Xenon Pharmaceuticals Inc. (NASDAQ:XENE) Q4 2023 Earnings Call Transcript
Xenon Pharmaceuticals Inc. (NASDAQ:XENE) Q4 2023 Earnings Call Transcript February 29, 2024
Xenon Pharmaceuticals Inc. beats earnings expectations. Reported EPS is $-0.64, expectations were $-0.76. Xenon Pharmaceuticals Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good afternoon. My name is Janie, and I will be your conference operator today. I would like to welcome you to the Q4 2023 Xenon Pharmaceuticals, Inc. Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, will be a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Sherry Aulin, Chief Financial Officer. You may begin your conference.
Sherry Aulin: Good afternoon. Thank you for joining us on our call and webcast to discuss Xenon's fourth quarter and full year 2023 financial and operating results. Joining me today are Ian Mortimer, Xenon's President and Chief Executive Officer; Dr. Chris Kenney, Xenon's Chief Medical Officer; and Dr. Chris Von Seggern, Xenon's Chief Commercial Officer. Ian will begin with a summary of our recent progress in areas of focus for 2024. Chris Kenney will provide an overview of our ongoing XEN1101 clinical programs, including our plans in major depressive disorder, or MDD, and Chris Van Seggern will comment on key findings from our market research on the potential of XEN1101 in the MDD treatment landscape. I will close with a summary of our financial results and anticipated milestone events before opening the call up 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 timing of and potential results from our and our collaborators' clinical trials, the potential efficacy, safety profile, future development plans, addressable market, regulatory success and commercial potential of our and our partners' product candidates, the efficacy of our clinical trial designs, our ability to successfully develop and achieve milestones in our XEN1101 and other development programs, the timing and results of our interactions with regulators, our ability to successfully develop and obtain regulatory approval of XEN1101 and our other product candidates, anticipated enrollment in our clinical trials and the timing thereof, and our expectation that we will have sufficient cash to fund operations into 2027.
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 Xenon's fourth quarter and full year 2023 financial results and the accompanying annual report on Form 10-K will be made available under the Investors section of our website at www.xenon-pharma.com and filed with the SEC and on SEDAR. Now I'd like to turn the call over to Ian.
Ian Mortimer: Thanks, Sherry, and good afternoon, everyone, and thanks for joining us on our call today. We are proud of the significant progress made across our pipeline in 2023, including the advancement of XEN1101 in our broad Phase 3 epilepsy program as well as strong execution in our Phase 2 X-NOVA clinical trial, which culminated in the release of topline data in late November, that demonstrated XEN1101 to have clinically meaningful drug activity in patients with major depressive disorder or MDD. In addition, we've made considerable progress in the maturity of our discovery portfolio, which I will expand upon in a moment. Our team has made excellent progress since the release of X-NOVA, which includes completing a capital raise in December to fully fund a broad Phase 3 program in MDD and setting the date for an end of Phase 2 meeting with the FDA in April.
We have also taken meaningful steps towards designing our Phase 3 program and are committed to initiating the first of three planned Phase 3 clinical trials in the second half of this year. XEN1101 is the most clinically validated and advanced Kv7 therapeutic in development across multiple indications, and we believe the mechanism may have broad applicability. This is reflected in our comprehensive strategy to pursue multiple indications with XEN1101, while also advancing additional novel Kv7 drug candidates. Our extensive know-how developed over almost two decades in ion channel drug discovery as well as our experience with potassium channels, positions us to maintain a leadership position in the Kv7 space. And we plan to continue exploring the pipeline in a mechanism potential of XEN1101 and earlier-stage drug candidates.
We have made strong progress in our Kv7 preclinical program in 2023, including the identification of several promising product candidates, and we expect more than one candidate will be in IND-enabling studies this year, and if successful, could enter first in-human studies next year. Looking beyond our robust research and development efforts in the Kv7 space, we are also advancing development candidates targeting sodium channels, including Nav1.1 and Nav1.7, which may have utility in treating seizure disorders and pain, respectively. We are uniquely positioned in developing molecules targeting Nav1.7, given the previous pioneering genetics research conducted by Xenon scientists that suggests that this particular sodium channel is a key target for the development of novel analgesics.
We have made considerable advancements in this program in 2023 and anticipate that multiple Nav1.7 candidates could also enter IND-enabling studies over the next few years. The benefit of this program is the opportunity to generate important early derisking human proof-of-concept data. So the considerable progress made in 2023 puts us in a strong position as we enter this year, where we have three key areas of focus. One, the continued execution on our Phase 3 epilepsy program with a specific focus on X-TOLE2 as this is on the critical path to an NDA filing and potential approval for XEN1101. Second, the expansion of XEN1101 beyond epilepsy with our now planned Phase 3 program in MDD while we continue to evaluate other clinical indications given XEN1101's compelling profile.
And third, the continued maturity of our discovery portfolio with multiple molecules expected to move into human clinical development over the next few years. So in summary, with a strong balance sheet to support our robust clinical and preclinical plans, we are looking forward to advancing and growing our broad pipeline with the goal of improving outcomes for patients in areas of high unmet medical need. I'll now turn the call over to Chris Kenney, who will provide some more details on the progress within our XEN1101 clinical program in both epilepsy and depression. Chris Von Seggern will then provide an important summary of recently completed market research providing feedback from physicians in the depression space to underscore the problems we believe XEN1101 has for broad therapeutic utility.
So, Chris, over to you.
Chris Kenney: Thanks, Ian. To echo Ian's comments, I'm proud of the many accomplishments achieved in 2023 by our development team and the advancements made across Xenon's preclinical and clinical product portfolio. We continue to receive overwhelmingly positive feedback on XEN1101 from both clinical investigators as well as the broader neurological community. At the annual meeting of the American Epilepsy Society in Orlando this past December, we had the opportunity to present 30-month data from the ongoing X-TOLE open-label extension study, demonstrating impressive seizure freedom rates including almost one in four patients who were on treatment for two years or more, achieving at least 12 months of consecutive seizure freedom.
In addition, we've now generated more than 600 patient years of safety data with some patients having been on XEN1101 for more than four years, supportive of a well-tolerated drug profile. Given the compelling data generated both in our Phase 2b X-TOLE study and ongoing open-label extension as well as from our recent X-NOVA MDD study, we continue to hear that physicians are enthusiastic about the profile of XEN1101 as we advance our late-stage development plans. Our ongoing XEN1101 Phase 3 epilepsy program includes our X-TOLE2 and X-TOLE3 clinical trials in patients with focal onset seizures or FOS, and X-ACKT clinical trial in patients with primary generalized tonic-clonic seizures or PGTCS. In our news release today, we refined our guidance for the completion of X-TOLE2 patient enrollment to late this year or early 2025 to reflect our current modeling.
As a reminder, we intend to submit an NDA upon the successful completion of X-TOLE2, our first XEN1101 Phase 3 clinical trial, along with the existing data package from our Phase 2b X-TOLE clinical trial and additional safety data from other clinical trials to meet regulatory requirements. Turning now to our work in major depressive disorder. And as Ian indicated in his comments, we believe the X-NOVA results were compelling and supportive of continued clinical development of XEN1101 in MDD. To summarize the findings from X-NOVA, XEN1101 demonstrated clinically meaningful dose-dependent activity in depression and anhedonia. Although we did not reach statistical significance in the trial's primary endpoint of MADRS, there was a clinically meaningful separation of greater than 3 points between placebo and 20 milligrams of XEN1101 and statistical significance was achieved on a number of important secondary endpoints.
XEN1101 achieved statistical significance at week six in the Hamilton Depression Rating Scale, or HAM-D17, a scale that has been used as a primary endpoint in Phase 3 depression studies. XEN1101 achieved statistical significance on change in the Snaith-Hamilton Pleasure Scale or SHAPS measuring anhedonia at week six. XEN1101 achieved statistical significance in MADRS at week one, demonstrating early onset of efficacy and XEN1101 achieved statistical significance in reporting of at least minimally improved symptoms of depression as assessed by physicians using the clinical global impression of improvement. Since reporting the X-NOVA results in November, we've made significant progress around key trial elements to position us for success in Phase 3.
Broadly, our development plans include three Phase 3 clinical trials, each one with one active drug arm, in other words, 20 milligrams versus placebo, compared to X-NOVA which had two active drug arms. Based on our review of the literature, we believe this should help lower the placebo response. We also intend to use the primary endpoint of HAM-D17 where we demonstrated statistical significance in X-NOVA while raising the baseline HAM-D17 threshold for entry to ensure a moderate to severe MDD population. We plan to assess the efficacy of XEN1101 compared to placebo on improvement in anhedonia using the Snaith-Hamilton Pleasure Scale or SHAPS, and HAM-D17 at week one as key secondary end points with hopes to confirm the compelling data we generated around rapidity of onset in X-NOVA.
We intend to align with FDA on these and other key design and protocol elements at a scheduled end of Phase 2 meeting in April of this year. Our aim is to initiate our first Phase 3 MDD study in the second half of this year. We recognize the importance of continuing to raise the profile of XEN1101 within healthcare community, and we intend to continue connecting with leading physicians, epileptologists and psychiatrists at key meetings. In the coming months, our team is looking forward to further outreach at the annual meeting of the American Academy of Neurology, or AAN, which is taking place in mid-April in Denver, where we have two podium presentations highlighting XEN1101 data from X-TOLE and data from the ongoing X-TOLE open-label extension study.
We also plan to feature our X-NOVA results at a suitable psychiatric-related scientific congress later this year. We are encouraged and excited by physicians' enthusiasm for XEN1101 and its potential to improve the lives of patients within both the epilepsy and depression communities. 2024 will be a key year of clinical execution for us with continued advancements in our Phase 3 epilepsy trials in anticipation of our first Phase 3 readout from X-TOLE2 and three Phase 3 clinical trials in depression. I would now like to turn the call over to Chris Von Seggern, who will share some of our recent findings from primary market research to further build upon our understanding of how XEN1101 might address some of the current unmet needs in depression.
Chris?
Chris Von Seggern: Thanks, Chris. By way of background, we firmly believe that market research is an integral part of our planning process to better inform our clinical and commercial development plans. Similar to our approach in epilepsy, we are expanding our understanding of MDD based in part on our own primary market research with prescribing physicians. Based on those market research findings, we believe that if approved, XEN1101 could play a significant role within the MDD treatment landscape. Digging deeper into the research, we surveyed 150 high-volume prescribing physicians, psychiatrists and other key opinion leaders in the US to test product profile of XEN1101 reflective of the X-NOVA findings to understand its fit within the current treatment paradigm.
Similar to our epilepsy research, physicians were interested in the drug profile that included ease-of-use attributes such as once-daily dosing with no titration. Other key takeaways include physicians who are interested in new agents with novel mechanisms of action, especially given the heterogeneity of depression and the current unmet need of those patients who do not respond initially to generic therapies such as SSRIs or SNRIs. Physicians are looking for new therapeutics that do not have liabilities of commonly used agents such as sexual dysfunction and significant weight gain. There is keen interest in products that have the potential to deliver rapid relief of symptoms given the delayed therapeutic response with the current standard of care.
Physicians also identified the ability to address anhedonia, a common comorbidity of depression as another potential differentiator. Given supportive preclinical research and statistically significant results from our X-NOVA study when evaluating secondary anhedonia endpoint using the SHAPS scale, this presented another dimension of keen interest in XEN1101. These survey results are highly encouraging of a compelling product fit for XEN1101 in the future MDD treatment landscape. Further, given the depression of the common comorbidity in epilepsy patients, efficacy in MDD could be a notable differentiator in epilepsy, particularly given that select anti-seizure medications are associated with unwanted mood symptoms. We are incredibly excited about our strategy to pursue multiple streams of late-stage clinical development of XEN1101 in epilepsy and depression and based on our market research, see further potential for the Kv7 mechanism of XEN1101 to have even broader applicability in other neurological indications.
I will now turn the call over to Sherry to summarize our financial results and upcoming milestones. Sherry?
Sherry Aulin: Thanks, Chris. Before diving in, I want to take a moment to introduce a new member of our team, Chad Fugere, who is joining Xenon as our Vice President, Investor Relations. Many of you on the call will know Chad is an integral member of the Investor Relations team at Seagen, leading up to its $40 billion buyout by Pfizer. And prior to Seagen, Chad spent nearly two decades as a healthcare analyst on both the sell side and buy side. We're excited to welcome Chad and proud that Xenon continues to attract top talent across all areas of our business. Turning now to our financial results. Xenon is in the fortunate position of having a strong balance sheet to support our broad and robust plans for XEN1101 and other programs in our pipeline.
We're grateful for the support of existing shareholders and the additional new investors who participated in our capital raise in December following the release of our Phase 2 X-NOVA data. As of December 31, 2023, cash and cash equivalents and marketable securities were $930.9 million compared to $720.8 million as of December 31, 2022. Bolstered by this recent financing round, we have extended our cash runway into 2027, which is based on current operating plans that include our XEN1101 Phase 3 epilepsy studies and fully supporting late-stage clinical development of XEN1101 in MDD, which includes three planned Phase 3 clinical trials. I would refer you to our news release and 10-K report for further details around our financial results. Looking ahead to some important milestone events for Xenon this year.
We'll continue to focus on advancing our XEN1101 Phase 3 epilepsy program, including our X-TOLE2 and X-TOLE3 clinical trials in FOS and our X-ACKT clinical trial in PGTCS with patient enrollment in X-TOLE2 expected to complete in late 2024 to early 2025. We anticipate participating in an end of Phase 2 meeting with FDA in the second quarter of this year to align on elements of the design and protocol for our Phase 3 XEN1101 clinical program in MDD. We expect to conduct three Phase 3 clinical trials in MDD with the first study expected to initiate in the second half of this year. We continue to explore potential opportunities for XEN1101 in other indications. And finally, we intend to advance our early-stage preclinical ion channel programs with the goal of delivering or the goal of having multiple candidates enter IND-enabling studies, both this year and next year.
I hope our call today has conveyed the sense of excitement and anticipation we have as a team around XEN1101 and Xenon's other promising early-stage programs. Based on its unique mechanism of action and attractive product profile, we see immense opportunity for XEN1101 in epilepsy, depression and potentially other indications. We believe that our depth of experience in ion channel drug discovery and development will help us continue to advance and grow our robust product pipeline. I'll now ask the operator to open the line for any questions.
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