Xenon Pharmaceuticals Inc. (XENE) Earnings Call Transcript & Summary

Good morning, everyone. My name is Ian Mortimer, I'm the President and CEO of Xenon Pharmaceuticals, and I will be moderating today's session. Thank you for joining us on this investor webinar focused on our Kv7 and Nav1.7 programs in the development for the treatment of pain. Before diving into the speaker introductions and agenda for today, please note the standard notice that we will make a number of statements that are forward-looking. I encourage you to review our SEC filings for a more fulsome discussion of risks facing our business, and readers are cautioned not to place undue reliance on such forward-looking statements. With that, I'm pleased to introduce my colleagues who are speaking on today's call. Dr. Jim Empfield, Xenon's Executive Vice President, Drug Discovery; Dr. JP Gilbert, Xenon's Senior Director of Biology; and Dr. Chris Kenney, Xenon's Chief Medical Officer. To kick us off, I'll provide a brief corporate overview, including our current pipeline. Jim will then provide some of Xenon's history and outline the work we've done over the years to position Xenon as a leader in ion channel drug development and how that translates specifically to our work in pain. Having spent almost a decade at Xenon, Jim has been integral to the extensive buildout of our discovery function and has an impressive pedigree previously serving as Vice President, Drug Discovery and Chemistry and co-site Head of Research at Vertex in Boston. And prior to that, leading CNS chemistry and various other positions at AstraZeneca. Jim will then hand the call over to JP Gilbert, who is going to take us through a brief overview of the pain signaling pathway and the important role that ion channels play, followed by a more detailed discussion of our kv7 and Nav1.7 programs, respectively. JP is one of our senior scientists at Xenon and is actively involved in the discovery and advancement of our promising preclinical drug candidates and early clinical development pain programs, and his extensive knowledge around our programs will be much appreciated throughout this webinar. I've also asked Chris Kenney to join the call to give us a backdrop of the significant unmet need in the treatment landscape for pain, and as our lead molecules are now in first-in-human studies and in the clinic to provide a summary of our clinical development plans for these programs. For those of you on the webinar who are new to the Xenon story, we're a neuroscience-focused biopharmaceutical company and a leader in small molecule ion channel drug discovery and development. Our lead molecule is azetukalner is a highly potent Kv7 channel opener in Phase III development in epilepsy and depression and represents the most advanced clinically validated potassium channel modulator in late-stage clinical development across multiple indications and the only Kv7 program with over 700 patient years of efficacy and safety data. Given the stage of a development of a azetukalner, obviously, much of the focus of the Xenon story is on our late-stage clinical development. However, we are also advancing a robust early-stage pipeline of therapeutic candidates targeting both potassium and sodium channels across various indications, and we're incredibly excited to share this work with you today. This chart illustrates both the breadth and depth of our pipeline. Looking at our late-stage programs, we are currently developing a azetukalner in 4 distinct indications. These include: focal onset seizures, primary generalized tonic-clonic seizures, major depressive disorder, and most recently, we initiated a Phase III clinical trial in bipolar depression. Today, we're going to focus on our earlier work in the highlighted section as we talk through our plans for developing our potassium channel Kv7 openers and our sodium channel Nav1.7 inhibitors for pain, both of which have the potential to offer a non-opioid approach for the treatment of pain. We also continue to generate exciting preclinical data supporting our Nav1.1 program in Dravet syndrome, and we expect to dedicate a stand-alone webinar to walk you through this program's advancements and the progress once it draws closer to clinical development. And we'll also have additional updates at the American Epilepsy Society meeting in December. Finally, we're extremely proud of our collaboration with Neurocrine that came to fruition as a result of our extensive work and leadership in developing Nav1.6 and dual Nav1.6 and 1.2 inhibitors for the treatment of epilepsy. So I'm now going to hand the call over to Jim, who can speak to our evolution and maturation as a company, leading us to our position today where we have built this impressive proprietary pipeline potentially offering a brighter future for people living with neurological and psychiatric disorders. I'm incredibly proud of our drug discovery team, who have built world-leading capabilities in drugging ion channels where we have made breakthroughs in novel chemistries and approaches to this challenging target class. We now have a maturing portfolio of early-stage molecules. We have initiated 2 Phase I clinical trials this year and we expect a number of additional molecules to transition into human clinical development over the next few years. So Jim, I'll hand it over to you.

Thanks, Ian. Xenon has a strong commitment to ion channel R&D and has become a global leader at drugging ion in the central and peripheral nervous system. This expertise is underpinned by our heritage in human genetics, a deep understanding of ion channel biology and our expertise at ion channel drug design that enable our team to invent highly potent, selective and orally active small molecule ion channel modulators, both inhibitors and potentiators. Many of you are familiar with the upper right-hand side of this time line, which focuses on azetukalner in its late-stage development. Briefly, with our vast experience in ion channel science, we identified a promising asset with attributes that would support clinical success, which has subsequently become our lead clinical candidate azetukalner. It is the most advanced potassium channel modulator in development now in multiple Phase III studies, as Ian had noted and is advancing towards our goal of commercialization. In parallel with all the azetukalner counter activities, there has been a significant ion channel discovery and early development work at Xenon, which is what we'll focus on today. Our roots in ion channel drug discovery originated by way of genetics. We were founded in 1996 with a platform science capable of discovering new genetic targets to treat human disease. Soon after, we became inspired by the opportunity to translate our genetic insights into life-changing medicine and prompting us to establish our own discovery and clinical capabilities. Our genetics platform attracted premier biopharmaceutical companies, and we entered into multiple discovery and development collaborations with Genentech, Merck, Teva and others. Several of these collaborations focused on the sodium channel Nav1.7, which launched our decades-long commitment to ion channel drug discovery, particularly those expressed in the central and peripheral nervous system. A particular note is our work with Genentech, some of which will be referenced in today's webinar. Nav1.7 was one of Xenon's most significant genetic discoveries. Over 20 years ago, we identified loss of function in Nav1.7 as the ideology 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. Importantly, these individuals with CIP had no abnormal neuropathy, retain the sensations of touch and vibration and can distinguish hot from cold. Jeffrey Woods in his group at Cambridge independently and simultaneously discovered the same link and published it in 2006. With these discoveries, Nav1.7 emerged as an exciting target to treat pain. With the expertise gained through our target discovery work and collaborations, we made a strategic decision to become a fully integrated biotechnology company. After becoming a U.S. publicly traded company in 2014, we focused on building a proprietary pipeline which increasingly leveraged our expertise in sodium and potassium channels. We then sharpened our focus on areas of neuroscience, where we could make a significant impact, including epilepsy and pain. In the mid-2010s, we initiated a Nav1.6 program for the treatment of epilepsy that ultimately resulted in clinical candidates and a subsequent collaboration agreement with Neurocrine Biosciences, which focus on highly selective voltage-gated sodium channels, Nav1.6 and 1.2 inhibitor. This program continues today with a promising selective dual inhibitor which is currently in Phase I clinical trials. Over the past number of years, we continue to build out our investment in ion channel drug discovery to include independent programs targeting Nav1.7 inhibition, Kv7 potentiation and Nav1.1 potentiation with small molecules. Today, we are going to provide a more detail on our planned pain programs, specifically our highly selective and potent Kv7 and Nav1.7 small molecules, which are currently progressing in Phase I clinical trials. Before discussing our specific Kv7 and Nav1.7 programs, I would like to briefly describe our in-house drug discovery capabilities. We have built an organization with all the functional capabilities to conduct leading CNS research and drug discovery, from target identification, ion channel assay development, electrophysiology, in vivo biology, computational medicinal and synthetic chemistry, DMPK to toxicology and CMC. As we build out these capabilities, momentum has grown attracting scientists and experts who are excited to be part of a leading ion channel company here at Xenon. Importantly, we have expertise in the following areas: genetics, advanced bioinformatics and data analysis, development of cellular ion channel flex assays, investigation of and understanding the biophysics of ion channels, development and utilization of cutting-edge electrophysiology assays, such as measurement of brain slice action potentials, recording currents from exciditorian inhibitory neurons as well as high-throughput electrophysiology assays. Design, validation and utilization of variety of disease-relevant and genetic in vivo models, development of machine learning computation models, design and synthesis of highly potent and selective ion channel inhibitors and potentiators with CNS potential, as well as the development and utilization of generative artificial intelligence to aid in the design of novel small molecules, which we believe will accelerate the next generation of ion channel drugs. These capabilities have enabled us to be successful in delivering ion channel modulators for clinical development. I'm incredibly excited and proud of the work we are doing at Xenon, and I'm pleased to invite JP Gilbert to present the scientific portion of today's talk, with a brief overview of the role of Nav1.7 and Kv7 within the pain signaling pathway, followed by a presentation of our ion channel pain programs. JP, over to you.

Thanks, Jim. Yes, I'd like to start by giving a brief overview of the pain signaling pathways. This will queue up some of our discussion around Kv7 and Nav1.7 pain programs. Pain signals can initiate in tissues, for example, in the skin, that stimulate nerve endings of dorsal root ganglion neurons or DRGs. These are pain-sensing neurons also called nociceptors. In chronic neuropathic pain, pain signals can result from damage or dysfunction of the nerves themselves in conditions like diabetes or from infections or autoimmune disease. These signals travel along the long axons of the DRGs to reach the spinal cord where they synapse on despinal neurons in the dorsal horn of the spinal column. The DRG terminals release neurotransmitters, which stimulate these spinal neurons and pass the pain signal up into the brain, where the thalamus and cortical regions can then process these pain signals ultimately leading to the perception of pain. Looking at a simplified version of this pain circuit, we can visualize how analgesics exact along different points of the pathway and interrupt the pain signal on its way to the brain. As I'll discuss in subsequent slides, we're really excited about the potential for Kv7 potentiators and Nav1.7 inhibitors as these channels play important roles at multiple points in the pain signaling pathway. Transduction is the initial step in the pain process. We're a damaging stimulus for example, on mechanical, chemical or thermal insult or via nerve damage activates the nerve endings of nociceptors via specialized pain receptors localized there. It is here that some known analgesics like local anesthetics or NSAIDs work. It's also here that we believe Kv7 potentiators and Nav1.7 inhibitors could have a significant impact on transduction or the earliest part of the pain signal. If we zoom into a peripheral sensory neuron terminal where transduction occurs, we can see this in a bit more detail. If a pain stimulus is strong enough, the pain neuron will fire an action potential, which serves as the basic unit of a pain signal. Kv7 channels help regulate the excitability of the pain neuron, while sodium channels like Nav1.7 are important for the initiation of action potentials. Therefore, Kv7 and Nav1.7 modulators could affect the first step in the pain process for nociceptors convert pain stimuli into electrical pain signals. Transmission is the next step in the process, where pain signals carried from the site of injury along the nerve fibers and into the central nervous system. Agents that affect the neurons ability to fire action potentials can block transmission of these pain signals. Some examples include other sodium channel inhibitors and local anesthetics. Kv7 potentiators and Nav1.7 inhibitors could both have a significant impact on pain transmission because these ion channels are critical for neuronal excitability. As we see here, in action potential is a rapid transient change in neurons membrane voltage that involves the secret events triggered by voltage-gated ion channels, primarily sodium potassium channels to generate signals in these neurons. At rest, a neuron maintains a negative membrane voltage. However, when a stimulus is strong enough to depolarize the membrane to more positive voltages, a threshold is reached and an action potential can be elicited. Kv7 channels are critical for maintaining the resting membrane voltage and the intrinsic excitability of these neurons. A more negative membrane voltage is less excitable whereas more positive membrane voltage is more excitable. With enough of an increase in the neurons membrane voltage, sodium threshold channels like Nav1.7, open and initiate an action potential. This is shown at the takeoff voltage in this figure. Other sodium channels, like Nav1.6 and Nav1.8, work in series with Nav1.7 to influx more positive sodium ions and produce the rapid upstroke of the membrane voltage. The sodium channel has been rapidly inactivate and close and additional potassium channels help repolarize the membrane to allow further action potentials to be generated. A Kv7 potentiator decreases neuronal excitability by holding potassium channels open longer, thus decreasing the membrane voltage. This, in turn, increases the amount of depolarization necessary to trigger an action potential, silencing hyperexcitable neurons involved in pain. A Nav1.7 inhibitor can make it harder for a neuron to reach its firing threshold and to generate an action potential to propagate the pain signal. Both mechanisms could therefore have a significant impact on the intrinsic excitability of nociceptive neurons and their ability to fire action potentials to send pain signals along the pain pathway. Continuing along the paint circuit, the nociceptive neurons will synapse on to spinal cord dorsal horn neurons where the pain signals relay from the periphery into the central nervous system. Gabapentinoids and other analgesics can modulate the pain signal here, but so too, could Kv7 and Nav1.7 modulators. Looking closer at the synaptic connection, we can see that Kv7 and Nav1.7 channels play a significant role in the excitability of and the neurotransmitter release from the sensory neuron onto the postsynaptic spinal cord neuron. Kv7 channels also play an important role in the acceptability of the spinal cord neurons and their ability to propagate the pain signal into the brain. It's important to note that the nociceptive sensory neuron, as shown here in blue, has processes that extend into peripheral tissue as well as behind the blood-brain barrier, such that channels are expressed in both peripheral and central compartments. We believe this is important in terms of drug sites of action and I'll discuss this further in future slides. In summary, analgesics can act along multiple different points of the pain pathway, and we believe that Nav1.7 and Kv7 are compelling pain targets because they play significant roles 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. I'd now like to transition to a more detailed discussion of our Kv7 and Nav1.7 pain programs, respectively. There are multiple lines of evidence that support targeting Kv7 for pain. First, as noted, Kv7 channels are expressed throughout the pain pathway and can suppress repetitive action potential firing. Second, dysfunction or downregulation of Kv7 activity has been shown in altered pain states. And lastly, a clinical compound previously approved for the treated pain has a mechanism of action that involves potassium channel opening. Therefore, we believe that activation of Kv7 channels offers a potential non-opioid approach to treat a range of pain conditions and supports Kv7 as a compelling pain target to modulate neuronal hyperexcitability. To my first point, Kv7 proteins widely expressed in DRG neurons. Here, we're showing some internal Xenon data collected from rat DRG tissue. These images are cross sections of dorsal root ganglia where we can image the cell bodies of sensory neurons. In green, we have immunostained for the Kv7.2 subtype, while Kv7.3 is depicted in Magenta. DAPI depicts the cell nuclei in blue. In the graph to the right, we've quantified the number of Kv7.2 and Kv7.3-positive cells as well as their distribution across the range of cell-body diameters. Typically, the CNA delta fibers, which are the pain sensory neurons have smaller cell diameters of less than 40 microns. It is in these cells that we see the greatest number of Kv7.2 and 7.3 expressing cells, suggesting that the Kv7 channel can play a significant role in the excitability of nociceptive neurons. Moving beyond expression, Kv7 channels have previously been shown to modulate the excitability of nociceptive neurons. In the upper right-hand corner of this slide, we can see multiple points in which Kv7 channels can modulate signaling along the pain pathway. First, Kv7 channels play an important role in controlling neuronal membrane voltage. As denoted by the red star, we can see that a Kv7 opener serves to make the membrane potential more negative or less excitable, while Kv7 blocker would make the membrane voltage more positive or more excitable. This affects the intrinsic neuronal excitability, or the ability of these neurons to fire an action potential along the length of the pathway. Looking at actual potential firing in the DRG is shown with the yellow star on the pathway and in the bottom center panel, or in the spinal cord as shown with the orange star in the bottom right panel, we can see that a Kv7 opener has the potential to block action potential firing in both DRG and in spinal cord neurons, thus greatly inhibiting or preventing the pain signal from reaching the brain. This data suggests that Kv7 channel openers could have a significant impact on signaling across the pain pathway. To test the preclinical efficacy of our Kv7 channel openers, we leveraged a mouse formal in acute pain model. Briefly, this is a mouse model in which the irritant formalin is injected into the rodent's [ sign paw ] to create a localized biphasic pain response that can be used to evaluate effectiveness of analgesics. It's characterized by an initial acute phase that occurs in the first 5 minutes after formal an injection. That's shown here is Phase I and is the result of direct activation of the nociceptive neurons. This is followed by a longer-lasting inflammatory phase or Phase II. We selected this model because it's a relatively high bar since most analgesics only work in Phase II, where as typically only opioids show efficacy in the acute Phase I. In the 2 bar graphs, we've quantified the fraction of animals and pain as measured by a licking or flinching response across a range of agents. We can see that diclofenac, a nonsteroidal anti-inflammatory drug shown here in light gray, does not reduce the Phase I pain response, but does reduce the Phase II pain response. The opioid buprenorphine, as shown in orange, significantly reduces both the Phase I and the Phase II pain responses. In green, flupirtine, which as noted previously, is a clinical compound previously approved for the treatment of pain that has a mechanism of action that involves potassium channel opening reduces the Phase I response, as does Xenon's lead Kv7 pain compound, XEN1120 and another exemplary Xenon Kv7 potentiator compound XPCA. We ship to the right panel, when we plot the free plasma exposures that demonstrate efficacy in the formalin model against Kv7 in vitro potency, we can see a strong correlation that suggests efficacy is driven as a result of Kv7 modulation. We believe this efficacy data is very exciting because it reveals the exemplary Xenon Kv7 channel openers can demonstrate efficacy in both phases of the assay but most importantly, in the Phase I portion of the formalin model, a high bar for most non-opioid drugs are ineffective. In summary, we believe Kv7 is a compelling pain target to modulate neuronal hyperexcitability at multiple points along the pain pathway. Kv7 channels play important roles in the initial transduction of pain stimuli, transmission along the pain pathway as well as in the spinal cord where they're expressed in dorsal horn neurons that propagate pain signals into the brain. We therefore believe Kv7 potentiators could decrease neuronal hyperexcitability for the potential treatment of a range of pain conditions. First, this is supported by high levels of Kv7 expression throughout the pain pathway, and our data shows that Kv7 is enriched in the C and A delta pain subtypes of sensory neurons. Second, Kv7 openers can block action potential firing in both DRG and spinal cord neurons, thereby significantly inhibiting pain signals from reaching the brain. Additionally, evidence supports the dysfunction or down regulation of Kv7 activity has been observed in altered pain states. And lastly, flupirtine, a clinical compound previously approved for the treatment of pain has a mechanism of action that involves potassium channel opening. We have ongoing work to develop a robust pipeline of Kv7 potentiators with appropriate profiles for development and pain. And I'm pleased to confirm that our lead Kv7 pain compound, XEN1120 is now in Phase I first-in-human clinical study. Chris will provide some more details on our clinical development plans for this program later in this session. I'd now like to turn to our Nav1.7 program and walk you through work from our team, some of which goes back 10-plus years, as Jim referred to in his opening comments. Before delving into our product profile, I'll start with some of the Nav1.7 genetics as we believe that Nav1.7 is a compelling target for the treatment of pain with excellent human genetic validation. Specifically, loss of function mutations in the SCN9A gene, the gene that encodes the Nav1.7 protein have been shown to cause congenital indifference to pain or CIP. These are otherwise healthy individuals whose normal sensory functions are intact. However, they cannot feel any pain regardless of the noxious stimula. The picture inset shown on the left is of a man named Edward Gibson. In 1932, his case was one of the earliest known reports of CIP, where he was described as a 54-year-old man who reported never having felt pain despite a list of injuries, including a blow in the face with a pick axe, a bullet through a finger, a broken nose, severe laceration of the knee and a burned hand, all without apparent pain. He later became owned by a stage name, the human pin cushion during his time as a vaudeville performer, where he asked audience members to push large pins into him with up to 50 to 60 pins in just one performance. We then pull them out well on stage in front of the audience. Edward Gibson story is similar to later reports of patients with CIP, who often spent time is street performers that would walk across hot coals or plunge knives into their arms. By studying these cases, researchers, including Xenon scientists, linked loss of function mutations in SCN9A to the inability to feel pain. Conversely, gain of function mutations have also been identified that lead to extreme pain disorders such as Inherited erythromelalgia, IEM and paroxysmal extreme pain disorder, PEPD demonstrating that excessive Nav1.7 activity can drive pain. However, since the initial discovery and link of Nav1.7 to pain decades ago, there have been many failures and an inability to translate these strong genetic findings into promising pain therapeutics. Over the next couple of slides, I'll walk through what we have learned along the way and what we're doing to overcome previous failures and why we think we've developed a compound with the appropriate and exciting profile, one that's never been tested before in the clinic. More recent genetic research has better informed the potential level of Nav1.7 inhibition required for efficacy and pain. Individuals have recently been identified in 2 different families by 2 independent research groups with an incomplete loss of Nav1.7 and a complete lack of pain. The subjects in these families have Nav1.7 mutations in both alleles. One mutation in each family is a no variant, meaning it produces no functional channels. The other mutation is a hypomor, meaning it has a reduced amount of current. Family 1, shown on the left, Harvard mutations that result in about 75% loss of function of Nav1.7. The mutations identified in Family 2, as shown on the right, result in about an 85% loss of function. Mutations from both of these families have been generated in-house at Xenon, and we've independently verified these functional electrophysiology findings in our labs. Importantly, though, this data suggests that 75% to 85% receptor occupancy or inhibition of the Nav1.7 channel is sufficient for a complete loss of pain. This is in contrast to initial thinking within the field where we thought that close to 100% receptor occupancy would be needed for efficacy in pain. These data can, therefore, guide our therapeutic target exposures and achieving 75% to 85% receptor occupancy is materially less challenging than near 100% inhibition of the channel, thus significantly increasing our probability of success. This brings me to the target compound profile we aim to achieve for our lead Nav1.7 compounds. Our target profile is based on 3 pillars. The first is that we want CNS exposure to engage Nav1.7 in the spinal cord to better mimic patient genetics with global inhibition of the channel. Second, we need improved free fraction and good tissue distribution to achieve high levels of receptor occupancy. And third, comprehensive selectivity over the other NAV subtypes to avoid any off-target concerns. This table shows a high-level comparison of prior sodium channel inhibitor profiles with Xenon's lead compounds. First generation molecules, namely nonselective inhibitors that bind to the poor region of Nav1.7 and were significantly dose limited due to a lack of selectivity against the other sodium channel subtypes, which did not allow high levels of Nav1.7 receptor occupancy. Second-generation molecules were the first to demonstrate some appreciable Nav1.7 selectivity. However, these molecules were hampered by high plasma protein binding and therefore, low-free drug concentrations in poor tissue distribution. Additionally, they are not very CNS penetrant and mostly peripherally restricted. From these learnings, we've designed our lead compounds to achieve good CNS exposure, good free fraction and tissue distribution as well as excellent selectivity and potency to achieve high levels of Nav1.7 inhibition. Importantly, and why we're so excited about our program is that a Nav1.7 inhibitor with this compound profile has never been tested in the clinic before. We believe this best positions us to test the Nav1.7 mechanism for the treatment of pain and to best mimic the human genetics of Nav1.7. I'd now like to dig into each of these pillars a bit more, starting with the expression profile of Nav1.7, which is highly expressed in nociceptive neurons, where it's found in processes that extend all the way out into peripheral tissue as well as processes that extend behind the blood-brain barrier into the spinal cord. As shown in the first figure on the right, Nav1.7 shows the highest expression in human DRGs as compared to other sodium channel isoforms. Additionally, Nav1.7 protein is found in no susceptive neuron terminals in the spinal cord as shown in the figure on the right. Based on this, we believe inhibition in both compartments may better mimic the human genetics. Turning to the second pillar of our product profile. Free fraction is related to a drug's protein binding and how much free unbound drug is available. If a drug has a low free fraction, it's highly bound to plasma proteins and can be trapped in the blood, keeping it away from its target. A prior Nav1.7 clinical compound, PF771, was highly protein-bound with a very low free fraction. We believe this limited its ability to achieve sufficient Nav1.7 target engagement and contributed to that compound's poor efficacy. Specifically, in an evoked pain study in IEM patients as well as a dental pain study, PF771 demonstrated some efficacy when dosed up to 1,600 milligrams. However, due to its low free fraction, it likely didn't achieve our projected Nav1.7 receptor occupancies. It's important to note, however, that no patients demonstrated autonomic effects in either study at efficacious exposures. In peripheral diabetic painful neuropathy, PF771 was given at a much lower dose of 150 milligrams due to dose-limiting increases in LDL cholesterol and it failed to demonstrate efficacy, again, likely due to insufficient Nav1.7 inhibition. The figure on the right shows the PK profile of a single 1,600 milligram dose of PF771 from the IM pain study. Peak plasma exposures reached 57,000 nanograms per ml or 114 micromolar right around the TMAX of 4 to 6 hours. Based on Xenon's internal assays, this compound is highly potent. However, less than 0.1% is free unbound drug. When we calculate the free fraction of drug, it doesn't achieve our target levels of Nav1.7 receptor occupancy even at these very high total plasma exposures. This, therefore, demonstrates how it can be challenging for a highly protein molecule to sufficiently target the channel. We believe an improved free fraction is an important part of our profile to ensure that we can achieve high levels of Nav1.7 target engagement. Finally, with a compound profile that's both CNS penetrant and with good free fraction and tissue distribution, high isoform selectivity will be required to safely achieve high levels of Nav1.7 inhibition. Robust selectivity provides an appropriate therapeutic window with a reduced risk of dose-limiting off-target toxicities from the other sodium channel subtypes. For example, minimizing inhibition at other sodium channels like the CNS isoforms, Nav1.1, Nav1.2 and Nav1.6, as well as the cardiac channel, Nav1.5, is important. As detailed on this slide, with 30-fold selectivity, high levels of Nav1.7 inhibition could be achieved with only minimal off-target activity at other NAV subtypes. This is illustrated in the plot to the right, where a target range shown in green, aims to achieve 75% to 90% block at Nav1.7. Again, this is based off of the patient genetics. With thirtyfold selectivity, this translates to only about 10% to 25% block of an off-target sodium channel. One key liability we've learned from our years of work in the sodium channel space, is the level of Nav1.6 inhibition that's tolerated in the brain. For reference, our extensive work on selective Nav1.6 inhibitors has shown that there could be tolerability concerns that arise at high levels Nav1.6 inhibition, and that sufficient levels of selectivity could provide more than adequate safety margins to explore our Nav1.7 target therapeutic range. Our lead Nav1.7 inhibitor, XEN1701, has been developed to address these 3 pillars and demonstrates nanomolar potency against Nav1.7 with excellent selectivity against the other sodium channel subtypes as shown on the left. We believe this profile could allow high levels of Nav1.7 inhibition with a good therapeutic index. Selective Nav1.7 inhibition can decrease activity in sensory neurons, and this is demonstrated in the right panel, where a selective Nav1.7 inhibitor can block action potentials in iPSC-derived sensory neurons from IEM patients. To interrogate our compounds in vivo, we assessed Nav1.7 target engagement with an IEM mouse model. Recall that inherited erythromelalgia, or IEM is a severe pain syndrome caused by gain-of-function mutations in Nav1.7. Xenon developed this model by producing transgenic mice that express a human Nav1.7 with a mutation observed in IEM patients. Upon injection of the sodium channel activator aconitene into the paw these animals, a pain response is elicited in the IEM but not in the wild-type mice. We've also developed novel in-house machine learning-based automated tracking to analyze the lunches as a readout of pain. And on the right, you can see IEM animals have a significant number of nociceptive events after aconitine injection, whereas the wild-type animals have no pain response. This makes this a very useful and proprietary model to study target engagement of the human Nav1.7 channel in vivo. In our IEM mouse model, exemplary Xenon Nav1.7 inhibitors demonstrate target engagement at relatively low overall total plasma concentrations. As shown on the left-hand side of the slide, we can see XEN1701 demonstrates target engagement at significant lower plasma concentrations as compared to second-generation molecules like GDC-310 and PF771, which support Xenon's target compound profile to achieve the Nav1.7 receptor occupancies needed for efficacy and pain. On the right, we've plotted efficacy in the IEM model against free brain concentrations normalized to Nav1.7 potency. We can see across an exemplary set of compounds that once we achieve 75% to 90% Nav1.7 receptor occupancy, as highlighted by the gray box. This results in little to no pain, which is in line with the patient genetics and our target therapeutic exposure range. Taken together, CNS penetrants improve free fraction and strong potency and selectivity demonstrate target engagement at low total plasma exposures. And as I've mentioned, to our knowledge, we are the first to test the molecule of this profile in a human clinical trial. In terms of additional findings, Nav1.7 is not only highly expressed in pain sensory neurons as previously described. but it's also expressed in autonomic neurons that play a role in the regulation of blood pressure and heart rate. Therefore, I wanted to pause here briefly to discuss Nav1.7 in autonomic function. In patients with Nav1.7 gain-of-function mutations, autonomic abnormalities have been reported. However, and importantly, patients that have Nav1.7 loss of function mutations, like in CIP, have reports of normal autonomic function. Prior published reports have demonstrated autonomic effects after pharmacological inhibition of Nav1.7, however, these compounds differ from our target compound profile. The main concern of a Nav1.7 mediated autonomic effect would be a loss of consciousness or orthostatic hypotension, which would be dizziness upon standing from a sitting or line-down position. Based on our experience and work in the space, we believe that avoiding a rapid onset of Nav1.7 inhibition, thus avoiding a rapid rise in the plasma concentration or a very quick Tmax could potentially mitigate autonomic findings that have been previously reported in the literature with other Nav1.7 inhibitors. Additionally, avoiding peripheral receptor occupancies at or greater than 99% may be important. Similar to published reports, we've identified compounds that can alter heart rate and blood pressure at these very high levels of Nav1.7 peripheral receptor occupancy. However, as I've previously noted, we believe the patient genetic supports a target therapeutic range significantly below these levels. And lastly and importantly, XEN1701 does not show autonomic cardiovascular effects at exposures greater than predicted therapeutic levels based on preclinical studies conducted today. As shown in the figures to the right, XEN1701 had no effect on heart rate or mean arterial pressure in cynomolgus monkeys across a range of doses tested. Furthermore, cardiovascular effects are easily monitorable in the clinic, and we will be assessing these parameters as our clinical study progresses. The key takeaway here is that the target profile for our Nav1.7 compounds is differentiated from other published compounds that demonstrated these autonomic findings, and we anticipate being able to achieve high efficacious exposures in the clinic without autonomic effects. In summary, we believe Nav1.7 is the best genetically validated pain target with striking genetic data in patients with a loss of function mutations that have no ability to feel pain. Gain of function mutations have also been identified that drive in -- the drive pain disorders further underscoring the critical role Nav1.7 plays and pain signaling. This, combined with our long history with Nav1.7 in our deep ion channel drug discovery expertise, best positions us to deliver a differentiated Nav1.7 compound profile into the clinic, one that has never been tested before. Specifically, our lead Nav1.7 inhibitors are seeing us penetrant to enable global inhibition of Nav1.7 to better mimic the human genetics. Our lead molecules, including XEN1701 demonstrate good free fraction and tissue distribution to achieve high levels of target engagement; and lastly, we've identified molecules that have excellent potency and selectivity to safely achieve target therapeutic levels of Nav1.7 inhibition. We believe we have solved the critical limitations of prior Nav1.7 compounds to build a strong pipeline of optimized Nav1.7 inhibitors for development and pain. Our lead Nav1.7 pain compound, XEN1701, is now in a Phase I first-in-human clinical study, and Chris will provide additional details around the clinical development plans for this program shortly. In summary, Xenon has a clear leadership position in ion channel pain research and development, and we're actively pursuing well-validated ion channel targets like Kv7 and Nav1.7. Both lead Nav1.7 and Kv7 compounds are currently in Phase I clinical studies, and we have a growing early-stage pipeline of multiple additional compounds with distinct chemistries advancing into IND-enabling studies. At this point, I'd like to turn the call over to Chris, who's going to walk through the clinical pain landscape and development plans for our lead compounds. Chris?

Thanks a lot, JP. Great overview. Okay. To begin, it's important to ground the conversation in just how pain is classified clinically because understanding these distinctions help frame the unmet need and also the rationale behind our clinical development strategy. Pain is not a single disease, but rather a symptom with many underlying causes. Pain can stem from a clear singular source such as a tissue injury or nerve damage or it may have more complex multifactorial origins. In some cases, the underlying cause isn't even well understood, which presents challenges in both diagnosis and treatment. We typically categorize pain by its origin nociceptive, which is driven by tissue injury, neuropathic, which results from dysfunction in the nervous system and nociplastic pain, which in some patients fails to present with organic lesions and therefore, cannot be classified as nociceptive or neuropathic such as fibromyalgia. Duration is another key dimension, acute pain, which is short-lived and often tied to a specific event versus chronic pain, which persists beyond 3 months and often becomes a disease state of its own. Chronic pain, in particular, represents a large and underserved patient population and it's where many of today's treatment challenges but also opportunities lie. As noted in the examples listed, chronic pain encompasses a wide range of conditions from osteoarthritis and diabetic neuropathy to cancer pain. Each of these conditions may respond differently to treatment depending on the underlying mechanisms involved. Our focus is on leveraging mechanistic insight, especially around ion channel function to target pain at its source and develop precision therapies that can address both the complexity and the chronicity of pain. We engage directly with clinicians as part of our early expert outreach to gather KOL insights and the message was strikingly consistent. Across the board, we heard a desire for opioid-sparing therapies. Physicians recognize the limited efficacy of current options and remain concerned about the high risk of abuse and dependency tied to opioids. Even when opioids are used appropriately, their long-term safety profile is not ideal, chronic NSAID usage can also be problematic for different safety and tolerability issues that may arise. What stood out in these conversations was the appetite for alternatives that are both effective and well tolerated over the long haul. Neuromodulators like Lyrica and Cymbalta are often sedating and don't work for everyone, leaving physicians with limited reliable tools. Importantly, there was strong interest in ion channel blockers as a potential transformative class of therapies for pain. These physicians aren't just asking for new medications, they're asking for mechanism-based innovation that can deliver real relief without sacrificing safety or tolerability. So we believe that our discussions with physician experts presented broader sentiment in the field that there is an unmet urgent need for non-opioid therapies that can meet the everyday realities of pain management without compounding the problem or causing a new one. Both of our lead molecules in our Kv7 and Nav1.7 programs, XEN1120 and XEN1701, respectively, are now in Phase I first-in-human studies in healthy volunteers. Our goal is to initiate Phase II proof-of-concept studies next year, and we'll provide more details as we get closer to these important milestones. I'm excited that there is ongoing work to maintain a robust pipeline of additional Kv7 and Nav1.7 compounds through the work of Jim, JP and over 80 additional scientists on our ion channel drug discovery team. These distinct molecules will explore different binding sites and mechanisms as well as tissue distribution profiles. As JP alluded to, within our Nav1.7 program, we'll continue to explore our 3 pillars and strive to develop compounds with differentiated profiles that address levels of CNS exposure, free fraction and tissue distribution as well as optimal selectivity. Before addressing some of your specific questions, we've summarized some of our key points from today. First of all, current pain treatments rely on NSAIDs, neuromodulators and opioids, which pose risks of poor tolerability and/or addiction. Second, there's a significant unmet need for non-opioids that provide effective analgesia and minimize safety and tolerability issues. And third, we're developing modulators of Kv7 and Nav1.7, with both targets believed to have significant impact in the transduction, transmission and relay of pain signals. Our aim within Xenon's pain program is to address liabilities of earlier compounds by leveraging our extensive ion channel expertise and ultimately bringing new pain medications to the many patients dealing with acute and chronic pain. With that, I'd like to turn the call back to Ian, who will moderate a Q&A session. Over to you, Ian.

Great. Thanks very much, Chris, and thanks, Jim and JP. [Operator Instructions] We've had lots and lots of questions come in throughout the webinar. So we really appreciate those. Because there have been so many questions that have come in, what I think I'm going to try to do is group some of the questions by theme. And a lot of them are generally around just these targets and the specific ion channel targets for pain. So I'm going to do some kind of thematic questions, which I think will be helpful. If we don't get to your question, we are trying to limit this to 60 minutes. We have a list of all of the questions, and we'll be able to follow up with you individually afterwards. So again, keep submitting your questions, and we'll get to as many as we can. So we'll start maybe about the current landscape. And as everyone on the call knows, there was recently and Nav1.8 drug approved in acute pain. And so we've had a number of questions just around the theme of why we believe Nav1.7 may be a preferred target over Nav1.8 in the treatment of pain. Jim, maybe I can get you to start here?

Certainly. We believe Nav1.7 offers the strongest genetic validation of any pain target. As noted in JP's remarks, individuals with loss of function in Nav1.7 do not feel pain and more recent genetic data supports needing only 75% to 85% receptor occupancy to achieve this phenotype. Nav1.8 does not have this level of genetic validation. So we have always believed that 1.7 is the preferred target based on human genetics. As JP noted, our strategy has been to mimic the genetics through inhibition of Nav1.7 in both the periphery and the CNS. Thus, we expect to dramatically reduce pain with this approach. Furthermore, the expression level of Nav1.7 in human DRGs is significantly greater than that of Nav1.8, suggesting its importance in no receptors. Finally, it's important to note that we believe the Nav1.8 mechanism has likely reached an efficacy ceiling based on recent acute clinical studies with selected Nav1.8 inhibitors. From our perspective, Nav1.8 clinical molecules that have achieved greater than 90% receptor occupancy have not demonstrated further improvements in pain reduction, suggesting that Nav1.8 mechanism is saturated. We anticipate the Nav1.7 ceiling will be higher. So overall, although Nav1.7 has been a more challenging target to drug, we believe there are multiple lines of evidence as to why it is the preferred target over Nav1.8. Back to you, Ian.

Great. Thanks, Jim. That was really helpful. So maybe again, with this theme around 1.8 and Kv7, there's a number of questions just around combinations. So how do we just think about combining different ion channel modulators together? Would we expect synergy with Nav1.8 inhibitors or how do we think about maybe even combining Nav1.7 as well as the Kv7 potentiators? So Chris, maybe you can just talk about from a clinical perspective, what you think from a synergistic point of view and how you think some of these different targets may be developed together as we move forward?

Sure thing, Ian. So given the involvement along the pain pathway of the different mechanisms that we've discussed, there might be synergy or at least additive potential with our approaches and Nav1.8 inhibitors. There could also be synergy or additive effects between the Nav1.7 and Kv7 mechanisms, given the complementary features of these mechanisms. As noted by JP, our Nav1.7 inhibitors and Kv7 potentiators were able to effectively block the pain signaling at various points along the pathway. Kv7 potentiator could decrease neuronal excitability and has demonstrated its ability to block the action potentials in both the DRG and the spinal cord. Meanwhile, Nav1.7 inhibitors have the potential to minimize or eliminate the initiation of the action potential firing with the DRG as well as block the transmission of the signal to the spinal cord. Kv7 and Nav1.7 are frequently co-expressed in the same nociceptive neurons, and therefore, while each mechanism has the potential to greatly minimize or eliminate pain on its own, the 2 mechanisms might work well in concert to ameliorate pain. Our expectation is that these different mechanisms will and should be tested in combination in future clinical pain studies. So it's an exciting time for sure. Back to you, Ian.

Great. Thanks, Chris. So shifting gears a little bit. We've had a number of questions just come in around specifically around Nav1.7 and maybe kind of the adverse event profile in TI. So obviously, the field has been trying to drug Nav1.7 for quite some time. And we talked a little bit about it in our prepared remarks, but maybe we can go into some more detail as well just around potential adverse events. So JP, maybe you can walk through drugging Nav1.7 without hitting the autonomic effects as have been seen in the literature with some other molecules. And just generally, as you think about therapeutic index of 1.7 over the other NAV isoforms, I think, would be helpful. JP?

Sure. Happy to, Ian. So first, we strongly believe there's a significant window between the therapeutic exposures needed in pain. And as I noted, those that may cause autonomic effects. But I think we've also learned a bit about the therapeutic index and the selectivity required in terms of some of the other NAV isoforms. So based on our prior work in the space, from the autonomic side of the equation, we believe avoiding a rapid increase in plasma concentrations or that overly fast rapid inhibition in Nav1.7 can potentially avoid some of the autonomic findings that have been previously reported. And then similar to previously published reports, when we assess compounds that don't meet our target profile, we have seen the autonomic effects that have been shown at very high peripheral receptor occupancies of Nav1.7 around 99%. So those are all on target findings, but maybe to get kind of to the kind of therapeutic index against the other sodium channel isoforms. Because we are seeing us penetrating, it's really at the significantly high central receptor occupancies of channels like Nav1.6, for example, as shown in my figure there, it was kind of 85%, 90% levels of inhibition there might you run into tolerability concerns. We think with the level of selectivity we've built into our molecules, we have a pretty significant therapeutic index to fully test our therapeutic exposure range with our clinical assets. And then I'd just note you might recall, and I noted in my remarks, the Pfizer compound, PF771, that demonstrated efficacy in both the dental molar extraction in IEM clinical studies without autonomic findings or other findings we might attribute to some of the other sodium channel isoforms. And then just as a reminder as well, we haven't seen cardiac signals with XEN1701 in any of our preclinical studies to date in cardiac monitoring is pretty straightforward in the clinical setting. So we'll be closely monitoring for these effects in our Phase I development.

Great. Thanks, JP. Good detail. Great. I think we have -- we're kind of bumping up against the bottom of the hour here. Well, let's do one more question, and then we'll wrap. So there's been questions just around the clinical development strategy, potential indications. So Chris, maybe over to you. Obviously, from a genetic perspective as well as some of the preclinical work that we showed today, both for Kv7 as well as Nav1.7 suggests that the programs really could be broadly applicable across pain. So how are we thinking about future clinical development, both proof-of-concept studies as well as later stage development?

Yes, sure. I mean it's clear that these investigational compounds may have broad utility across various types of pain. While we've not yet unveiled our Phase II proof-of-concept study designs, we expect to pursue one of the well-validated acute pay models or more perhaps such as bunionectomy and/or abdominoplasty as the next step within both programs. So both for Kv7 and Nav1.7. That said, based on our preclinical findings and the human genetics of Nav1.7 and Kv7, these mechanisms have the potential for broad utility in both acute and chronic pain and across both inflammatory pain conditions as well as neuropathic pain. So we're excited to move these molecules into Phase II to better understand the breadth of the 2 mechanisms. So there will be more to come, hopefully, in the near future.

Great. Thank you, Chris. Okay. We've reached time on today's webinar. But as I mentioned earlier, we have gathered all of your questions submitted through the chat function and we'd be happy to connect with you that have outstanding questions in the coming days. If you do have additional questions, please reach out. You can copy the investor e-mail that's shown on this slide. So I hope today's session help demonstrate Xenon's deep commitment to ion channel development and how our long history in the field has contributed to our proprietary approaches to the challenges of both sodium and potassium channel modulators and specifically new approaches to pain medicines. We are incredibly excited to be one of the leaders in the field, and we intend to rapidly advance these novel therapeutics to patients in need. So thank you again for everyone who took the time to tune in and to ask questions as well as for your interest in Xenon's pain programs. And with that, operator, we can conclude the session. Thank you, everyone.