it should not work in those chronic settings. But the genetics are really We see the genetic with these kind of acute noxious stimuli. But there is nothing to suggest that it should not work in the chronic pain indications.
Obviously, from a development point of view, we will do the acute pain studies first, and then if we see an effect there right away, we would want to move both, probably continue to do work in acute pain, but absolutely move into chronic pain settings as well.
Those studies historically take about a year to complete. Is that the right benchmark?
The acute pain ones?
Yes.
Yeah. Yeah, they can be run quite quickly. The way that you do them is you pay for the surgery—
Yeah.
—and you can enroll those patients and those studies reasonably quick.
Okay. On KV7, we've spent some time thinking about, you've got, I think, a couple points of support there. One, you have this support with flupirtine, which I think is not like the most simple case, but it's supportive. Then you also have just other AEDs working in like fibromyalgia or migraine or things like that. But maybe on the flupirtine example, it's probably a drug a lot of people are not that familiar with. How definitive is that offering proof of concept for KV7? It's known as a little bit of a dirtier drug too.
Yeah. Flupirtine was a drug that was developed decades ago, and was approved for a number and had positive studies in a number of different pain indications. It did have some liver toxicity associated with it and was removed from the market, excuse me, because of liver toxicity. But it absolutely showed.
Yeah, it absolutely showed—
It's actually a tough time of year. This is not the first time this happened today, so it's all good.
Look, it may be a slightly more mixed case, but we do think KV7 modulation was really the driving force behind the efficacy there with flupirtine, and there's preclinical data that also backs it up as well, right? We see KV downregulation in folks with chronic pain. We think it's a kind of a more robust story beyond just flupirtine, which as Ian said, is a little bit more complicated of a case. We think there's clinical as well as preclinical evidence to support KV7 as a good non-opioid analgesic.
The flupirtine data, is that coming in like acute indications like this, or is it a little bit more all over the place?
Yeah, they've done, the flupirtine is across different pain indications, including both acute and chronic pain.
In these acute studies, like how long would you dose? Because I think for suzetrigine, the indication allowed them to dose up to like a couple weeks or even a month.
Yeah. I mean, we don't have the final trial design and we haven't talked about it publicly, but yeah, we have enough I don't know if the question is kind of, we did in the multiple ascending dose in phase I, we went to 10 days of dosing. But yeah, usually for these studies, it's a reasonably short period of time, so think about it as kind of one to two weeks.
One to two weeks. Okay. But even you get some like durability data, things like that. Okay. Great. I mean, do you guys want to just talk maybe a little bit more broadly about sort of like cash runway and your comfort with the balance sheet heading into a launch, these big studies potentially continuing psych?
Yeah. Look, we were, I think, well-positioned heading into the X-TOLE2 readout. We obviously did a large capital raise on the back of the strong data. So we ended Q3 now with $1.2 billion in cash, which is a lovely thing to say, and that guidance that we've maintained is that into 2029. So that funds, as I mentioned before, launch probably starting in kind of early 2028. That gives us a full first year of launch. And that includes, again, continued development across both the other epilepsy studies that we had ongoing, and we did mention on Q3 as well that we're going to be starting this X-FIRST clinical study, phase III-B/IV.
So that's included in that cash runway, along with the continued development in psychiatry for X-NOVA2, which is the one we're going to read out in December, X-NOVA3, which is the one we paused enrollment, as well as our BPD, bipolar depression study. So, that also includes the phase II proof of concept studies in pain, plus we have a second generation, or at least second now generation for NaV1.7 that's in the clinic now in a phase I healthy volunteer study. So, it's a really robust clinical pipeline as well as we've got a really active research effort. So, we've got a team up in Vancouver that's doing great work in ion channel discovery and drug development. We've got a preclinical program for NaV1.1 for Dravet syndrome with a small molecule that could be disease modifying, which is super exciting, and that's in IND-enabling talk.
We got a lot of good things to spend money on, and these will be the highest burn years, right? We're going to build up a commercial infrastructure next year before we have any revenue, and as we talked about before, we're going to have a more modest revenue curve at the outset of the launch, but we're going to have the full commercial cost. So, these will be relatively hard burn years, but we go into it well-positioned, and we've got good ways in which to continue to capitalize the company at the right time.
Awesome. All right. Perfect timing. Thanks, guys. Appreciate it.
Thanks, Paul.
Thank you.