Xenon Pharmaceuticals Inc. (XENE) Q3 2026 Earnings Call Transcript

Operator: Good day, everyone, and thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to Xenon Pharmaceuticals Third Quarter 2026 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press *1 again. Thank you. I would now like to turn the call over to Colleen Alabiso, senior vice president of corporate affairs at the Xenon. Please go ahead.

Colleen Alabiso: Good afternoon. Thank you for joining us on our call and webcast. To discuss Xenon's third quarter 2026 financial and operating results. Joining me today are Ian C. Mortimer, President and Chief Executive Officer Dr. Christopher John Kenney, chief medical officer Darren S. Cline, chief commercial officer, and Tucker Kelly, Chief Financial Officer. After completing our prepared remarks today, we will open the call up for your questions. Please be advised that during this call, we will make a number of statements that are forward looking, including statements regarding the status of potential results from clinical trials, the potential efficacy, safety profile, future development plans, in current and anticipated indications, addressable market, regulatory success, and commercial potential of our and our partners' product candidates, the strength of our clinical trial design, our ability to successfully develop and achieve milestones in our clinical development program, including the anticipated filing of INDs or equivalent and NDAs, the timing and results of our interactions with regulators, our ability to successfully obtain regulatory approvals, anticipated timing of top line data readouts for our clinical trials of EZET2 calendar, and our expectation that we will have sufficient cash to fund operations into 2029. Today's press release summarizing Xenon's third quarter financial results and the accompanying quarterly report on Form 10 Q will be made available under the Investors section of our website at xenon.pharma.com and filed with the SEC and on SEDAR plus. I will now turn the call over to Ian.

Ian C. Mortimer: Thank you, Colleen, and good afternoon to everyone joining us today. We are excited to recap another productive quarter for Xenon as we make continued progress toward becoming a fully integrated neuroscience company delivering life changing medicines to patients. Over the last few months, we remain focused on 3 key areas. First, advancing azetukalner or AZK, toward potential FDA approval. And launch in the US for the treatment of focal seizures. and building our commercial infrastructure and launch plans. Second, broadening the therapeutic opportunities for AZK beyond focal seizures by progressing our additional phase 3 epilepsy studies as well as completing enrollment in our first phase 3 neuropsychiatry study at X-NOVA2. And third, expanding our pipeline through advancement of our promising early-stage assets including 2 of our pain candidates targeting Nav1.7 and Kv7, which we recently announced will be moving to Phase 2 proof-of-concept studies in acute pain based on positive Phase 1 data. Following the submission of our new drug application, or NDA, to the FDA in the third quarter, full steam ahead on preparing for the potential approval and launch of AZK. Our NDA package includes strong scientific evidence from 2 pivotal randomized, double blind, placebo controlled trials in focal seizures including the Phase 2B X-TOLE study, and the phase 3 X-TOLE2 study. Across both studies, treatment with all 4 doses of AZK demonstrated a statistically significant reduction from baseline in monthly seizure frequency compared with placebo. X-TOLE2 outperformed XTOL with a 42.7% placebo adjusted median percent change, or MPC, which is to our knowledge the highest placebo adjusted NPC ever seen in a pivotal focal seizure study. Azetukalner was generally well tolerated with a consistent safety profile. Observed across both studies. As well as in the multi-year open-label extension studies. Such that across the entire epilepsy program, we now have more than 1500 patient-years of safety and exposure data. Adding to the efficacy and safety profile is AZK's novel mechanism of action, as well as ease of use attributes like once daily dosing, ability to start at a therapeutic dose without titration, our expected availability of 4 therapeutic dose levels, and no ASM adjustments needed for DDIs. We believe AZK represents 1 of the most compelling profiles ever seen in epilepsy. And we continue to hear this sentiment in our conversations with potential future prescribers as well, including at congresses, advisory boards, individual meetings with HCPs, as well as in market research. In parallel, the team is hard at work building our commercial infrastructure and preparing this launch plan. We are making great progress engaging a broad set of health care professionals. Including epileptologists, general neurologists, and APPs. Including through multiple scientific exchange opportunities, and in the field through our MSL team. We have also been increasing our touch points with patient advocacy organizations, and payers as we focus on enabling patient access following commercial availability. And we are making progress on selecting critical partners such as specialty pharmacy partners. and we engage with a broadening set of stakeholders And we continue to hear enthusiasm for AZK's compelling product profile ease of administration, and the ways in which we are looking to innovate and support the complex needs of HCPs, people living with epilepsy, and their care partners. Beyond our commercial plans, we continue to enroll our phase 3 X-TOLE3 and exact studies of AZK in focal seizures in PGTCS respectively, which could enable us to expand the potential geographic and therapeutic reach of AZK in epilepsy. Today we are announcing that we also plan to initiate an important new Phase 3b/4 study called the Xfirst study, and this will assess AZK earlier in the treatment paradigm. As the first add on therapy on top of standard of care ASMs. Our clinical teams are working to initiate X first in the first quarter of next year. And early feedback from epileptologists and general neurologists regarding our plans for the study, have been very positive. To round out our epilepsy work, we continue to invest in multiple high quality candidates targeting various ion channels. Including our preclinical Nav 1.1 program for Dravet syndrome, as well as our partnered Nav1.2/1.6 program with Neurocrine. And the molecule MBI, 921 thousand 55, which continues to advance through a Phase 1b study. With data expected in 2027. Turning now to psychiatry. We continue to believe in the potential of KV7 modulation as a novel therapeutic approach based on several clinical studies including our own Phase 2 X-NOVA study, which showed promising signals of antidepressive effects for this mechanism. Innovative treatments for disorders like major depressive disorder and bipolar depression are urgently needed, especially treatments that may also impact anhedonia, and offer differentiated tolerability profiles, without weight gain or sexual dysfunction. Since our last update in September, we have completed enrollment in the Phase 3 X-NOVA2 study in MDD, with approximately 360 patients, and we now expect to announce top line data in December 2026 instead of Q1 2027. These data from our first psychiatry phase 3 will provide us with the understanding of the benefit risk profile of AVK and MDD, and this will inform the next steps for our neuropsychiatry program. Finally, beyond AZK, we are very excited about the recent progress in our emerging pain portfolio. 2 weeks ago at the IASP World Congress on Pain, we shared positive results from the Phase 1 studies with our lead Nav1.7 and Kv7 pain assets. XEN1.1000 and XEN1.1 thousand. Respectively. As well as exciting evoked pain data in preclinical species, including nonhuman primates. The clinical studies achieved all of our program goals, demonstrating the desired profiles that we hope to see in Phase 1. And supporting the advancement to Phase 2 proof-of-concept studies, in acute pain. We are excited to be leading the science around these 2 innovative non opioid targets and to increase our visibility within the pain HCP community. So now, to provide more details on our recent pain announcement, as well as our clinical development programs. I will turn the call over to Christopher. Christopher?

Christopher John Kenney: Okay. Thanks a lot, Ian. it is an exciting time for Xenon as we continue to make great progress across our pipeline. I will start today with more detail about our emerging pain programs. As we look at the pain landscape, there remains a significant persistent unmet need for novel opioid sparing therapies due to the high risk of abuse and dependency with opioids, and limited efficacy of other options. Pain KOLs have expressed strong interest in ion channel modulators as a potentially transformative class of therapies. They want mechanism based innovation that can deliver real relief without sacrificing safety. 2 weeks ago, we presented Phase 1 data for XEN1.7 thousand targeting NAV 1.7 and XEN 31 targeting KV7. The data were presented at the International Association for the Study of Pain, or IASP, 2026 World Congress on Pain. And this was an exciting moment for us given our deep history with both Nav1.7 and Kv7. For 1.7, we have worked on this target since our early days. Over 20 years ago, we identified a loss of function in Nav1.7 as the etiology behind congenital indifference to pain, or CIP. An extremely rare autosomal recessive disorder whose carriers are unable to feel pain but are otherwise completely healthy. Since then, many companies have attempted to develop NAV1.7 inhibitors without success. In that regard, our IASP data were not only meaningful for Xenon, they were also meaningful for the broader scientific field that has pursued this target for decades. The Nav1.7 ion channel is a highly genetically validated pain target with both gain and loss of function demonstrating pain related phenotypes. As we set out to develop our current NAV1.7 candidates, understanding the challenges that previous programs faced was absolutely critical to formulating our target product profile. First generation molecules, namely nonselective inhibitors that bind to the pore region of Nav1.7, or significantly dose limited due to a lack of selectivity against the other sodium channel subtypes, which did not allow them to reach high levels of Nav1.7 receptor occupancy required for efficacy. Second generation molecules were the first to demonstrate some appreciable NAV 1.7 selectivity. However, these molecules were hampered by high plasma protein binding. And therefore low free drug concentrations and poor tissue distribution. Additionally, autonomic side effects were observed with inhibitors, that were peripherally restricted or agents that demonstrated a very increase in drug plasma concentrations. These findings helped inform the development of XEN1.1 thousand as well as our follow on molecule XEN1.1020, which is currently in Phase 1. Both were designed to achieve excellent NAV 1.7 potency and isoform selectivity. High CNS exposure, and robust levels of free drug in the plasma and brain to enable effective tissue distribution. As a result, we believe that we will be able to achieve high levels of NaV1.7 inhibition. Specifically greater than 75% receptor occupancy to mimic the human genetics. Turning to the Phase 1 XEN1.1000 study results. The single ascending dose, multiple ascending dose study included 76 healthy volunteers receiving XEN1.1000 and 22 receiving placebo. The study was designed to assess the safety, tolerability pharmacokinetics, food effect, and CNS penetration of XEN1.1000. CNS sampling to confirm CNS drug exposure was performed in an open label cohort. XEN1.1 thousand exhibited dose dependent increases in plasma exposure across the evaluated dose ranges. Plasma and CSF sampling and receptor occupancy modeling indicate that the proposed Phase 2 doses achieved and maintained greater than 75% Nav 1.7 receptor occupancy in both the peripheral and central nervous system with twice daily dose. At the highest dose we achieve receptor occupancy above 90% peripherally and above 80% centrally from the first hour through 24 hours. Human genetic evidence has established that more than 75% NAV 1.7 inhibition is associated with a pain free clinical phenotype. Looking at safety, there were no treatment related dose limiting TEAEs, serious TEAEs, or TEAEs leading to steady drug discontinuation. Most EAEs were mild. Those observed in more than 1 participant in the MAD cohorts included headache, dizziness, and postural dizziness. We also were pleased to see the treatment related TEAEs potentially related to autonomic cardiovascular effects were infrequent and balanced between XEN1.1000 and placebo cohorts with no consistent dose or exposure related patterns, and none occurring at the highest 2 dose levels. We also presented new preclinical data evaluating a Xenon Nav1.7 inhibitor representative of XEN1.1000 and synovalgus monkeys, which demonstrated that doses achieving more than 75% of Nav1.7 receptor occupancy were associated with significant reductions in a capsaicin evoked heat pain model. Including about 85 to 100 percent reduction of pain at the 2 highest doses tested. And without clinically meaningful changes in systolic blood pressure or heart rate relative to vehicle. We have seen similar results in other animal models, including rodents and dogs. So these data met our target for free drug exposure in the CNS high receptor occupancy in the CNS, and peripheral nervous system with a lack of autonomic effects that had been an issue for prior compounds. The findings strengthen our conviction that XEN1.1000 has a profile unlike any Nav1.7 inhibitor previously tested in the clinic. And we are excited to progress to a Phase 2 proof-of-concept study in acute pain. Now turning to XEN1.1 thousand and our Kv7 pain program, like Nav1.7, we also have significant experience Kv7 due both to our clinical experience with azetukalner as well as extensive research in our own labs. Multiple lines of evidence support KV7 as a therapeutic target for pain. KV7 channels are broadly expressed throughout the peripheral and central pain pathways and play a significant role in the initial transduction of pain stimuli into pain signals. The transmission of those pain signals along nociceptive neurons and the relay from peripheral sensory neurons to spinal cord neurons in the central nervous system. We have demonstrated that XEN1.1 thousand suppresses excitability in human dorsal root ganglion neurons consistent with enhanced KD7 channel activity and reduced nociceptive firing. Further evidence comes from scientific reports that down regulation of KD7 channel activity has been observed in altered pain states. Finally, flupratine, a compound previously approved for the treatment of pain, has a mechanism of action that involves KV7 potassium channel opening. The SAD and MAD study included 54 healthy participants receiving XEN1.1 thousand and 18 receiving placebo. The study was designed to assess the safety tolerability PK, and food effect of XEN1.1 thousand. Clinical PK data demonstrated that XEN1.1 thousand exceeded the predicted efficacious exposures established from preclinical rodent and nonhuman primate efficacy models. PK modeling also demonstrated that a loading dose rapidly achieved target exposures while maintenance dosing could sustain plasma concentrations within the predicted efficacious range for the duration required an acute pain proof of concept study. XEN1.1 thousand was also generally well tolerated, There were no treatment related dose limiting TEAEs, serious or severe TEAEs, or TEAEs leading to study drug discontinuation. Most of these adverse events were mild, and the most common ones observed in more than 1 participant in the MAD cohorts include postural tachycardia, dizziness, and somnolence. The poster also included a new preclinical data evaluating a xenon KD7 potentiator representative of XEN1.1 thousand which demonstrated efficacy in a mouse formalin model. With a treatment profile similar to opioids. And dose dependent reductions in a capsaicin evoked heat pain model in synovalgus monkeys. Analgesic activity in this nonhuman primate model was achieved at a approximately 2.3 fold lower exposures relative to the formalin mouse model. This important finding suggests the potential to achieve an analgesic activity at lower doses in humans. and this, plus the Phase 1 data, are informing our dose selection to study in Phase 2. We are currently in the process of finalizing the Phase 2 study designs to evaluate both XEN1.1000 and XEN1.1 thousand in acute pain and expect to initiate studies in the first half of 27. We plan to share more information on study designs and timing for data as the studies get underway. Additionally, we continue to see opportunities for both approaches in chronic pain, and planning is ongoing for those future studies as well. To summarize, we are increasingly excited about emerging area of our pipeline. It underscores our growing ability to develop our own internally discovered medicines, our strong heritage of innovative ion channel science, and our growing potential to help millions of people suffering from chronic and acute pain. I will close with a few comments on AZK before turning it to Darren. Starting with neuropsychiatry, as Ian mentioned, after completing enrollment in X-NOVA2, We now expect top line data next month. The study has randomized approximately 360 patients and is well powered at 90% to demonstrate a 2.5-point placebo-corrected difference on the HAM D17. at week 6, which is clinically meaningful. The availability of unblinded phase 3 X-NOVA2 data will help accelerate our evaluation of the benefit risk profile of AZK in MDD and enable us to determine next steps for our broader AZK psychiatry program. Following the voluntary pause in new patient enrollment that we shared in September. As a reminder, the voluntary pause followed our review in consultation with our DSMB of some neuropsychiatric adverse events in our MDD and BPD studies, which were mostly mild or moderate in nature. Although the number and severity of the events are consistent with the known profile of AZK, and what we have seen across over 1500 patient-years of exposure in epilepsy, they were not observed in the Phase 2 X NOVA proof of concept study in MDD, where AZK was very well tolerated. Through this process and since September, we have had productive interactions with FDA, and they have been supportive of the steps we have taken so far. As mentioned, our next step is to see the totality of data from ExNova 2 to gain a fuller picture of the benefit risk profile in psychiatry. And then to meet with FDA to review the data and discuss the development plan for AZK in psychiatry. Moving now to epilepsy, our strong momentum continues. Through our attendance at various medical conferences, we have had hundreds of HCP engagements over the last few months where we continue to hear strong support for AZK's differentiating pivotal data safety profile, novel mechanism of action, and ease of use attributes. At the end of August, a large cross functional xenon team attending the European Epilepsy Congress in where we had 5 full days of meetings with HCPs key opinion leaders, and patient advocates. We had 6 presentations at the meeting. Including a poster highlighting AZK's potential additive effects when used with commonly prescribed ASMs, as well as an encore of our X-TOLE2 top line data which was presented from the podium during a platform session. Following the presentation, 2 KOLs shared unsolicited comments with the room about how their patients' lives were significantly impacted from being treated with AZK. We are now in the midst of preparing for AES, where we expect several new AZK presentations as well as a sizable xenon presence on the Congress floor. As Ian mentioned, we also continue to focus on additional opportunities to expand the use of AZK. We are nearing completion of enrollment for the phase 3 X-TOLE3 study in all countries except Japan, and this study would support regulatory submissions outside the US. Enrollment is also ongoing in our phase 3 X-ACKT study, which would support label expansion to primary generalized tonic clonic seizures. Additionally, we are excited to initiate our Phase 3B/4 Xfirst study in Q1 2027. which will look at AZK as the first add on treatment for patients with low seizure burden and earlier in their treatment journey. This will be a US based multicenter open label study with a 52-week treatment period in patients who are significantly less refractory compared with the X-TOLE and X-TOLE2 study populations. AZK will be added into the treatment regimens of patients who are on a stable dose of either a generic SV2A inhibitor or sodium channel blocker. Over the course of the open label study, we will be looking at seizure reduction from baseline and periods of seizure freedom among other endpoints. In sharing the study plans with HCPs, we have heard significant enthusiasm for this study and appreciation for our commitment to adding to AZK's already significant and impressive body of scientific evidence. Now I would like to turn to Darren to provide an update on our commercial build out, go to launch plans for AZK and focal seizures, and momentum with health care providers.

Darren S. Cline: Thanks, Christopher, and good afternoon, everyone. it is been a busy and exciting few months for our team as we continue to make meaningful progress across 3 commercial priorities. 1, sharpening our launch strategy building the organization and infrastructure to execute it and engaging with physicians and payers to understand what will matter most for AZK's adoption. We are aiming to set a new standard for focal epilepsy launches and to become a strong partner that the epilepsy community can count on for years to come. I will start with what we are hearing from physicians. Because those conversations continue to be the strongest driver of our confidence in AZK's commercial potential. Enthusiasm about AZK's use in remains clear and consistent. Epileptologists and neurologists continue to reinforce their strong belief in AZK's differentiated efficacy and ease of use attributes. They recognize that even in early line treatment settings, patients can experience significant AEs including mood related AEs, with standard of care ASMs. And they are comfortable with AZK's safety and tolerability profile that has remained consistent over 1500 patient-years of exposure. Their excitement for the innovation AZK is bringing to the category was reiterated at the EEC meeting in recent ad boards and market research and in individual meetings as we continue to connect with the group of physicians who drive the vast majority of branded ASM prescribing. With AZK's exciting profile, ensuring awareness, access, and advocacy remains essential. And we continue to focus on learning from and building relationships with physicians. We are currently in the midst of completing several general neurologist ad boards, and their feedback has been consistent in every meeting. They see compelling efficacy, a safety profile they are comfortable with, and that has advantages over other ASMs they currently prescribe. And meaningful practical advantages particularly the ability to start at an efficacious dose without titration or adjustments for drug interactions. They also value the flexibility of 4 efficacious doses. It gives them options to tailor treatment to its patient's seizure burden and where that patient is in their treatment journey and to adjust as needed. Our plans for Xfirst have also been very well received. As we view this study as core to our strategy with general neurologists. Who see the majority of patients in this specific phase of their epilepsy journey. The GenNeuros are used to adding on ASMs for patients who do not become seizure free with monotherapy. But they express frustration that they do not have higher efficacy options that are also easy to add on top of first or second-line monotherapy. We believe this study can provide more compelling evidence to potentially support adoption in this important setting. Building on the efficacy, safety, and ease of use attributes physicians already recognize in AZK. Finally, the neurologists have also provided excellent insight into ways we can support them and their practices to ensure that when an AZK prescription is written, that it is covered by the patient's insurance, that they can access and start the medication easily, and that they can stay on the medication without disruptions. All of these insights continue to drive our commercial model and how we are building our infrastructure. More specifically, we are sharpening our focus on simplicity for the patient and HCP. In alignment with the ease of use already attributed to the AZK profile. We are aiming to provide as frictionless an experience as possible. And this is shaping our pharmacy strategy. And the support and services we will provide to physicians and patients. We are approaching this as an opportunity to do things differently. We are looking beyond epilepsy for ideas and drawing on technologies and specialty services that were not available during prior epilepsy launches. At the same time, we are grounding every decision in our understanding of this community because innovation only matters if it makes the experience better for physicians and patients. We are also nearing selection for our specialty pharmacy network. And we continue to have regular productive interactions with payers. The feedback from this important stakeholder has also been very supportive. They recognize the novelty of AZK's profile and the significant unmet need that remain in epilepsy. We also recognize that broad payer coverage will take time following commercial availability. We are planning for that reality while working to shorten the timeline wherever we can. And 1 concrete step is investing early in our field payer team. We plan to deploy that team early next year expanding our reach with payers well ahead of potential approval and launch. Alongside our pharmacy and patient support capabilities, that work is central to our access strategy. Finally, we are preparing for AES in December, which we expect to be Xenon's largest presence at the meeting to date. We anticipate multiple new AZK data presentations, a significantly expanded booth presence and a large team meeting directly with hundreds of healthcare professionals and patient advocates. We view this as vitally important meeting for deepening our already strong relationships with physicians and the broader epilepsy community. To close, we are making excellent progress on both the strategy and execution required for a successful launch. Our confidence rests on 2 things. The positive reaction to AZK's profile from health care professionals patient advocates and payers, and the differentiated commercial capabilities we are building around it. We believe the combination of efficacy, a consistent safety profile across studies, a novel mechanism, and ease of use gives AZK a compelling foundation. Our job is to match that profile with an equally thoughtful experience for physicians and patients from the first prescription through ongoing treatment. I will now turn the call over to Tucker to review the financials on our upcoming milestones.

Thomas Patrick Kelly: Thanks, Darren, and good afternoon, everyone. We entered Q3 with cash, cash equivalents and marketable securities of $1.2 billion, which based on our current operating plans provides cash to fund operations into 2029. Given our strong balance sheet, we are well-positioned to support AZK's U. S. Launch multiple registration programs for AZK, the advancement of our pain pipeline through Phase 2 proof-of-concept studies and the advancement of other early stage research and development programs. I would refer you to our press release and 10 Q filed today at further details on our financial results. Overall, it was an extremely exciting time at Xenon. We are maintaining strong momentum toward our first commercial launch across our promising pipeline of epilepsy, neuropsychiatry, and pain. Over the next few months, we expect multiple important milestones including the acceptance of our NDA submission, sharing multiple new AZK presentations at AES, announcing top line X-NOVA2 data in MDD, and determining next steps for our broader psychiatry program and progressing our pain programs to Phase 2 proof-of-concept studies while planning for future studies in chronic pain disorders. And of course, we remain resolutely focused on scaling the organization, putting the infrastructure and launch plans in place to set a new standard for launches in focal seizures. We remain very optimistic about the opportunity ahead as we transition to a fully integrated commercial stage company. With that, we can open the call up for questions. Operator?

Operator: At this time, I would like to remind everyone in order to ask a question, please press star then the number 1 on your telephone keypad. We request to limit yourself to 1 question, and you can rejoin the queue for additional questions. Your first question comes from the line of Paul Matteis with Stifel. Your line is open.

Emily: This is Emily on for Paul. We were just wondering, how long do you think it will take to implement any protocol adjustments after you unblind X-NOVA2 data and what might those changes potentially look like for the psychiatry programs? Thank you.

Ian C. Mortimer: Thanks, Emily. Christopher, can I pass that 1 to you just to talk through kind of how we are thinking? And we did not do it on today's call. Emily, but we did in September, just talking about some of the work we have done on dose escalation. So Chris, can talk about that and then we talked today that we would engage with FDA post-X-TOLE2. But he can walk you through the next steps.

Christopher John Kenney: Yeah. Thanks, Ian. Yeah. Hi, Emily. So we have been doing a lot of thinking about this as you can imagine. What we want to do is we want to see the top line X-NOVA2 data to confirm the path that we think we are about to take. So that will be next month. From that point, we have already mentioned that, you know, we made this pause voluntarily. In concert with the DSMB. So we want to share the top line data with DSMB, show them our proposal to go forward, And the other thing that we mentioned in our prepared remarks was that we want to interact with FDA as well. So that will take a little bit of time, but not a lot. We are not publicly guiding towards anything, but you can be sure that we are going to move as quickly as we possibly can.

Emily: Great. Thank you.

Operator: Your next question comes from the line of Tessa Romero with JPMorgan. Your line is open.

Tessa Romero: Hi, Ian and team. Thanks so much for taking our questions. So, given what you know now, how much of a priority is it for your neuropsychiatry initiatives at Xenon given all your efforts in maximizing the value of azetukalner in epilepsy? And, what would you really need to see in X-NOVA2 to move the program forward. in neuropsychiatry. Thank you.

Ian C. Mortimer: Thanks, Tessa. I am happy to take that 1. I think we often talk about our business, and you see us sometimes set out our disclosures. We think about is that due calendar in epilepsy, is that due calendar in psychiatry, and then the kind of emerging pain and some of the preclinical assets, even earlier stage. We have a huge amount of information on azetukalner in epilepsy, and we are full steam ahead. The benefits of having such clarity in our Phase 2B X-TOLE study is we were able to early invest things like medical, field medical, bring on Darren and his leadership team early, and then obviously with the such strong results with X-TOLE2 and now filing the NDA. So nothing is slowing us down there. We move to psychiatry, which is kind of the central part to your question, is we just know less. Right? We have less data with the Zet2 counter in psychiatry. We believe that KV7 modulation and is that 2 counter specifically have antidepressant effects. We need to unblind these data. I am really pleased that the team was able to accelerate the Exnova results from Q1 into December. So next month, we are gonna have unblinded data. And I think those data need to stand on their own. And if we have a really compelling profile in terms of benefit risk, when we unblind those data, then we have balance sheet and the capabilities to continue to develop azetukalner in psychiatry. If the data do not support future development, then we will cross that bridge when we get there.

Tessa Romero: Thanks, Ian. See you soon.

Ian C. Mortimer: Yep.

Operator: Your next question comes from the line of Joseph Thome with TD Cowen. Your line is open.

Joseph Thome: Hi, there. Good afternoon. Thank you for taking my questions. Maybe on the Xfirst early action study, given the open label nature, how will you be assessing clinical meaningfulness of the seizure and the seizure freedom rates that you are seeing? And relative to the prior pivotal studies, are you gonna expand the sites to include more primary care physicians and general neurologists so that they can get the experience and you are really seeing these early patients or are you gonna stick to the epileptologist community? Thank you.

Ian C. Mortimer: Thanks, Joe. I think it is a really good question. I am going to I will start and give you a little bit of my perspective and then Christopher can talk about some of the operational, kind of where we are going to target in terms of the different types of sites how we would maybe think about seeing data, including seizure freedom, and obviously with it being open label, I would just think about looking at those data And then I really want Darren to weigh in on. I think this is probably 1 of the most important studies for Darren and his team as we will start to see some data early in the launch period. But I do wanna remind people, we look at the X-TOLE and X-TOLE2 studies, and I think this is becoming common focal seizure studies, is we are getting very refractory patients in those studies. So the average patient, the median patient in both those studies had failed. They had the disease for about 20 years. They had failed 6 prior anti seizure medicines. The majority of them were on 3 background medications. And then they were getting exposure to azetukalner, as a reminder, close to 60 percent of patients in X-TOLE2 had exposure to Think about this as a commercial medicine. We believe that the profile, the mechanism, really lends itself to be earlier in the treatment paradigm And this study really sets us up to start generating data and experience with the physicians that are seeing those patients earlier in their treatment journey. So that is why we have been thinking about this study as this first add on study for quite some time. And we are really excited to be getting up and running. The study is fully designed and will be up and running the first quarter of next year. But maybe Christopher, you can just go into a little bit more detail in types of physicians we are targeting and then Darren about just the value of these data.

Christopher John Kenney: Sure. So I mean just to build on what Ian said operationally, it is very consistent with what he just said. So these patients who have fewer seizures at baselines are more typical for what would be seen with a general neurologist as opposed to an epileptologist and so that is out in the real world once this drug is approved. And in the meantime with this study we are also targeting sites that are likewise kind of more geared towards general neurology compared to the XTOL and the X-TOLE2 studies. I will turn it to Darren to talk about value.

Darren S. Cline: Yeah. You know, 1 of the. And we have talked a lot about this. Right? If you look at the profile of AZK and particularly on top of the X-TOLE2 data as Ian has outlined, not only is the efficacy and safety, particularly efficacy setting a new bar, but our ease of use attributes. And when we go talk to a particularly, as I alluded to in the call, we are spending a lot of time with general neurologists. And this is the community where this type of data will really reflect this kind of ability for them to incorporate it into their practice. If they think about patients that continue to be refractory and they cannot manage on a single or second monotherapy. Before referring their patients, they have said to us they would love another option. And when they look at our profile, profile, you know, this only, I think, endorses on why we are so enthusiastic about the Xfirst. If you think historically about you know, UCB and the LEV study, the Keeper study that they did historically, that was really of a game changer for them. As their profile somewhat looked like ACKs. And that kind of really jump started the use in the general neuro. So we are. And they started their trial much later in the life cycle than we are. So I think all those add up to, you know, a great opportunity for us to get that experience and the data, and really we can make a push much earlier historically has been done in the general neuro audience.

Joseph Thome: Perfect. Thank you very much.

Operator: Your next question comes from the line of Andrew Tsai with Jefferies. Your line is open.

Andrew Tsai: Hi. Thanks for the nice set of updates. I wanted to ask on the NAV 1.7, dataset that you shared. it is 90% plus receptor occupancy, which is above that 75% threshold. Need to be pain free. So how confident are you guys now that you do have something superior, full stop, maybe more superior than a Nav1.8. And then the safety profile also looks really good to me. There was 1 case of severe syncope. So is it fair to rule out syncope being a drug related AE though? Or is that something we might need to pay attention to as you move into larger studies? Thank you.

Ian C. Mortimer: Thanks, Andrew. I am happy to take the first 1 and then Christopher maybe you can just walk through the patient that had the syncope and a little bit of the background because I think we are very comfortable that we are not seeing the autonomic effects that we are seeing with prior molecules. Yeah. You know, Andrew, I think you have heard a lot from us on this target. Obviously, we know it incredibly well. We have always felt that NAV 1.7 is 1 of the strongest targets. And we believe, at least based on the genetics, has a superior profile to Nav1.8 because in Nav1.7 as you see these loss of function and gain of function populations, So it really has exquisite genetics associated with it. it is just been a very, very challenging target. We have walked through a number of times on why we believe previous approaches have had challenges and have failed. And so we now have a molecule with a profile that is never been tested. And we really hope for the first time we will mimic the human genetics, you outlined. More than 75% receptor occupancy and we feel we can get even higher than that based on the profile. Especially at the higher dose that we look to use in our Phase 2 proof of concept study. So we believe that for the very first time we will be able to answer the question can we pharmacologically mimic the human genetics by creating an opportunity for a novel analgesic. So I think it is really exciting times. And then you combine that Phase 1 data with what we are seeing in nonhuman primates. Where we got in certain models in the capsaicin heat model up to a 100% reduction again, really has not been seen with other approaches. So I think it is an exciting time for the field. And we are excited to get this into a proof of concept study. You raised a good question on safety though. We are very comfortable. We are not seeing the autonomic effects But because you raised that 1 question, or sorry, that 1 patient or healthy subject that had syncope, Christopher should just walk us through that case study.

Christopher John Kenney: I want to do that, but I also just want to make sure that everyone is kind of understands this rationale of talking about 75%. So there is a couple of families where there is complete loss of function and in 1 allele and then partial loss of function in the other. And when you look in vitro, there is about a 75% loss of in vitro function of Nav1.7. Those patients do not feel any pain. And so we talk about this 75%, but it is important to keep in mind that this is in the presence of a patient not feeling any noxious pain. And so our receptor occupancies, whether you look peripherally or centrally are well above that, but that may not necessarily be needed. To answer your question directly about the patient, this was a patient who had some degree of orthostatic hypotension at baseline and then did have a syncopal event in the context of orthostatic hypotension. But the event occurred well after you would expect based upon drug levels. And so I am not at all convinced that this is related to drug. So we are pretty convinced whether you are looking in animal models or humans that we are not seeing the autonomic effects with XEN1.1000 that have been seen by the historical compounds.

Andrew Tsai: Thanks. Very good. Thanks, Christopher. Thanks, Andrew.

Operator: Your next question comes from the line of Brian Skorney with Baird. Your line is open.

Brian Skorney: Hey, good afternoon, everyone. Thank you for taking the question. I guess I am just wondering if you can talk at all to any qualitative measures in the 1700 SAD/MAD study like PROs or I guess in the case, HVROs. Maybe the best 1 could hope for would still be very anecdotal. But do you think there would potentially be something that could be picked up in terms of the participants feeling or not feeling? Like, I do not think I would feel any difference if I just took ibuprofen if I was not in pain, but I am sure I would feel 5 megs of oxycodone. Obviously, those are not the same mechanisms. But is there any sort of evaluation of participant sense in the MAD? I also think Nav1.7 is really important for factory sense and people have lost function mutations cannot smell. Would you expect this to occur on-treatment? Helping volunteers? And did you see any sort of interruption in all factory sense? Thanks.

Ian C. Mortimer: Thanks, Brian. Christopher, you can start, but give your kind of detailed perspective here. Yeah, maybe we can just take your last 1. So, what Brian's referring to is that some of these patients that have loss of function in Nav1.7 that do not feel pain also have anosmia, so they do not smell. And that is based on the. Where Nav 1.7 is expressed in the olfactory bulb as Brian mentioned. So Brian, 1 of the things we did look at was you can actually do kind of these smell tests and the problem is, like, any of these tests, there is just a lot of variability. So we have. We looked at it, and we just did not feel again that should be gating if we have the profile that meets our kind of TPP for the program moving forward. So we did look at that. As a potential marker in phase 1 for a cohort of patients, but we decided not to pursue that. But Chris, maybe you can just provide your perspective on any kind of qualitative stuff from Phase 1.

Christopher John Kenney: Yeah. I mean, I think you are looking for some kind of a readout that there could be a pharmacodynamic effect. Other people, maybe it was you, who brought up the idea that maybe venipuncture was less painful, these sorts of things. I mean we are not really systematically collecting that data, so I do not really think we have seen anything And then as far as the olfactory function, I think again you are looking for any evidence that there could be PD effect, but we did not see that as an adverse event.

Operator: Next question. Your next question comes from the line of Cory William Kasimov with Evercore. Your line is open.

Adi: Hi. The this is Adi on for Cory. I wanted to ask, like, in your. The discussions with physicians, where do you believe AZK would be placed in the clinic in FRS epilepsy right now or in a way, how much can it move up in the treatment cycle without the earlier line study program?

Ian C. Mortimer: Thanks, Adi. I can just start and maybe put into context why we are doing the Xfirst study. And then Darren is best suited to answer that question. So 1 of the things that in treating focal seizures that lines up really well is medical practice and also the payer environment. So if you are a newly diagnosed patient, you are gonna be on a generic monotherapy. So today, we would see the SV2As used, so drugs like levetiracetam or maybe a sodium channel inhibitor, so drugs historically like a Vimpat or a Lamictal. And again, if they are not getting good seizure control or there is tolerability, often patients are moving to another monotherapy, so call that kind of a second line. Again, if they try an SV2A and maybe they are having some mood issues, then likely they would move to a sodium channel inhibitor. And then after that, as the drugs are starting to be added, that is where you can at least historically, see these branded medicines show up. So probably less so today, because the only branded medicine that is available is generally used by the epileptologist and not the general neurologist. But we believe a branded medicine with the right profile that is where it is going to start to be used. And that was kind of the reason of the X First study. But Darren should provide his perspective just on where AZK can move up because as we have answered earlier, if I think the clinical trial population is materially different than where the commercial population will end up.

Darren S. Cline: Yeah. that is exactly right. And I think if you know, you look at the X-TOLE and X-TOLE2 trial patient population. Again, we have referenced it several times. it is the most refractory patient population, ever trialed. And so the efficacy speaks for itself there. And for the epileptology community who see these patients every single day. They could not be more excited. Because of the data. it is a new mechanism of action. They are not stacking on, as Ian said, another SV2A or sodium channel or any other mechanism And so we anticipate. And a reminder that it will be almost a decade when we are launching that the last branded ASM was approved in cenobamate. So we know there are a lot of refractory patients that will be looking for a new treatment. And so that is where you think about kind of stage of launch where we anticipate the excitement to be, and the uptake to be initially. But over time, and particularly as I have stated, based on the profile of AZK, and the ease of use, the more we get in front of general neurologists, the more excitement they have. And so I think it is a couple of kind of converging points. This medicine, the ease of use, the data is the right time. Doing the XFIRST trial will expose it to a larger set of these general neurologists with these less refractory patients. We call partially controlled, And we do anticipate it moving up earlier lines of treatment Again, much faster than other anti seizure medications.

Adi: Okay. Thank you.

Operator: Your next question comes from the line of Myles Minter with William Blair. Your line is open.

John: Hey, team. This is John on for Myles. Thanks so much for taking our question. I was wondering if you could give us any more color on how you were able to move X-NOVA2 data up 1 to 3 months to December. Does this faster data cleaning or something else here? Thanks.

Ian C. Mortimer: Thanks, John. Christopher, can I pass this 1 to you?

Christopher John Kenney: Yeah, sure. Thanks for the question, John. I mean, we just took a look at the timelines, and we worked on trying to cut every sort of unnecessarily step out and we were able to pull in the timelines into this year. So team's working really hard, as a unit. And I am proud of them being able to pull this off.

Operator: Your next question comes from the line of Brian Abrahams with RBC Capital Markets. Your line is open.

Kevin: Hi, guys. This is Kevin on for Brian. Thank you for taking our questions. Maybe back on the adjunctive study for AZK, how are you thinking about dose selection in this population just given the profile of AZK to date? And what has the FDA feedback been on the protocol features you talked about? It sounds like the protocol is fully designed, so just curious if anything in particular regulators wanted to see in this setting. Thank you.

Ian C. Mortimer: Sure. Thanks, Kevin. Happy to start, and then Christopher and Darren, you guys can add your perspective. So Kevin, 1 of the things that we have talked about. We do not have all of the details for the Xfirst trial design that we have provided publicly. That will come as we get ready to initiate the study. But I can give you a little bit of color here that I think will help answer your question. So as you know, historically, we have looked at 4 different doses. So 10, 15, 20, and 25 milligrams as you look across the XTOL and the X-TOLE2 program. And we have and we have talked about this publicly is that all 4 of those we have submitted as part of the NDA. And we believe that flexibility is really important for prescribers. The likelihood, as we have done all of our market research and talked to hundreds of epileptologists and general neurologists and the way that they are trained is that they will likely start on a lower dose to begin with. And that is also part of it as we are thinking about what the starting dose is, how we have taken all of that into consideration. I will also mention when we look at things like the 10 and the 15 milligram dose, and we compare that to placebo, they are really indistinguishable with placebo when you look at the adverse event profile. So very placebo like and on the safety profile. Many of these physicians start because they have to titrate drugs, start lower and then move up. So all of these things are really consistent with us starting lower. So if you think about the x first study, again, we want to see as best we can to really mimic clinical practice. These are patients earlier in their treatment journey, on 1 background medication, and this would be an add on to that. And so we would start at a dose that these physicians would likely use azetukalner in the real world. So think about that as we are kind of bringing first together or we have written the protocol. Christopher, I do not know if you have any comments specific, specifically, on FDA and kind of the protocol and then Darren just on kind of thinking about how we continue to educate prescribers on how to use azetukalner, which I think is going to be critically important. So, Christopher, with you?

Christopher John Kenney: Yeah. Not much to say with FDA. As we mentioned in the prepared remarks, it is a phase 3 b slash 4 study. And so we will submit the protocol to them. They will have an opportunity to provide feedback. But I am not expecting, you know, there was no kind of formal FDA interaction nor am I expecting to hear from them. They are pretty familiar with the compound, as are we. So yeah, very different than kind of a phase 3 program.

Ian C. Mortimer: Darren?

Darren S. Cline: Yeah. And then just to kind of follow-up on just the kind of commercial implication to our customers. And I think Ian hit the nail on the head. I mean, physicians are particularly epileptologists and the general neuros take kind of direction from the epileptologists, is this kind of low and slow approach that we constantly hear. And, if the epileptologist, these patients are refractory, on multiple ASMs, And so when introducing a new 1, they wanna make sure that it is tolerable with their other medications. And so when they look at the data, they see the 15 and even the 10 as reasonable place to start. And I think that will resonate. And then you know, then when do you dose escalate? Because I think, you know, a lot of physicians, particularly epileptologists, have the notion of, you know, another seizure is 1 seizure too many. And so the ability to dose escalate from 15 to 20, for example, and we give them the opportune. Or the, the option to do that. With our clinical trial data and also having 4 doses available to them. So I think over time, you will see a comfort level also increase on starting doses when they get more experience and familiarity. But I think it is. We really do have a very elegant data package tied to the proper starting dose and the ability to escalate as physicians get more comfortable.

Operator: Your next question comes from the line of Mark Goodman with Leerink Partners.

Analyst: Hello. This is [Inaudible]. Thank you for taking my question. This is on for Mark Goodman. So you have talked about the X-NOVA2 data in December. I guess beyond the primary endpoint, I was just curious, like, which result would you expect to give the most clarity on the differentiated profile in depression? Like, when should we expect, like, additional data following this initial readout in December? Thank you.

Ian C. Mortimer: Thanks for the question. I am happy to take it. Christopher. And then if I have missed anything, please jump in. Yeah. As you know, when we unblind a phase 3 clinical trial, there is always a balance on how much data analysis we can get done at top line versus additional analyses after that. But I think if you have looked at our previous disclosures either in the epilepsy program or if you go back to the X-NOVA study, I think we will have enough information at top line to give you a really good feel of the overall benefit risk profile of the drug and then we can talk about next steps from there. Obviously the primary endpoint is week 6, HAM D17. I think 1 of the key secondary endpoints that we would be looking at even at top line is on anhedonia because we do think that is a differentiating feature of this mechanism that is measured through a scale called CHAPS. So at a minimum, will be to be key efficacy measures at primary and secondary endpoints. And then obviously the safety profile and understanding the unblinded safety profile is going to be critical as we move forward as well. So you know, I think there will probably be a little bit more information at top line, but those will be like the critical things that we will have. And if you go back and look at our previous data disclosures, think we have a fair bit of information on top line as we move forward. Christopher, did I miss anything or anything that you wanted to highlight specifically?

Christopher John Kenney: You did not miss a single thing. Thank you.

Analyst: Great. Thanks, Christopher, and thanks for the question.

Operator: I will now turn the call back over to Ian C. Mortimer for closing remarks.

Ian C. Mortimer: Great. Thank you, operator, and thanks, everyone, for joining us today. If we did not get a chance to get to your question during the allotted time, we are happy to connect directly. And we also look forward to continuing to provide updates as we advance our programs as well as deliver on important milestones. So operator, we can now end the call.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.