Q3 2020 Xenon Pharmaceuticals Inc Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to the Q3 2020, Xenon Pharmaceuticals Inc. earnings Conference call.

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Q3... Earnings College. At this time, all participants are in a listen-only mode.

This time, all participants are listen only mode.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press Star 1 on your remote control. Please be advised that today's conference is. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Ms. Jodi Ramos.

After the speaker's presentation, there will be a question and answer session to ask a question during the session no need to press star one on your telephone. Please be advised that todays conference is being recorded if you require any further assistance. Please press star zero.

I would now like to hand, the call. This over to your speaker today Ms. Jody reached please go ahead.

Thank you. Good afternoon. Thank you for joining us on our call and webcast to discuss our third quarter 2020 financial and operating results. Joining me on today's call are Dr., Simon Pimstone see no one's chief Executive Officer, and Ian Mortimer scenes, President and Chief Financial Officer. Following this introduction Simon will give an overview of xenon clinical proof.

Jodi Ramos: Thank you for joining us on our call-in webcast to discuss our third quarter 2020 financial and operating results. Joining me on today's call are Dr. Simon Pimstone, Xenon's Chief Executive Officer, and Ian Mortimer, Xenon's President and Chief Financial Officer. Following this introduction, Simon will give an overview of Xenon's clinical programs, and then Ian will provide some high-level financial commentary. After that, we will open up the call to your questions. Please be advised that during this call, we will make a number of statements that are forward-looking, including statements regarding the anticipated impact and timing of the COVID-19 pandemic on our business, research and clinical development plans and timelines and results of operations, the timing of and results from clinical trials and preclinical development activities, including those related to XCN 496, XCN 1101, XCN 007, and other proprietary products, and those related to NBI 921352, FX 301, and other partnered product candidates, the potential efficacy, safety profile, future development plans, addressable market, regulatory success and commercial potential of our proprietary and partnered product candidates, the anticipated timing of investigational new drug, or IND, or IND equivalent submissions, and the initiation of future clinical trials for our proprietary products, and those related to our other partnered candidates, the efficacy of our clinical trial designs, our ability to successfully develop and achieve milestones in our proprietary development programs, the timing and results of our interactions with regulators, the potential to advance certain of our product candidates directly into phase two or later stage clinical trials, the timing and anticipated enrollment in our clinical trials, the progress and potential of our other ongoing development programs, the potential receipt of milestone payments and royalties from our collaborators, our expectation of having sufficient cash to fund operations into 2023, and the timing of potential publication or presentation of future clinical data.

Friends and then he will provide some high level financial commentary after that we will open up the call to your questions. Please.

Please be advised that during this call we will make a number of statements that are forward looking including statements regarding the anticipated impact and timing of the COVID-19 pandemic on her business research and clinical development plans and timelines and results of operations and timing of and results from clinical trials and preclinical development activities, including those related to.

Actually in for nine six X C. N 11, no one X C. N series, your seven and other proprietary products and those related to India. I 90, 1352, FX three a one and other partnered product candidates the potential efficacy safety profile future development plans addressable market regulatory success and commercial potential.

Jodi Ramos: Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the risks and uncertainties described from time to time in our SEC filings. Our results may differ materially from those projected on today's call. We undertake no obligation to publicly update any forward-looking statements. Today's press release summarizing the results of Xenon's third quarter of 2020 and the accompanying quarterly report on Form 10-Q will be made available under the Investor section of our website at www.xenon-pharma.com and filed with the SEC and on CDA. Now, I would like to turn the call over to Simon. Thank you, Jodie, and good afternoon, and thank you, everyone, for joining us today.

Simon N. Pimstone: I hope everyone is staying well. At Xenon, despite the ongoing serious second wave of the global COVID-19 pandemic, which is certainly placing pressure on everyone, and in particular on clinical recruitment, we continue to progress advancing our proprietary neurology product candidates into mid- to late-stage clinical development. We have made important adjustments to our business in order to respond and react to COVID's impact on our business. And with many factors outside of our control, we've been closely assessing the potential impacts of this COVID-19 second wave on our clinical programs, and we'll provide some further updates to program and cash guidance today. I'll start by providing a brief status report on each of our proprietary and partner programs, with a focus on XEN1101 and XEN496.

Business in order to respond and react to Covid impact on our business.

And with many factors outside of our control we've been closely assessing the potential impacts of this COVID-19 second wave to our clinical programs and we will provide some further updates to program in cash guidance today.

I'll be starting by providing a brief status report on each of our proprietary and partnered programs with a focus on HCN 1100, one <unk> 496.

Simon N. Pimstone: The first XEN11-01, which is a differentiated next-generation KV7 potassium channel modulator, is currently in our Phase IIb XTOL clinical trial in the U.S., Canada, and Europe. In brief, this trial is a randomized, double-blind, placebo-controlled, multi-center study to evaluate the clinical efficacy, safety, and tolerability of XCN1101 administered as adjunctive treatment in The primary endpoint is the median percent change in monthly focal seizure frequency from baseline compared to the treatment period of active versus placebo.

First <unk> 11, O one which is a differentiated next generation cave seven potassium channel modulator currently in our face to be X toll clinical trial in the Us Canada and Europe.

Briefly this trial as a randomized double blind placebo controlled multicenter study to evaluate the clinical efficacy safety and Tolerability of <unk> 11 O. One administered as adjunctive treatment and approximately 300 adult patients with focal epilepsy.

The primary endpoint is the median percent change in monthly focal seizure frequency from baseline compared to treatment period of active versus placebo.

Within the <unk> study in as many other companies are experiencing this is an extremely challenging environment in which to provide guidance as COVID-19, as resulting in regular changes in clinic screening and inpatient perspectives on committing to longer term studies that require monitoring and interaction with medical staff.

Simon N. Pimstone: Within the XTOL study, and as many other companies are experiencing, this is an extremely challenging environment in which to provide guidance as COVID-19 is resulting in regular changes in clinic screening and patient perspectives on committing to longer-term studies that require monitoring and interaction with medical staff. In the early stages of the COVID-19 pandemic, we experienced a significant decrease in patient screening and randomization. In response, we implemented several risk mitigation strategies that resulted more recently in a positive uptick in patient screening and randomization. We expanded the XTOL clinical trial to include a number of new sites in both existing and new jurisdictions, and many of these new sites have recently initiated patient screening. Well, we are pleased to see more positive trends in enrollment recently.

In the early stages of the COVID-19 pandemic, we experienced a significant decrease in patient screening and randomization.

In response, we implemented several risk mitigation strategies that resulted more recently in a positive uptick in patient screening and randomization.

We expanded the extolled clinical trial to include a number of new sites and both existing and new jurisdictions in many of these new sites have recently initiated patient screening.

While we are pleased to see more positive trends in enrollment recently these rates are still short of pre covid levels and we are modeling that patient enrollment will likely continue at this reduced level for the remainder of the year.

Simon N. Pimstone: These rates are still short of pre-COVID levels, and we are modeling that patient enrollment will likely continue at this reduced level for the remainder of the year. Therefore, while we believe our presence in multiple jurisdictions with new sites opening will certainly help to mitigate the risks of delay presented by COVID-19, we anticipate that patient randomization will be completed in the first half of 2021. And with an 8-week dosing period and follow-up, we are now guiding that top-line data is anticipated in the third quarter of 2021. This guidance is based on the recovery and patient enrollment rates we have seen over the past few months. But with a more cautious outlook for the coming months until we have better visibility into the second wave of the pandemic and its resulting impact.

Therefore, while we believe our presence in multiple jurisdictions with new sites opening will certainly help to mitigate the risks of delay presented by COVID-19, we anticipate that patient randomization will be completed in the first half of 2021.

And with an eight week dosing periods and follow up.

We all know guiding that topline data is anticipated in the third quarter of 2021.

This guidance is based on the recovery and patient enrollment rates, we have seen over the past few months, but with a more cautious outlook for the coming months until we have better visibility into the second wave of the pandemic and it's resulting impacts.

It is important to emphasize that despite these trying circumstances, we remained confidence in the conduct of the study and and the integrity of the data is captured by electronic diary and we do not believe COVID-19 will have any impact on the final efficacy results of the study.

Simon N. Pimstone: It is important to emphasize that despite these trying circumstances, we remain confident in the conduct of the study and in the integrity of the data as captured by the electronic diary, and we do not believe COVID-19 will have any impact on the final efficacy results of the study. To date, dropout rates remain lower than modeled, and we continue to see excellent continuation into the open-label portion of the study. Although we are laser focused on the XTOL study, this year, we have completed additional primary market research and detailed work around the focal epilepsy market. And we remain very excited about XCN 1101 and the role it could play in that market with its novel mechanism of action. Xenon's PK characteristics and other potentially beneficial pharmaceutical properties, we believe Xenon 1101 has the potential to be significantly differentiated in the marketplace.

To date dropout rates remained lower than models and we continue to see excellent continuation into the open label portion of the study.

Although we are laser focused on the external study. This year, we have completed additional primary market research and detailed work around the focal epilepsy markets and we remain very excited about <unk> 11, O one and the role it could play in that phone call epilepsy market with its novel mechanism of action.

It's PK characteristics and other potentially beneficial pharmaceutical properties, we believe Exeunt 11 O. One has the potential to be significantly differentiated in the marketplace.

Simon N. Pimstone: We look forward to sharing more of our research with you over the coming months. Next, I'd like to turn to XeN-496, which is a KB7 potassium channel modulator that contains the active pharmaceutical ingredient isogabine, also known as ritigabine, that we have reformulated and are developing as a treatment for a rare pediatric neurodevelopmental disorder called KCNQ2 developmental and epileptic encephalopathy, or KCNQ2-DEE, which is a severe pediatric condition for which no Over the past quarter, we have made considerable progress towards our goal of initiating a Phase III clinical trial examining XEN496 in patients with KCNQ2DEE. In addition to a fast-track designation and orphan drug designation for XeN-496 for the treatment of KCNQ2-DEE, we received a positive opinion from the EMEA, which recommends the granting of an orphan medicinal product designation in Europe for XeN-496 for the treatment of KCNQ2-DEE.

We look forward to sharing more of our research with you over the coming months.

Next I would like to turn to Etsy, and 496, which is a K b seven potassium channel modulator that contains the active pharmaceutical ingredient zagha been also known as <unk> that we have reformulated and are developing as a treatment for a pediatric neurodevelopmental disorders called Casey in queue to developmental.

And if elliptic encephalopathy okc in queue to D E, which is a severe pediatric condition for which no medicine has yet been approved.

Over the past quarter, we have made considerable progress towards our goal to initiate a phase III clinical trial examining exeunt 496 in patients with Casey and Q2 day.

In addition to a fast track designation and orphan drug designation for <unk> 496 for the treatment of Casey in queue to the we received a positive opinion from the EMEA, which recommends the granting of an orphan medicinal product designation in Europe for <unk> 496 for the treatment of Casey in queue today.

Simon N. Pimstone: In addition, the FDA has completed its review of the clinical trial protocol, and based on this, we expect to initiate our Phase 3 EPIC clinical trial in pediatric patients with KCNQ2-DEE before year end. This EPIC study is designed as a randomized, double-blind, placebo-controlled, parallel-group multi-center clinical trial to evaluate the efficacy, safety, and tolerability of XeN-496 administered as adjunctive treatment in approximately 40 pediatric patients aged 1 month to less than 6 years with KCNQ2-DEE.

In addition, the FDA has completed its review of the clinical trial protocol and based on this we expect to initiate a phase III epic clinical trial in pediatric patients with Casey and Q2 day before year end.

This epic study is designed as a randomized double blind placebo controlled parallel group multicenter clinical trial to evaluate the efficacy safety and Tolerability of <unk> 496 administered as adjunctive treatment and approximately 40 pediatric patients H, one month to list and <unk>.

Six years with Casey and Q2 D E.

Simon N. Pimstone: Eligible subjects will be randomized on a one-to-one basis to receive either XEN496 or placebo for approximately 15 weeks, which includes the titration period and a 12-week maintenance period. The primary endpoint is the percent change from baseline in monthly countable motor seizure frequency during the blinded treatment period as recorded by caregivers in a daily seizure diary. We continue to work closely with the medical community, genetic testing companies, and patient advocacy groups to identify potential patients for our EPIC study. This marks an extremely important milestone for Xenon, with the first of our proprietary product candidates now poised to enter a phase three clinical trial. And we look forward to initiating the trial before year end. Turning now to XEN007, which is a CNS-acting calcium channel modulator that modulates Cav2.1 and T-type calcium channels.

<unk> subjects will be randomized on a one to one basis to receive either <unk> and 496 or placebo for approximately 15 weeks, which includes the titration period, and a 12 week maintenance period.

The primary endpoint is the percent change from baseline and monthly countable motive seizure frequency during the blinded treatment period as recorded by caregivers and a daily seizure diary.

We continue to work closely with the medical community genetic testing companies and patient advocacy groups to identify potential patients for our epic study.

This marks an extremely important milestone for xenon with the first of our proprietary product candidates now poised to enter a phase III clinical trial, and we look forward to initiating the trial before year end.

Turning now to <unk> 007, with the active ingredient <unk>, which is a CNS acting calcium channel modulator that modulates calf, two one and t-top calcium channels.

Simon N. Pimstone: The physician-led Phase II proof-of-concept study is examining the potential clinical efficacy, safety, and tolerability of XEN007 as an adjunctive treatment in pediatric patients diagnosed with treatment-resisted childhood absence epilepsy (or CAE). We continue to work with our collaborators and anticipate that a presentation of interim data collected from a small number of patients initially enrolled is expected to be presented in a poster presentation at AES 2020, the virtual annual meeting of the American Epilepsy Society to be held in December 2020. Due to the impact of COVID-19, we now expect that top-line results from a larger data set will be available by the middle of next year. Depending on the final results, CAE may represent a potential orphan indication for future development of XEN007. Turning briefly to our partner programs, we have an ongoing collaboration with Neurocrine Biosciences to develop treatments for epilepsy. Neurocrin is an exclusive license to XEN901, now known as NBI921352, a clinical stage, selective NAB1.6 sodium channel inhibitor with potential for treating SCN8A developmental and epileptic encephalopathy, otherwise known as SCN8A-DEE, as well as other forms of epilepsy.

The physician led phase III proof of concept study is examining the potential clinical efficacy safety and Tolerability of <unk> 007, as an adjunctive treatment in pediatric patients diagnosed with treatment resisted childhood absence epilepsy or Cie.

We continue to work with our collaborators and anticipate that a presentation of interim data collected from a small number of patients. Initially enrolled is expected to be presented in a posted a presentation at aes 2020, the virtual annual meeting of the American epilepsy Society to be held in December 2020.

Due to the impact of COVID-19, we now expect the topline results from a larger data set will be available by the middle of next year dip.

Depending on the final results.

He may represent to potential often indication for future development of <unk> 007.

Turning briefly to our partner programs, we have an ongoing collaboration with Neurocrine biosciences to develop treatments for epilepsy.

Neurocrine as an exclusive license to Exeat 901, now known as in B I 921352.

Clinical stage selective one six sodium channel inhibitor with potential in <unk> H, a developmental an epileptic encephalopathy, otherwise known as <unk>.

As well as other forms of epilepsy.

We provided an update last month's, indicating that the FDA had provided feedback on the IMD applications submitted by European and supportive of phase two clinical trial and pediatric SCN a H.

Simon N. Pimstone: We provided an update last month indicating that the FDA had provided feedback on the IND applications submitted by Neurocrin in support of a Phase II clinical trial in pediatric SCNA 8A-DEE patients. As part of its review of the IND, the FDA is requesting additional non-clinical data to support dose justification in this pediatric study. We are supporting Neurocrin as it engages with the FDA to address the feedback received with the goal of initiating a Phase II clinical trial in 2021. In parallel with this interaction, Neurocrin is advancing clinical plans to develop NBI-921352 for the treatment of adult focal epilepsy. Moving now to our partnership with Flexion Therapeutics, who acquired the global rights to develop and commercialize XEN402, an NAV1.7 inhibitor known as Funapide. FX-301 consists of XEN-402, formulated for extended release from a Flexion proprietary thermosensitive hydrogel for administration as a peripheral nerve block for control of postoperative pain.

Patients as part of its review of the <unk> the Fda's requesting additional non clinical data to support dose justification in this paediatric study.

We are supporting Neurocrine as it engages with the FDA to address the feedback received with a goal of initiating the phase two clinical trials in 2021.

And parallel with this interaction European is advancing clinical plans to develop and beyond 921352 for the treatment of adult focal epilepsy.

Simon N. Pimstone: Flexion has made good progress and anticipates filing an IND application in the first half of 2021 to support a proof-of-concept clinical trial in patients undergoing bunionectomy. Results from that trial could potentially be available in late 2021, and we look forward to keeping you updated on this partnered program. At this point, I would also take the opportunity to welcome Patrick Machado to Xenon's Board of Directors. Pat brings deep biotech experience and a great track record of strong business leadership, having overseen finance, business development, and legal functions over more than 20 years of a very impressive career. Many of you may know Pat as the co-founder and CFO, CBO, and later board member of Medivation until its acquisition for approximately $14 billion by Pfizer in 2016. More recently, Pat served on the board of Principia Biopharma, which was recently acquired by Sanofi.

Simon N. Pimstone: I believe PATH will add tremendous value to our board as we continue to advance multiple mid- to late-stage neurology-focused clinical development programs. Before turning the call over to Ian, I'll close by saying that I remain excited and optimistic about the important milestone events ahead for Xenon. I genuinely believe we have one of the most promising epilepsy pipelines currently in development. The clinical programs have been addressed today, but Xenon also has an exciting pipeline of non-clinical programs, which we expect to present in more detail in the future. At this point, I'll ask Ian to recap our financial position and provide some closing commentary before opening up the call to your questions. Thank you, Ian. Ian Mortimer Thanks, Simon, and thanks everyone for joining us today.

Promising epilepsy pipelines currently in development.

The clinical programs have been addressed today, but xena and also as an exciting pipeline of non non clinical programs, which we expect to present in more detail in the future.

At this point I'll ask into recap, our financial position and provide some closing commentary before opening up the call to your questions. Thank you.

Thanks, Simon and thanks, everyone for joining us today.

While we acknowledged the impacts of the COVID-19 pandemic, we continue to manage our business prudently and as a result, we're in a very sound financial position today to support the nuns business objectives and to advance our clinical development programs.

As of September 30th 2020, cash and cash equivalents, and marketable securities where $199 million compared to $141.4 million as of December 31, 2019.

Ian C. Mortimer: While we acknowledge the impacts of the COVID-19 pandemic, we continue to manage our business prudently. And as a result, we're in a very sound financial position today to support Xenon's business objectives and to advance our clinical development program. As of September 30, 2020, cash and cash equivalents and marketable securities were $190.9 million, compared to $141.4 million as of December 31, 2019.

Based on our current assumptions, which include a fully supporting the plan clinical development of <unk> 11, O. One Exeat 496, and <unk> 007, we.

We have updated our cash runaway guidance to reflect that we anticipate having sufficient cash to fund operations into 2023, and this excludes any revenue generated from existing partnerships are potential new partnering arrangements.

As a reminder, our previous cash runway guidance was into 2022 and given our prudent balance sheet and expense management, we're extending the runway guidance a full year today into 2023.

Ian C. Mortimer: Based on our current assumptions, which include fully supporting the planned clinical development of XCN 1101, XCN 496, and XCN 007, we have updated our cash runway guidance to reflect that we anticipate having sufficient cash to fund operations into 2023. This excludes any revenue generated from existing partnerships or potential new partnering arrangements. As a reminder, our previous cash runway guidance was into 2022, and given our prudent balance sheet and expense management, we're extending this runway guidance for a full year today into 2023. Therefore, we continue to have a lot of flexibility as we manage our business and continue to advance our product campaign. The other specific details from this quarter's financial statements are covered in today's press release and our 10-Q filing, so I won't repeat those details here, but I will summarize our upcoming key milestones.

Therefore, we continue to have a lot of flexibility as we manage our business and continue to advance our product Canada.

The other specific details from this quarter's financial statements are covered in today's press release, and our 10-Q filing so I won't repeat those details here, but I will summarize our upcoming key milestone events we.

We expect to initiate the epic phase III clinical trial, examining <unk> 496, efficacy and Tolerability and Casey on queue to dde by the end of this year. This is a significant achievement as we advanced this precision medicine product candidate into our first phase III clinical trial.

We anticipate that patient randomization within our phase two B X told clinical trial examining SCN 11, O one and addled focal upload epilepsy will be completed in the first half of 2021 was topline data anticipated in the third quarter of 2021, we.

We also to expect to provide an update before the end of this year with respect to an expanded clinical development for <unk> 11 O. One in a non epilepsy indication and this will be driven by strong scientific and mechanistic rationale.

Ian C. Mortimer: We expect to initiate the EPIC Phase 3 clinical trial examining XCN496 efficacy and tolerability in KCNQ2-DEE by the end of this year. This is a significant achievement as we advance this precision medicine product candidate into our first Phase 3 clinical trial. We anticipate that patient randomization within our Phase 2b XTOL clinical trial, examining XEN1101 in adult focal epilepsy, will be completed in the first half of 2021, with top-line data anticipated in the third quarter of 2021. We also expect to provide an update before the end of this year with respect to expanded clinical development for XCN1101 in a non-epilepsy indication, and this will be driven by strong From our physician-led Phase II open-label study in the treatment of resistant childhood absence epilepsy with XCN007, we look forward to presenting interim data from a small dataset in a poster session at AES in a few weeks' time, with top-line results from a larger dataset expected to be available by the middle of next year.

From our physician led phase to open label study in the treatment of resistant childhood absence epilepsy with <unk> 007, we look forward to presenting in term data from a small dataset and a poster session and a and.

In a few weeks time with topline results from a larger dataset expect it to be available by the middle of next year.

Will continue to work with Neurocrine to address regulatory feedback with the goal of initiating a phase two clinical trial with N. B I 921352 in 2021 with progress supporting a milestone payment for xenon of up to $25 million.

And we anticipate that our partner flexion filing IMD obligation in the first half of 2021 to support a proof of concept clinical trial was FX 301, and patients undergoing bunionectomy with results potentially available in late 2021.

We have the opportunity to earn earn milestone payments are up to $9 million through the initiation of a phase two proof of concept clinical trial and we have only received $500000 of these amounts to date.

Ian C. Mortimer: We'll continue to work with Neurocrin to address regulatory feedback with the goal of initiating a Phase 2 clinical trial with NBI 921352 in 2021, with progress supporting a milestone payment for Xenon of up to $25 million. And we anticipate that our partner Flexion will file an IND application in the first half of 2021 to support a proof-of-concept clinical trial with FX-301 in patients undergoing bunion We have the opportunity to earn milestone payments of up to $9 million through the initiation of a phase two proof-of-concept clinical trial, and we have only received $500,000 of these amounts today. So, in summary, importantly, we believe we have the cash runway to support the business objectives we've outlined today, and we continue to make prudent business and spending decisions to manage through these unprecedented times.

So in summary, importantly, we believe we have the cash runway to support the business objectives as we've outlined today and we continue to make prudent business and spending decisions to manage through these unprecedented times. So on behalf of the entire thing on team. We look forward to updating you on our progress over the coming months and at this time operator, we can open the call it for them.

Question.

As a reminder to ask a question you would need to pass firewood I got a telephone covid dry your question Preston Palanquin. Please stand by while week about the Q&A rats Jay.

Yeah first question kitchen, Angie Si Jesse.

Thanks for taking my questions is my first one is.

On 496.

Congrats on the progress on that so it turns out that another company recently reported some positive data on another rare epilepsy indication C. Decalcify then.

The placebo response was pretty low so I was wondering if.

Those results were baked into your powering assumptions 4496, and separately, even though you're enrolling patients who are fairly young I think younger than six and the study I'm I'm wondering how refractory of these patients might be basically what I'm trying to get as if if if it's possible that.

Ian C. Mortimer: So, on behalf of the entire Xenon team, we look forward to updating you on our progress over the coming months, and at this time, operator, we can open the call up for questions. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound. Please stand by while we compile the Q&A.

Your study could potentially see a similar low kind of placebo response rate.

Andrew assignment I will take a stab in and <unk> and that's an excellent question.

Lin Tsai: Your first question: Andrew Tsai on that. So it turns out that another company recently reported some positive data on another rare epilepsy indication, CDKL5, and the placebo response was pretty low. So I was wondering if, you know, those results were baked into your kind of powering assumptions for 496. And separately, even though you're enrolling patients who are fairly young, I think younger than six in this study, I'm wondering how refractory these patients might be basically when trying to get as if it's possible that your study could potentially see a similar low kind of placebo response rate. Yeah, Andrew. It's Simon.

Of course, it's encouraging to see that.

Placebo, obviously being Ah.

Critical variable in these studies and how we power and the assumptions we built in.

It is important to note of course that has not been a study done before in patients with Casey in queue developmental epilepsy. So.

We can never ever draw a conclusion from one indication to another and say this is how they behave.

I think it's Joseph pages say that across the Paediatric.

Developmental epilepsy studies.

You've mentioned one of course can.

Simon N. Pimstone: I'll take a stab and hand it over to Ian. That's an excellent question. You know, of course, it's encouraging to see that placebo obviously is a critical variable in these studies in how we power and the assumptions we build in. It's important to note, of course, that there has not been a study done before in patients with KCNQ, developmental epilepsy. So we can never, ever draw a conclusion from one indication to another and say this is how they behave. I think it's also fair to say that across the pediatric developmental epilepsy studies, You've mentioned one, of course, Phntepla with the Zodiac Necklace. Epidiolex in Dravet and some other studies that have been published.

Can tip low would sojourn X.

The dialects and drove a.

And some other studies that have been published.

<unk> response rate can be quite variable in fact in some cases.

On placebo kids have got worse over time.

There has been no improvement in other cases, it's in the 10, 10% to 20% range.

I think in general we would assume that in the younger patient population the placebo rates.

Would likely beyond the lowest side.

Of course, you've got parental bias in that situation as it relates to placebo because they are the ones.

Simon N. Pimstone: You know, that placebo response rate, you know, can be quite variable. In fact, in some cases on placebo, kids have got worse over time. There has been no improvement.

Simon N. Pimstone: And in other cases, it's in the 10 to 20 percent range. I think, in general, we would assume that in the younger patient population, the placebo rates would likely be on the lower side. Of course, you've got parental bias in that situation as it relates to placebo because they are the ones that are actually collecting the data. It's not the kid himself.

Simon N. Pimstone: But certainly from a behavioral standpoint, you know, I think a very young patient is less likely to have an observable placebo response to a drug. So, you know, I think as we think about placebo rates, it's probably to some degree also in the anticipation of parents drawing their conclusions. But look, I think we haven't designed the study, Andrew, in a way that has a very definitive placebo rate. These studies are designed to hit a p-value based on a certain differential between your placebo and active arms and what that percent seizure frequency reduction is. And so it allows you to have a successful trial if a placebo rate is 0, 5, 10 percent, and 15 percent in a disorder like this.

Simon N. Pimstone: Of course, your active response rate has to go up accordingly with the same delta to meet your p-value. So, a long-winded way of saying it's encouraging to see in these studies, but we do know there's placebo variability, and we don't have an absolute number built into the study design from a statistical standpoint. That placebo response rate can fluctuate, but of course, the higher it gets, the higher your active response rate has to be relative to that placebo for your p-value to be met.

Be happy while you're on the line go ahead.

Okay, I mean, I'm, just thinking out loud here for 11 or one you know unfortunately covered of course it has impacted the timing of the read out but I'm personally I'm wondering if there's some kind of silver lining to that because if I were to assume first patient was enrolled treated a long ago has moved onto the open label phase.

Simon N. Pimstone: So I think we've given ourselves room. I think it's the right model, it's the right stats, but a lot depends at the end of the day on what your placebo rate looks like. We just don't know. Right, makes sense. Is it possible for me to ask a follow-up question, or should I? We'd be happy while you're on the line, go ahead.

Lin Tsai: Okay. I mean, I'm just thinking out loud here at 1101. You know, unfortunately, COVID, of course, has impacted the timing of the readout, but I'm personally wondering if there's some kind of silver lining to that because, you know, if I were to assume the first patient was enrolled, treated a long time ago, and has moved on to the open label phase, by the time XTOL read out in Q3 2021, could we get a glimpse of this long I'm asking only because as it relates to the pigmentation effect potential of Isogamine.

The time EXL read out in Q3, 2021 could we get a glimpse of this long term data from the open label extension phase I'm, asking only because as it relates to the pigmentation you affect potential.

Okay, great. Thank you and you want to tackle that I assure you I mean its.

Ian C. Mortimer: Great. Ian, you want to tackle that? Sure. Yeah. I mean, it's a good point.

Ian C. Mortimer: We will definitely have more patients with exposure to the drug for longer periods of time. That's absolutely accurate. And we're seeing, we've mentioned a couple of times on previous calls, just the high rate, very, very high rate of patients going from the double blind portion into the open label extension portion. So yeah, we will continue to have a large body of data from patients in the study. That's important for our safety database as well as as we think about the future development of the product. I mean, specifically on the pigmentation, you know, a couple of comments.

Simon N. Pimstone: One, I think we've been very clear with this, but it's worth stating that we don't believe that 1101 has any pigmentation risk just based on the chemistry. We haven't seen it in any of our work preclinically. But I will mention that the pigmentation risk that was seen with Isogabine was on longer-term dosing, but you raise a good point. And the more experience and longer-term data we have with 1101, the better. I have also said, Andrew, before, one of the observations with Isogabine, which of course had a pigmentation risk, was in about 1 to 2% of subjects in the clinical studies, they developed what's known as chromaturia, which is pigmentation of the urine.

Patients not all somewhere.

Within a year.

The the urine was another finding that could be an early biomarker so to speak and and of course, we're looking for that is part of our safety.

Dataset.

And tastic okay. Thank you.

Simon N. Pimstone: And so again, you know, if we have a decent number of subjects that we have completed on the OLE, we'll have that data set. So while Ian's absolutely correct, pigmentation of the skin and the eye may take longer to set in in the majority of patients, not all; some are within a year. The urine was another finding that could be an early biomarker, so to speak. And, of course, we're looking for that as part of our safety data set. Fantastic

Sure.

Once again.

Please press star one on your telephone and please limit yourself to one question and one follow up.

Next question comes from getting some J Guggenheim.

Oh, Yeah, Hi, guys. This is Eddie on for Ya and thanks for taking the question I was wondering if you could give us an update on the ex full study you previously said that like 90 over the 90% of the patients are rolling over into the Alley, and you've seen blinded safety data and discontinuation rates that are low if you have an update on that given any updated enrollment and then.

Lin Tsai: Okay, thank you. Once again, to ask a question, please press star 1 on your telephone. Please limit yourself to one question and one follow-up.

Operator: Your next question comes from Yateng Sanjay Goodman. Oh yeah, guys, this is Eddie on for Yacht, and thanks for taking the question. I was wondering if you could give us an update on the X-Toll study. You previously said that over 90% of the patients are rolling over into the OLE, and you've seen blinded safety data and discontinuation rates that are low. If you have an update on that, please give me any updated enrollment, and then I'll follow up. Yeah, Eddie Simon here.

<unk>, Yeah, Eddie Simon Yeah, same same comment as before we seeing as we've said and we continue to see in the same trends.

Low dropout rates slow discontinuation rates in the study and we are in the very high.

Rollover into early.

90% range and above.

Which we've had for awhile and which continues so we've not seen any impact of that those trends through covid.

Gotcha, and then for the <unk> asset.

Simon N. Pimstone: Same comment as before. We're seeing, as we've said and we continue to see the same trends, low dropout rates, low discontinuation rates in the study, and we are in the very high rollover into OLE, you know, the 90% range and above, which we've had for a while and which continues. So we haven't seen any impact of those trends through COVID. Gotcha.

Given that you're going to have sort of potentially different timing on the I N. D is given those additional studies for the pediatric can you give us a sense of when do you expect to record those payments.

Given that there's like when the timing of the diabetes can be filed uhm for both adult and pediatric indications.

So we've we've guided with nerve grim that we believe the molecule can get into a phase two clinical trial in 2021.

Simon N. Pimstone: And then for the Neurocrine asset, given that you're going to have sort of potentially different timing on the IMDs, given there are additional studies for the pediatric indication, can you give us a sense of when you expect to record those payments? Given that there's, like, when the timing of those INDs could be filed for both adult and pediatric indications. So we've guided with Neurocrin that we believe the molecule can get into a Phase II clinical trial in 2021. I think based on the interaction with the agency on the pediatric side, which we've been really clear about, we don't believe there's any read-through to the adult study, but we'll have feedback and interaction with the agency over the next couple of months, so we'll have better information and clarity on guidance there. But we do believe we can get into Phase II clinical development in 2021. As for the payments, so the milestone payments, they're up to $25 million.

Based on the interaction with the agency on the pediatric side, which we've been really clear we don't believe there's any read through to the adult study.

But we'll have feedback and interaction with the agency over the next couple of months. So we will have better information and clarity on guidance there.

So, but we do believe we can get into phase two clinical development in 2021 as it relates to the payments.

So the milestone payments, it's up to $25 million if the adults study. His first and then it would be a 10 million dollar milestone payment and then a pediatric follows then there's a top up to the $25 million. So an additional 15 million if the pediatric studies start or are they are that IMD is clear.

<unk> first then then it's a 25 million dollar payment with no secondary payment on the adult IMD. So that's the way. It works I will remind you that there is a combination breakdown between equity in cash in the milestone payments. So those would be recognized as those events take place in 2021.

Ian C. Mortimer: If the adult study is first, then it would be a $10 million milestone payment, and then if the pediatric study follows, then there's a top-up to the $25 million, so an additional $15 million. If the pediatric study, that IND, is cleared first, then it's a $25 million payment with no secondary payment on the adult IND. So that's the way it works.

Great. Thank you.

Your next question comes from Palm of T stifle.

Hi, This is Katie I'm for Paul We just had a quick follow up from us on 11 online.

Wondering if you could provide any further details on the new risks mitigation strategy to have implemented for they'll have no one trial.

Ian C. Mortimer: I will remind you that there is a combination breakdown between equity and cash in the milestone payments, so those would be recognized as those events take place in 2020. Great, thank you. The next question... Paul Matteis, Hi, this is Katie. I'm on behalf of Paul.

And how this affects your confidence continuation of the data. Thanks.

Yeah, Great I mean, I think that has a number of elements.

The one element is risk mitigation to ensure the study conduct.

Paul Andrew Matteis: We just had a quick follow-up from us on 11.01. We were wondering if you could provide any further details on the new risk mitigation strategies you have implemented for the 11.01 trial and how this affects your confidence in the continuation of the data. Thanks. Yeah, great. I mean, I think that has a number of elements.

Maintains its integrity and the second element is risk mitigation strategies to optimize screening randomization effectively recruitment.

So on the latter that is.

We are tacking this in different ways.

The primary way is to ensure we've got more sites that are open and most site set of screening. So we've been extremely active over the last six months in.

Simon N. Pimstone: The one element is risk mitigation to ensure the study conduct maintains its integrity, and the second element is risk mitigation strategies to optimize screening, randomization, and effective recruitment. So on the latter, that is, we are tackling this in different ways. Of course, the primary way is to ensure we've got more sites that are open and more sites that are screening. So we've been extremely active over the last six months in initiating sites that continue to open. And a number of sites, new sites, have opened. Others are opening. New sites are screening already open. And so that work is underway, and new sites are being opened as part of a risk mitigation strategy, not just in a single geography but across different geographies, because you can imagine, with COVID, there are very different responses, country to country. You might have seen, for example, in the north of Italy recently, they've literally shut down borders and people coming in and out, really managing that risk.

Initiating sites.

That continues and number of sites new sites have opened others are opening.

New sites are screening already.

And so that work is underway.

And new sites are being opened from a risk mitigation strategy not just in a single geography, but across different geographies. Because you can imagine with covid. They are very different responses country to country you might have seen for example in the north of Italy recently, they've literally shut.

Boorda's down and people coming in and out.

So we have to anticipate these types of waves coming and going over the next few months so in order to.

Really manage that risk we have some sites in North America, and some across different European jurisdictions.

Simon N. Pimstone: We have some sites in North America and some across different European jurisdictions. We also are optimizing recruitment through marketing efforts, advertising efforts, working with referring physicians, those types of things that one would typically do in a study like this, direct-to-patient advertising through websites. Search Engine Optimization Those are the kind of activities that we have always done but which we are doubling down on now to drive so-called patient traffic to our clinical sites. I don't think there's a stone unturned, and I myself have been involved in calls with the CROs.

We also optimizing recruitment through.

Marketing efforts advertising, if it's working with referring physicians those types of things that one will typically do in a study like this.

Direct to patient advertising through websites.

Change and optimization.

Simon N. Pimstone: I think everything is being done in that regard. In terms of the first bucket, which is the integrity of the study, we really are focusing on how to ensure that accurate data continues to be obtained at the right time and in the right way. The e-diary, it turns out, we were extremely fortunate to have this nuance in the study. It's not been done in focal epilepsy, and so the primary endpoint is obtained electronically. That is going well. We're getting, obviously, that data gets loaded in real time, and that's why I mentioned in my notes. I think we feel very, very confident in the integrity of that data set, and that being our primary endpoint is absolutely key. We've also changed the study in ways that allow for more home monitoring and home visitations.

Simon N. Pimstone: So outside of just the typical telehealth-type visits, there are nurse visits that are built in for parameters that need to be measured, blood that needs to be taken, and of course, most importantly, we've set up delivery systems to allow drug to be delivered, active or placebo study drug to be delivered to the patient at their doorstep, avoiding them having to actually come into the clinic, which is usually what's done to pick up their study drug every certain number of weeks.

Parameters that need to be measured blood that needs to be taken.

And of course, most importantly, we've setup delivery systems to allow.

Drug to be delivered active or placebo study drug to be delivered to the patient at their doorstep.

Boiling them, having to actually come into the clinic, which is usually.

What's done to pick up this study drug every certain number of weeks so.

Simon N. Pimstone: So again, I think we've done absolutely everything in our power to ensure the ongoing smooth operation of the study, and we're not seeing, again, as testament to this, any material changes in dropout rates of the study due to how the study is functioning as it relates to COVID. So the study is as it was pre-COVID in how patients are remaining in the study, and so we're comfortable with the conduct of the study and the integrity of the data. So we feel good about where the study is headed, and significant emphasis has been placed on it in the company. Okay, great. Thank you so much.

Again, I think we've done absolutely everything in our power to ensure the ongoing smooth operation of the study.

And we're not seeing again and testament to this.

Any.

Simon N. Pimstone: Pleasure. Thanks for taking my question. For EPIC, how long are the baseline seizures going to be recorded, and given the natural history, how variable do you expect that baseline seizure rate to be? Jump in here, and I'll follow. Yeah, thanks, Tim. So, the baseline period is eight weeks, and then there's, with azogabine, just like when the drug was used as an adult tablet, a titration period that can take up to 24 days, and then there's 12 weeks of maintenance.

Ian C. Mortimer: So, that's how you should think about the study, and then there would be a titration down, but also an open-label extension. In terms of variability, so, yes, we will likely see considerable variability in terms of the number of seizures coming into the study. It's one of the reasons there are two ways that we're stratifying randomization. So, both by age, and I know you and others have looked at data, and not surprising in some of the younger populations, at least in the case reports, that they've had a much more significant response when we look at that data cut by age, but we're also stratifying by seizure frequency.

Very variability in terms of number of seizures coming into the study.

It's one of the reasons, there's there's two ways that we're stratifying randomization, so both by age and.

And I know you and others have looked at data.

Ian C. Mortimer: So, we'll do everything we can to get a balance between the active and placebo. I think the other point, Simon, is that there will obviously be screening, so patients, in terms of the variability, will have to have certain, or anticipated to have certain, seizures at baseline. And then, as Ian said, the baseline period will be the objective assessment of that. You know, these parents generally know their kids pretty well, so we also think the pre-screening, so to speak, should translate pretty well. Yes, there is variability, but a lot of these patients are having daily seizures and certainly a number of seizures a week, and generally in a younger age group, that doesn't just stop for months on end. So there might be variability numerically, but I think they cross a certain threshold, and there might be variability above that, but it's less likely that they are seizure-free for two months and then have paroxysms of, you know, multiple seizures.

And have parrots isms of multiple seizures. So we.

Simon N. Pimstone: So you know, we've put a long enough baseline period in for that very reason, and as Ian said, stratifying by seizure number to accommodate variability that occurs in that baseline period. And maybe my one follow-up question: how many AEDs are being allowed as, you know, kind of concomitant therapies? I think it's one or more, so we're not precluding kids who are on one, two, three, four, they're all in, but they have to have been at least one because this is a refractory population.

We will we put a long enough baseline period in for that very reason and as Ian said Stratifying by season number to accommodate variability that occurs in that baseline period.

Understood and maybe my one follow up how many.

Yes.

Our being allowed.

Yes, okay kind of concomitant therapies.

I think it's I think it's one or more.

So the we not precluding kids.

You've had your own 1234, they're all in but they have to have been at least one because this is a refractory population.

Simon N. Pimstone: Yeah. Okay. Thank you. Hi, this is Kenneth Shields on behalf of Laura Chico.

Okay. Thank you.

Yes.

And your next question comes from Laura Chico.

Wedbush Securities.

Kenneth Shields: Thanks for taking our questions. You mentioned Italy, but we're also seeing Germany and France moving towards lockdowns, and it's increasing COVID-19 cases. With this in mind, can you remind us where the newest European sites are based within the ECTOL study? Yeah, we haven't disclosed all of the geographies. What I can say is we're in, if I'm not mistaken, the new sites are in about four or five different countries, and so we think we've mitigated that risk maximally. There's only so much we can do; we're not going to every European jurisdiction, but actually, it's five European countries where new sites have or will be open soon. Yeah, and the only thing I can add is that, in rough, rough terms, it's about an even split between sites between North America and Europe and about an even split in randomization as well so far across Europe and the US or North America. Okay, thank you. And then, Ian, I have a question for you.

Ian C. Mortimer: Could you help us understand how we should think about the cadence of expenses in 2021? You know, we started the ZEN 496 study, and then the next goal study should be one down. So how should we think about the general trajectory? Thank you. Yeah, good question. So if I annualize our 2020 numbers, we get OPEX at about $60 million. And that's been pretty consistent over the last little while.

60 million.

And and that's been pretty consistent over the last little while.

Ian C. Mortimer: And as you mentioned, you know, that's obviously the Excel studies up and running. And we've been ramping up FEND more recently on EPIC and getting ready with CRO and CMC and other costs to get ready for the 496 study. So I do expect OPEX will go up in 2021 as EPIC's fully running into Phase 3. And then you're right, towards the end of 2021, the external costs will come down. I think the, you know, will and there'll be a bit of a gap between those Phase 2 costs and Phase 3 as we get ready for an end of Phase 2 meeting with the agency and then get ready for Phase 3. That would be initiated in 2022. So you can expect from kind of our run rate in 2020, that the cost in 2021 will go up once we're fully funding the 496 EPIC. Okay, thanks so much. Mark Goodman.

And as you mentioned you know Thats, obviously, the EXL studies up and running.

And and we've been ramping up spend more recently on on epic and getting ready with CRM, BPO and CMC and other costs to get ready for the 496 study.

Marc Harold Goodman: Let's talk about the data that you're going to have at the upcoming AES, at the interim date on 07. Is this going to be efficacy data, safety data, both? What are we looking for? Yeah. We'll have...

Simon N. Pimstone: So, let me just say, we haven't actually seen the final abstract because it's being compiled by our academic collaborator, the institution where it's being run, Mark, so I have to be a bit cautious in that regard. This is a small data set. It's the first few patients that this investigator has completed on when the abstract was submitted, and it will probably be heavily weighted towards efficacy, but I'm sure they'll have safety and tolerability data in there as well, so I think you'll get both. You certainly will get efficacy, and I'm assuming there will be tolerability and safety data in addition. I have not seen the final draft, the update, because it's been updated since the original skeleton abstract was submitted, but I have not seen the final go-to-press abstract yet.

And.

And we will probably be heavily weighted towards efficacy.

But I'm sure they'll have safety tolerability data in there as well so I think you'll get both you certainly will get efficacy.

And I'm, assuming they will be Tolerability and safety data. In addition, I have not seen the final draft.

The updates because it's it's been updated since the original scale. It's an abstract was present was submitted but have not seen the final go to press abstract yet it should be hitting us in days.

Simon N. Pimstone: It should be hitting us in a few days. And one other question, Xcopri, just wondering your thoughts on the launch of that product, obviously, you know, in the space that you're going to be playing in soon. So, what are your thoughts? Yeah, look, I mean, we've looked hard at the drug. I think this is a drug that clearly has had a very good effect in focal epilepsy. We are probably the best effect size scene of any of the drugs launched today, achieving about a 50% plus or minus median seizure frequency reduction, which is at least 10% better than, you know, the rest of the pack. I think the obvious challenge with the drug is its dose titration requirement because of the dress risk, which is the idiosyncratic, eosinophilic, hypereosinophilic syndrome, and you know, it takes six to eight weeks to titrate the drug to a steady, steady maintenance dose.

Simon N. Pimstone: That is a commercial challenge because any refractory patient, you know, that is a long time to get to a steady state if that's required for the effect that's observed. So, you know, assuming the efficacy data was based on the drug fully titrated, that's what we know. Fifty percent reduction is seen once you have a patient on long enough. What that looks like over a couple of months in titration is hard to know.

Ration hard to know I don't have not seen that data.

Simon N. Pimstone: I don't haven't seen that data, and I think it's all going to be down to sort of the competitive landscape and what's available. That's not an ideal characteristic of an anti-seizure medicine.

And I think it's all going to be down to sort of the competitive landscape and what's available.

Thats not an ideal characteristic of an anti seizure medicine, but.

Simon N. Pimstone: But, of course, if the drug works well, there's a very good place for it. I can't speak about the launch dynamics at this point, Mark. I think it's maybe a bit too early.

But of course, if the drug works well as a very good place for it I can't speak about the launch dynamics at this point Mark I think it's maybe a bit too early but we watching that closely and.

Simon N. Pimstone: But we're watching that closely and see what uptake is like. You know, look, there's still a refractory patient population despite a number of drugs in the space. And that's why we and others are still excited about focal epilepsy. We certainly, you know, have not seen that drug as a factor in our clinical trial from a competitive perspective, so that's at least an observation, but we'll continue to watch the market closely. You're just finishing that sentence.

See what uptake is like look there's still a refractory patient population. Despite a number of drugs in the space and Thats why we and others are still excited by focal epilepsy.

We certainly have not seen that drag as a factory now clinical trial.

Marc Harold Goodman: Thank you. And your last question comes from Serge Belanger. Hey, thanks for the question. This is TN Officer. Just two quick ones.

Serge D. Belanger: I guess the first one for 496 and EPIC. Do you guys have any update on the site selection process? Has that been completed? And, I guess, in terms of the location, is it going to be mostly focused on the US or a mixture of the US and EU? Um, yeah, good question.

Ian C. Mortimer: So, um, we've spent the better part of this year with our CRO doing kind of what you would expect in terms of feasibility and site selection. And so we've been working with sites, identifying them, seeing the types of patients that they see and whether they have KCNQ2DEE patients under their care. So we definitely have identified a number of sites that will be in the trial. It will be, I would, and that's never, you know, a completed objective.

Ian C. Mortimer: We're always looking at sites, but we do definitely have a list of sites that would be the early ones that will be initiated and the early ones for patient enrollment that will happen in the near term. In terms of geography and location, the first sites to be initiated will be in the U.S., but they'll definitely, given the rare condition, they'll definitely be sites that we'll be looking at outside of the U.S. We just had a positive opinion on orphan drug designation from Europe. That helps us in terms of as we think about both development but commercial opportunities in Europe as well.

As the ones for patient enrollment that will happen in the near term in.

In terms of geography and location.

Ian C. Mortimer: So absolutely, we'll be looking outside of the U.S. to leading investigators and KOLs both in Europe and likely other parts of the world as well. I'll just add, you know, in terms of site numbers, we don't have a fixed number at this point, but we probably are in the 30 plus or minus range, and we'll see where we land. But, as Ian said, it's going to be a bit of a moving target as the numbers unfold. But we're actually very encouraged. There's a lot of interest in the study because this is the first real precision medicine trial in infant and pediatric epilepsy. You know, there is certainly good anecdotal support and support from KOLs of the utility of this drug when it is used off-label.

Ian C. Mortimer: These are sick, sick patients. And so there's certainly a lot of site interest. No competition, essentially, in terms of clinical trials for this patient population because it's a genetically defined patient subset and there are no other trials ongoing, so we think things look good. We'll probably have two to three dozen sites at the end of the day, and as Ian said, probably will be across North America and Europe.

And is it probably will be across North America and Europe.

Simon N. Pimstone: Great, thank you. Pleasure. I'm showing no further questions at this time. I will now turn the call back over to Jodi. Thank you everyone for joining us today. Operator, we will now end the call. Thank you for joining today's conference call.