Xenon Pharmaceuticals Inc. ($XENE)

Good morning, ladies and gentlemen, and thank you for standing by. My name is Kelvin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Xenon Pharmaceuticals Phase III X-TOLE2 study top line results. [Operator Instructions] I would now like to turn the call over to Colleen Alabiso, Senior Vice President of Corporate Affairs. Please go ahead.

Good morning. Thank you for joining us on our call and webcast to review the top line results from the Phase III X-TOLE2 study in focal onset seizures. Joining me today are Ian Mortimer, President and Chief Executive Officer; Dr. Chris Kenney, Chief Medical Officer; Darren Cline, Chief Commercial Officer; and Tucker Kelly, Chief Financial Officer. After completing our prepared remarks today, we will open the call up for questions. Before we begin, please note the standard notice that we will make a number of statements today that may be forward-looking. Attendees are cautioned not to place undue reliance on such forward-looking statements, and we encourage you to review our SEC filings for a more complete discussion of the risks and uncertainties relating to our business. After today's call, a recording of this presentation will be available on the Investors section of our website at www.xenon-pharma.com. I'll now turn the call over to Ian.

Thank you, Colleen, and good morning, everyone, and thanks for joining us on this very special day. As disclosed in this morning's press release, today, we announced positive top line results from our Phase III X-TOLE2 study. This is truly an incredible moment for all of us at Xenon. But more importantly, this is an incredible moment of hope for people living with epilepsy. I would like to first recognize that we would not be here without the work of the entire epilepsy community, including patient advocates and clinicians. We also want to acknowledge and thank the investigators, clinical site teams and the clinical trial participants. Their participation underscores the community's continued determination to advance research and find new treatments that address the significant unmet needs in epilepsy. And today, with their help, we have made a meaningful step forward. Epilepsy research has been a primary focus at Xenon for many years, and we are proud that azetukalner is the only Kv7 potassium channel opener in development to complete 2 large, randomized placebo-controlled studies. As many of you know, data from our first RCT X-TOLE and our ongoing 7-year X-TOLE OLE have and continue to exceed expectations. Data from the X-TOLE double-blind period demonstrated what we believe was the best placebo-adjusted reduction in monthly seizure frequency seen in a focal onset seizure epilepsy study and in a very refractory patient population. And our goal with X-TOLE2 was to get as close as possible to replicating those positive results. And we are absolutely thrilled to be able to share that once again, we have exceeded all expectations with the X-TOLE2 results. With these 2 impressive data sets, our next priority is to complete our NDA submission with the goal of gaining FDA approval, and ultimately delivering what we believe could be one of the most important new antiseizure medications in decades for patients living with uncontrolled seizures. Azetukalner or AZK has a highly differentiated profile among both established and investigational ASMs, combining robust clinical data, a well-documented safety profile, ease-of-use attributes and a novel mechanism. The placebo-controlled Phase IIb X-TOLE and Phase III X-TOLE2 studies have both shown robust efficacy over their double-blind periods. Additionally, in the ongoing 7-year X-TOLE OLE, we continue to see strong efficacy and periods of seizure freedom, the longer patients are on drug. As a reminder, in our recent 48-month OLE data presented at the American Society of Epilepsy meeting, patients have achieved median reductions in monthly seizure frequency exceeding 90%. Almost 40% of those patients have achieved 12 months or more without any seizures. And this is the consensus definition of seizure freedom in the epilepsy community. It has been truly inspiring to hear the stories of patients who are achieving seizure freedom for the first time in their lives with AZK. Through our randomized trials in the X-TOLE OLE, we now have more than 800 patient years of exposure data in FOS patients, and there are some study participants who have now been on drug for more than 5 years. The safety profile of AZK has remained consistent between X-TOLE and X-TOLE2, and Chris will share more of these details later in the presentation. AZK is also differentiated due to its potential ease-of-use attributes. It is taken as one pill once a day with food with no titration required. This profile is differentiated in a treatment setting where lengthy, complicated titration regimens are the norm, which requires clinicians to start low and go slow and delays onset of efficacy. Further, based on our evidence to date, AZK does not have any meaningful drug interactions with other ASMs. These attributes are appealing to epilepsy specialists, but perhaps even more so to the general neurologists who may avoid using newer ASMs due to their complexity. Finally, as a highly potent Kv7 potassium channel opener, AZK has a novel mechanism that can be used in combination with foundational ASM treatments. One of the most consistent themes that we hear from clinicians is they don't necessarily need more of the same mechanisms that are already on the market. Up to 50% of people with epilepsy continue to live with uncontrolled seizures in spite of available mechanisms and medications. Taken together, we believe our data support azetukalner is having a compelling profile of robust efficacy, well-documented safety, ease of use and a novel MOA. Before I turn the call over to Chris to go through the top line results, I want to highlight a number of key points that speak to the strength of the data and importantly, gives us confidence in the full package we plan to submit to FDA. Most importantly, X-TOLE2 met its primary endpoint, demonstrating a highly statistically significant dose-dependent reduction from baseline in median monthly seizure frequency over 12 weeks versus placebo. The p-value in the primary endpoint at 25 milligrams versus placebo has a remarkable 11 0s. On a key secondary endpoint of RR50, AZK also demonstrated highly statistically significant dose-dependent increases in the number of participants who have had at least a 50% reduction in monthly seizure frequency. We also observed a rapid onset of efficacy with the 25-milligram dose showing a statistically significant reduction in weekly seizure frequency at week 1. Overall health status also improved in the study as assessed by the Patient and Clinical Global Impression of Change scales. And finally, we saw a safety and tolerability profile that was consistent with the prior X-TOLE study. There are a number of other post-hoc analyses and exploratory endpoints that we are still analyzing and will not be part of today's presentation, but we expect to present further data in the coming months and in future and further publications. So now, Chris, I'll turn the call over to you to walk us through the top line data results.

All right. Thanks a lot, Ian. Good morning, everyone. I'm honored to have the opportunity to take you through these impressive X-TOLE2 top line results. First, a reminder, on the study design, X-TOLE2 was a randomized, double-blind, placebo-controlled, multicenter Phase III study evaluating the efficacy, safety and tolerability of AZK in adult patients with focal seizures. In this study, AZK was administered as an oral adjunctive therapy once daily with food and with no titration period. Patients first completed a 9.5-week screening and baseline period and randomization visit before entering the 12-week double-blind portion of the study. The study randomized participants in a blinded manner to either AZK 25 milligrams, 15 milligrams or placebo. For those who completed the double-blind portion, they had the opportunity to enter the open-label extension study or OLE. For those who didn't enroll in OLE, they completed an 8-week safety follow-up visit. The primary objective was to evaluate the effect of AZK versus placebo on median percent change or MPC from baseline to monthly focal seizure frequency during the double-blind period of 12 weeks. Secondary objectives included assessment of the effect of AZK versus placebo on responder rate 50 treatment effect measured at week 1 and change in the Patient Global Impression of Change score. The study also assessed safety and tolerability of AZK throughout the double-blind period. A total of 380 patients were randomized in the study, 2 patients in each cohort did not receive any study treatment. This left 374 patients in both the safety and modified intent-to-treat populations, 125 in placebo and AZK 15 milligram groups, and 124 in the AZK 25 milligram group. Now looking at the baseline demographics, the mean age in the study was about 40 years of age. The breakdown of gender was approximately equal. Geographically, 42% of patients were in North America and 58% were at states outside of North America. Mean BMI was about 27 for the population and average age of disease onset was 16 years. These demographics are very similar to the X-TOLE study. Like X-TOLE, participants in X-TOLE2 had highly treatment-resistant epilepsy. They had tried and discontinued a median of 5 prior ASMs. They had a baseline seizure frequency of about 13 seizures per month, so roughly 1 every other day. More than half were taking 3 concomitant ASMs, which they were required to maintain throughout the double-blind period. With this refractory patient population, the bar for success was quite high. I'm very excited to share our primary endpoint data, which you'll see on this slide. As a reminder, the primary endpoint was median percent change or MPC in monthly focal seizure frequency for AZK versus placebo. In the 15 milligram dose group, we observed a 34.5% reduction from baseline to week 12. And in the 25-milligram group, we observed a 53.2% reduction compared to a 10.4% reduction in placebo. The results for both dose groups compared to placebo are highly statistically significant, as you can clearly see on the slide. When adjusted for placebo, the MPC and seizure frequency for the 25 milligram group was 42.7%. As a reminder, the placebo-adjusted efficacy in the 25-milligram group in X-TOLE study was 34.6%, which was already the best placebo-adjusted efficacy in a FOS study at that time to our knowledge. Now we're 8 points higher. With a lower placebo response in X-TOLE2, placebo-adjusted MPC substantially improved from Phase II to Phase III. I have to add here that it's pretty unusual in any therapeutic area for Phase III to outperform Phase II. So we're incredibly pleased with this outcome. We believe our trial conduct, gold standard design and execution and, of course, close collaboration with the community all played a factor. We also are the only sponsor over the past 10 years to run and complete 2 randomized controlled trials in epilepsy, and we believe X-TOLE and X-TOLE 2 have truly set a new bar for rigor and clinical efficacy in focal onset seizures. Responder rate 50, a key secondary endpoint in X-TOLE 2 measured the percent of participants who had at least a 50% improvement in monthly seizure frequency. 20.8% in the placebo group, 37.6% in the 15 milligram group and 54.8% in the 25 milligram group had at least a 50% improvement. This, again, was highly statistically significant, and the results were also consistent with what we've seen previously in the X-TOLE study. Another secondary endpoint evaluated onset of efficacy by measuring median percent change in weekly rather than monthly seizure frequency. As you'll see on this slide, from baseline to week 1, the 25 milligram reduction was statistically significant, while there was a statistical trend for the 25 milligram group. This is also consistent with the X-TOLE study, which showed a rapid onset of efficacy at week 1. Additionally, when we followed this weekly analysis out for the duration of the double-blind period, the 25 milligram dose led to an approximate 70% to 75% median reduction in weekly seizure frequency over the last few weeks of the study. What these results show us is consistency in dose response and time response with a sustained effect. The Patient and Clinical Global Impression of Change scales or the PGIC and CGIC are widely used scales across therapeutic areas. As neurologists who used to treat patients with epilepsy and other neurological conditions, these scales are very important because they take into account how many patients -- how patients and their clinicians feel that they are doing in the study overall and whether the results are clinically meaningful or not. In X-TOLE 2, the PGIC was a secondary endpoint and CGIC was an exploratory endpoint. On the CGIC at week 12, 46.4% and 45.2% in the 15 milligram and 25 milligram groups, respectively, rated themselves as either much improved or very much improved compared with the 26.4% in the placebo group. On the CGIC at week 12, 37.7% and 38.5% of clinicians rated their patients in the 25 -- excuse me, in the 15 and 25 milligram groups, respectively, as either much improved or very much improved compared with 23.1% in the placebo group. This demonstrates that both patients and their clinicians view the reductions in seizure frequency as clinically meaningful and consistent with what we saw in X-TOLE. Additionally, it's notable that the 15-milligram and 25-milligram dose performed similarly here, even though the MPC and monthly seizure frequency was higher in the 25-milligram group. As you'll see in the next few slides, the AE profile on 15 milligrams looks similar to placebo, and we believe that may be coming through in the PGIC and CGIC data. It suggests to us that 15 milligrams may potentially be the best starting dose for most patients in a clinical setting, offering a good balance of both efficacy and safety. This leads us to the safety and tolerability profile of AZK, something that is also very important to the well-being of these patients, especially considering they've already had 1 to 3 antiseizure medications on board before entering the study. Looking at the most common treatment-emergent adverse events, we were pleased to again see remarkable consistency with X-TOLE. The most common treatment-emergent adverse events across groups were dizziness, somnolence, headache and fatigue. As expected, more AEs occurred in the 25-milligram group than the placebo and 15-milligram groups. But notably, the placebo and 15-milligram groups had roughly the same number of AEs reported with the exception of dizziness, which was a bit higher in 15 milligrams compared to placebo. With regards to serious adverse events, incidence was low and similar across AZK groups. No severe allergic reactions such as Stevens-Johnson syndrome or DRESS occurred, which is important in this therapeutic area as many ASMs are associated with drug allergies and rarely idiosyncratic adverse reactions that can be life-threatening. There were no signals of retinal pigment epithelial or macular abnormalities and no meaningful weight gain. No deaths occurred in this study. There were 4 nonserious adverse events of urinary retention reported, which is similar to X-TOLE. One case occurred in the placebo group and 2 occurred in the 25-milligram group who did not require a dose reduction. One participant in the 15-milligram group was hospitalized for psychiatric event, resulting in discontinuation of study drug and catheterization with urinary retention reported as a nonserious adverse event. To summarize the X-TOLE2 safety, the most common AEs across AZK groups were dizziness, somnolence, headache and fatigue, which is similar to standard of care ASMs. Adverse events resulting in treatment discontinuation in 3.2%, 4.8% and 14.5% of participants in the placebo, 15 and 25-milligram groups, respectively. The most common adverse events leading to discontinuation were dizziness, headache, fatigue, gait disturbance, abnormal coordination and speech disorder. In all, AZK was generally well tolerated in X-TOLE2. The safety and tolerability data are remarkably consistent with X-TOLE in terms of the types of adverse events, the frequency at which they occurred, the number and types of serious adverse events and the events that led to discontinuation. There have been no new concerning safety findings and combined with our OLE data, we're quite comfortable that the safety profile is consistent with other well-tolerated antiseizure medications and with a drug that is potent and active in the central nervous system. Before I summarize the study results, I'd like to highlight the remarkable consistent dose effects seen across X-TOLE and X-TOLE2. On this slide, we show placebo-adjusted MPC for all AZK doses tested and at both 8- and 12-week time points. As a reminder, X-TOLE evaluated 10, 20 and 25-milligram doses through week 8, while X-TOLE2 evaluated 15 and 25-milligram doses through week 12. We also looked at the week 8 time points in X-TOLE2, and these analyses are marked by the dotted blue and orange bars. Looking at the data, the placebo-adjusted MPC and monthly focal seizure frequency shows consistent dose-dependent efficacy at all doses tested with better results with more time on drug. Of note, epileptologists want flexibility with dosing as they add AZK into treatment regimens across their different types of patients without having to make changes to concomitant antiseizure medications, and we expect to ultimately make several dose levels available, with strong data supporting each dose to meet this expectation from clinicians. To summarize, we're absolutely thrilled with this data set. and believe it sets a new bar for the epilepsy field. The study met its primary endpoint in both the 15 and 25-milligram dose groups, including a 53.2% median percent change in monthly seizure frequency in the 25-milligram dose compared to 10.4% for placebo. X-TOLE2 outperformed X-TOLE with a 42.7% placebo-adjusted MPC, which, to our knowledge, is the highest placebo-adjusted MPC ever seen in the pivotal epilepsy study. AZK was generally well tolerated in X-TOLE2 with a safety profile consistent with X-TOLE. We're looking forward to sharing these data with neurologists in the upcoming weeks at the American Academy of Neurology Annual Meeting, where they have been accepted for oral presentation as a late-breaking science abstract. We're also working on a manuscript so that we can publish the complete results in a peer-reviewed journal soon. I'll close by echoing a statement shared across our team of appreciation and gratitude. It's important to remember that our data is made up of many individual stories of people living with epilepsy who have struggled for a long time with their seizures and loss of independence, quality of life that comes with that. These are the stories we think of when we summarize the data and look ahead to an NDA submission. The urgency we have is for the patients who are achieving seizure control and seizure freedom for the first time in their lives. And we're excited about the potential to deliver a long-awaited new therapeutic approach to the medical community. Now I'll pass the call over to Darren to discuss how he and his team are preparing for the potential commercial launch of AZK. Darren?

Thanks, Chris. I would also like to extend my sincere appreciation to you, your clinical team and all our Xenon employees who are striving to make a meaningful difference for epilepsy patients. We conducted these studies with a high level of rigor and the strength of the data reflects that. These X-TOLE2 data are the next inflection point in Xenon's evolution to bring us one step closer to becoming a fully integrated biopharmaceutical company. As we look ahead, our commercial vision is to establish Xenon as a leader in epilepsy. We couldn't be more excited about our opportunity to have a meaningful impact on this patient and physician community. To understand the opportunity in front of us, it's important to remember that epilepsy is the fourth most prevalent neurological disorder, surpassing both Parkinson's disease and multiple sclerosis in frequency. In the United States alone, approximately 3 million adults are affected by epilepsy with 1.8 million experiencing focal seizures. While there are many treatments available for epilepsy, most share a limited and overlapping set of mechanisms of action. With the mechanisms available, about half of patients do not achieve seizure freedom with their first-line treatment, usually a generic SV2A or sodium channel blocker, and about 1/3 are considered to have drug-resistant epilepsy. Once patients progress to polytherapy, if they have not responded to one mechanism, they are less likely to benefit from other ASMs with overlapping mechanisms. Polytherapy is also less effective when taking multiple ASMs with overlapping mechanisms and can lead to increased adverse events. This underscores the necessity for innovative therapies with particular emphasis on differentiated mechanisms of action such as Kv7 modulation. It's very encouraging to see both epilepsy specialists and general neurologists express excitement for different components of AZK's profile. Through recent blinded market research, we queried both these groups about different aspects of AZK's product profile versus the most recently launched branded ASM. Both groups expressed highly favorable perceptions of the target profile for AZK or product X. Epilepsy specialists most often called out the novel mechanism of action, which could enable flexibility and allow for rational polytherapy. They also appreciated dose level flexibility to balance safety and efficacy. The general neurologist favorable opinion of product X was driven by its ease of use with no titration and limited drug-drug interactions with other ASMs. They also view the safety profile as manageable and called out the fast onset of action. This qualitative study aligns with other market research we've conducted, which found that general neurologists often hesitate to prescribe branded ASMs due to their complexity. We also believe AZK's novel mechanism and ease-of-use attributes will provide them with confidence in treating a broader number of their epilepsy patients in their practices versus referring to a level 3 or 4 epilepsy center when they feel they have run out of options. We believe that, if approved, AZK could become the preferred branded ASM for general neurologists, leading to broader adoption, improved patient outcomes and greater prescription growth potential. We are in an excellent position as we prepare for commercialization of AZK. Thinking historically about the most successful ASMs, they offered a good mix of efficacy, tolerability and ease of use. For AZK, we have a robust body of clinical data that demonstrates strong efficacy with a manageable safety profile. Our data strongly supports AZK's ease-of-use attributes, and we continue to believe in its potential antidepressive effects. As many of you know, we are investigating AZK in a large Phase III depression program with top line data from the first study expected in the first half of 2027. Additionally, the clinical profile of AZK in epilepsy continues to support AZK as at least mood neutral. As we benchmark other successful launches, a common denominator is early commercial investment. We continue to strengthen the commercial and medical team with seasoned epilepsy and launch experienced personnel. We expect to be extremely well positioned at launch, and we've set our sights high with epilepsy specialists as early adopters, followed by neurologists and advanced practice providers and are fully committed to long-term growth in epilepsy. On a concluding note, I've been fortunate to have been part of and led many very successful product launches in my career, including in epilepsy, and AZK and Xenon have all the same ingredients for success. The commercial team and I are excited for the work ahead as we continue preparations to deliver this promising potential new therapeutic option to the epilepsy community. I look forward to sharing additional updates on commercial planning as we approach launch. Ian, I'll pass it back to you.

Great. Thanks very much, Darren. I believe I speak for everyone at Xenon when I say that we are thrilled with the X-TOLE2 results and the opportunity in front of us. With these impressive data from our second randomized trial in hand, we are now setting our sights on NDA submission. As a reminder, we expect our NDA to include results from both X-TOLE and X-TOLE2, and we anticipate submitting the NDA application in the third quarter of this year. We are extremely motivated by the thought of contributing a potential new and much-needed innovative medicine to the epilepsy treatment paradigm. I'll close by again thanking the epilepsy community for their continued support and partnership. We look forward to continuing our collaboration as we bring this important potential new medicine to patients and clinicians. So with that, we can end the prepared remarks, and we can open the call up for questions. Operator, we'll turn it over to you.

[Operator Instructions] Your first question comes from the line of Paul Matteis of Stifel.

Congratulations, Ian and team on the awesome data. I have two questions, if you don't mind. First, on the commercial side, do these data make you rethink how you might price azetukalner? And just maybe big picture, how do you think about pricing power in the refractory epilepsy space? How do you think about cenobamate as a benchmark, like directionally, where could this go? And then just second, I appreciate that the seizure data looks great. Not many questions there. Is there anything you think in the full data you can learn as it relates to the mood effects of the drug either for this epilepsy population or the MDD population? Maybe just tell us like anything that you kind of measure there and what we could believe.

Thanks, Paul. I appreciate that. Why don't we take the second question first and then we can end on the commercial side. So I'll start on mood, and then Chris will give his perspective. So just as a reminder, just to take a step back, we did have exploratory endpoints in X-TOLE2 as it related to depression and anxiety. And we use patient-reported outcomes and not a clinical scale of depression or anxiety, but we used what was called the Beck Depression Inventory or BDI. And maybe I'll focus on the depression comments. Obviously, this was an exploratory endpoint. The study wasn't -- the study was really designed for seizure reduction endpoints, but there was a couple of things that we wanted to look at in the depression data. And I'd say we're still going through it. So we haven't disclosed any of those data yet, but I can give some kind of directional guidance. And part of it was in Darren's comments about mood neutrality. So I think if we look at a lot of other ASMs, they have negative mood symptoms associated with them. And so kind of first, we wanted to make sure that we had data to support through BDI that these patients weren't getting worse. And we're very comfortable with that outcome. And I think that sets us up really well as an antiseizure medicine. Then we looked at patients that how they did over time. And again, we're still analyzing some of these data but I can give you kind of a few highlights. And then Chris can really talk about the differences between running and looking at depression in an epilepsy study versus looking at it in a psychiatry study. So what we found is that all groups did better on -- or sorry, all treatment groups did better in the study, whether they were on placebo, 15 milligrams or 25 milligrams. So their scores from a BDI perspective got better. Actually, interesting for those that had depression that weren't on an antidepressant, they actually did in the active group did better than placebo. So that was a nice finding in the depression data as well. I think we need more work to do or we have more work to do, and we can, obviously, as that's done be able to communicate more broadly on that. But maybe this is a good opportunity for Chris to just comment on the differences between an epilepsy study and a psychiatry study because I think the real definitive data that we're looking forward is the X-NOVA2 data in MDD, which will be in the first half of 2027. Chris?

Yes. Thanks a lot, Ian. I mean just to kind of underline the point you made, though, we're not seeing any signals of mood worsening in this population. And we do think that this drug and this mechanism has an antidepressant effect based upon 2 controlled studies, and we're now in Phase III for depression. That said, Ian commented that we saw improvements in all 3 groups as we look at the literature, I think that the placebo effect was on the higher end there. And if you think about everything that we're doing in the depression program to control placebo, I think it's worth kind of repeating in the context of this study. So on the Phase III depression side, we've chosen a CRO that specializes in depression. We've chosen sites that specialize in depression. We've chosen clinicians to conduct a clinical scale who have experience in depression. We also have training about placebo response in that study, et cetera, et cetera. Lots of things that we're doing in the Phase III depression program to mitigate placebo, also like minimizing touch points throughout the study to -- with the principle of keeping it simple. So we are seeing improvements in all groups. But I think the take-home message here is that we're seeing new neutrality.

Thanks, Chris. Yes. So I think so far, the data on depression and epilepsy is looking interesting and more to come. So let's move to your question on commercial. Yes, I mean, we couldn't be any more pleased with where we are to get ready for commercialization, and Darren can talk about the attributes and how he's thinking about it because your specific question was around price. But one of the things that we've really done based on the X-TOLE data is we early invested in getting ready for commercialization. And so we -- for quite some time, for those that attend AES, know our presence there. They know that we've been publishing our work in peer-reviewed journals. They know that we have field-based medicine MSLs already out in the field talking to the prescribers. So I think we've done a huge amount of work, and that momentum is just going to build. So Darren, why don't you give your perspective on that? And then as we think about the work we need to do on price?

Yes. Thanks. Paul, I echo Ian's thoughts. As the commercial team in partnership with medical, we couldn't be more excited about this data set. And really, the -- I think what the opportunity for AZK to really become transformative for these patients and physicians. Now your specific question on how we think about price. I actually think the view that what you said around kind of historical and cenobamate's pricing is, I think, a good lens to kind of how we think about that price. And I think that if you think about cenobamate, which was priced 6 years ago, I think that based on their data set and the clinical paradigm in which they're used, they have been inappropriately priced. And so I think that when we think about this data set, the novel mechanism, the ease-of-use attributes, I think this data set demands that we optimize the pricing for AZK. And so a lot of work to do there. We'll be doing work with our stakeholders, the payers, the physicians, the patients, but this is -- I think we have a tremendous opportunity here to really maximize the value of AZK.

Darren, just to clarify for people, when you say inappropriately priced, you mean underpriced as it relates to cenobamate?

Yes, that's right, Paul.

Your next question comes from the line of Tess Romero of JPMorgan.

Congrats, Ian and team, really blow out data. So you talked a little bit about pricing. But given these data and known attributes, are you able to provide an updated view on how you size the market for a drug like azetukalner? And specifically, what do you think is a reasonable framework for peak sales? And then second, are you able to speak to the overall variability in the data set just in terms of how consistent the results were across the population by number of concomitant ASMs or any other variables?

Thanks, Tess. I think we can probably all jump in on these questions as well. One of the teams that you really, I think you heard from us throughout the remarks is remarkable consistency. And that was, I think, as we've unblinded these data and really compared X-TOLE2 to X-TOLE, that's one of the things that I think we're most proud of is just the consistency across the data sets whether we look at efficacy, whether we look at rapid onset, whether we look at the Clinical and Patient Global Impression scores, whether we look at safety and tolerability, the consistency is absolutely remarkable between these 2 data sets. And maybe this is an opportunity for me just to give my appreciation to Chris and the clinical team that I think just executed unbelievably in terms of this clinical study as well as managing the placebo rate. But Chris, any specific comments from you on variability?

Yes. And we're not seeing -- I mean I'm going to echo what you said. We're seeing consistency between X-TOLE2 and X-TOLE. I'll just say we have a lot of data that we're working through we focused on making sure that we have top line data to share with the world. But on a high level, I would just say that I'm not seeing any difference whether you think of the broad classes of ASMs, we're seeing benefits for AZK regardless of what it's added to. So lots and lots of consistency from that perspective.

Thanks, Chris. And then Tess, on your commercial question, when we look back at a number of the other ASMs over the last number of decades, right? And you start to look at what are the hallmarks that have made some of these drugs incredibly successful. And obviously, we believe AZK has all of those attributes from a novel mechanism to the safety and tolerability profile to those ease-of-use attributes. But Darren, I know you guys have been thinking a lot about then those successful drugs had to do well both with the epileptologists as well as the general neurologists. So maybe you can provide your perspective there.

Yes, you're spot on, Ian. I think that the opportunity here is the difference maker from the last branded ASM launched are the attributes, the ease-of-use attributes. And also, I think this novel mechanism will be a game changer. So as we think about the market, the epileptologists obviously like the novel mechanism, the dose flexibility, but it's really in the general neuro where I think that we really, really have the opportunity to be like of impact, and that had all the attributes that AZK had. And again, this novel Kv7 modulator is now a new mechanism that the general neuros can now incorporate. It's just not another SV2A or sodium channel that they typically may stack on each other before referring. This really gives them the opportunity to keep patients in their practice, offer them a new option around what they tell us are daily dosing, no DDIs and no titration. So that's how we're viewing it. And again, we couldn't be more excited to bring this to those physicians and their patients.

Your next question comes from the line of Brian Abrahams of RBC Capital Markets.

My congratulations to you, Ian and the team on the data as well. Just given the refractoriness of this population, can you provide some context on what you might hope to see on seizure freedom and maybe comment on any trends that you observed there? And then just secondly, real quick, how would you foresee a potential label reflecting the different doses studied here? Do you expect a starting dose of 15 mg to be specifically recommended on the label? And how might physicians be instructed to increase dose?

Thanks very much, Brian. We can take -- yes, let's start with your first question just on the refractoriness and maybe other data, including seizure freedom data and then let's talk a little bit. I mean, I think it's premature to talk specifically about label. But I think you've heard from us that I think 15 milligrams is a really interesting dose. So why don't we give a bit of perspective, how we think about that dose, both from an efficacy and safety point of view and how really this may translate into use in the real world. So initially, just to talk about other endpoints. Obviously, today, we focused on some of the key primary and secondary end points, including the RR50 to come will be the RR75, the RR90 and the RR100. The reason I use that terminology is because when you talk to the epilepsy community, when they think about the word seizure freedom or the term seizure freedom, they really think about it over a longer period of time. So 6 months or 12 months. And that's where I think our open-label data from X-TOLE is incredibly impressive, which we reviewed earlier in the call. And then we're really looking forward to having the Phase III data -- or sorry, the open-label data from this Phase III program, which we'll be presenting in the future as well. I think a quick look at some of the other endpoints of RR75, 90 and 100. I think we'll again see consistency in the data set, Brian, between X-TOLE and X-TOLE2 as we expect. Obviously, when you have a very refractory population that's having a seizure almost every other day and you don't have to titrate the drug. I think you're asking a lot of the drug in those early days in the study. And interesting, the drugs that titrate, when they look at seizure freedom, they look at over the maintenance period, not over the entire period. So again, I think it's an apples to oranges comparison, but I think we feel very comfortable with the profile and more to come on additional endpoints. So in terms of maybe label, Chris, anything to add on the RR100 or 90 or 75?

No. I think there's one thing you said that's worth reiterating, which is that the epilepsy community, in terms of definition for seizure, freedom seizure for 12 months. And look at our OLE study that we just presented at AES, we're seeing patients in that study with nearly 40% of patients with more seizure freedom. And I think that's where the time horizon for epileptologists is years, not days or weeks.

Thanks, Chris. And then, Brian, I think your other question is a really fascinating one on -- and we learned a lot from this study. Remember in X-TOLE, we had 10, 20 and 25 milligrams. So this is the first time we've tested 15 milligrams as a dose. And it looks very placebo-like in terms of the adverse event profile. Dizziness a little bit higher. But other than that, it kind of bounces back and forth on the adverse events on which is higher between placebo and 15 milligrams. So we think that's an incredibly well-tolerated dose with really strong efficacy. Actually, I'll mention when we were talking to investors coming into this announcement and data release on what expectations were, I actually think our low dose met expectations for what investors were looking for -- on a placebo-adjusted basis. And then obviously, the 25 milligram dose really blew through expectations. So I think it's a really interesting one. But Darren, based on the work that you've done, maybe talk about what you think the community's feedback is.

Yes. I think we were very pleased to see how the 15 milligram performed. And I say this in the context of when we meet with physicians, advisory boards, one-on-ones, -- and if you think about the approach that epileptologists and high-prescribing general neuros take in treating epilepsy, particularly incorporating a new therapy, it's kind of the low and slow approach. So they like to start the lower dose and then escalate appropriately. When they looked at our X-TOLE 10 milligram, that seemed to be for them a nice starting dose. The side effect profile was benign in their view and with some good efficacy. I'm very excited now to take this 15 milligram data to them and see their response. And to Ian and Chris, echo their point, we believe this could be a very, very nice starting dose for this treatment.

Your next question comes from the line of Andrew Tsai of Jefferies.

Congrats on the superb data. Hopefully, more to come. With these unprecedented results, could it make sense from the outside perception to seek a breakthrough designation? And as we think about the NDA filing in Q3, does it make sense to potentially seek a priority review instead of a standard review? And when exactly could AZK be launched after accounting for the DEA scheduling process?

Thanks, Andrew. Yes, I'm happy to take that. So with a number of antiseizure medicines available in focal onset seizures, if we've looked at the past number of drugs that have been filed and gone through the regulatory approval process, our base case would to expect a standard review. And so that's our base case going in. We've done a huge amount of work on the new drug application. Chris and Matt and the team here has been looking at all of the different sections. A number of them are already written. Obviously, this clinical study, as we told everyone, was kind of -- was on the critical path to getting the filing done. We've done a huge amount of clinical pharmacology and manufacturing work and all of the preclinical work. So we feel really good in terms of the new drug application. It will go in, in Q3 of this year. And so with a standard review and DEA scheduling, which can take a couple of months, that would put us on a time line somewhere towards the end of 2027, early 2028 if you use that math forward.

The next question comes from the line of Brian Skorney of Baird.

Congrats on the data, really awesome. Maybe just piggybacking off of Abrahams' question on dosing and how you think the 2 doses would be used in practice. I mean 25 milligrams look safer and better than XCOPRI and 15 milligrams looks as safe, maybe safer and better than Vimpat, and they sort of both have had good uptake historically by the community based on safety or efficacy. So I'm not really sure where long-term utilization winds up. But if you wind up with 2 NDCs, how would you anticipate pricing them? Are you thinking equivalent pricing per month, not on a milligram basis? And just in terms of the scheduling, where are we in terms of your thoughts on whether to get scheduled and where you would anticipate scheduling to occur and how that might impact both sort of commercial in epilepsy as well as down the road of MDD?

Thanks, Brian. You had a few there. So I think I've got them all down, but if we miss one, just jump back in. So Darren, do you want to take -- why don't we hit pricing first?

Yes. So we hope to have the 4 doses on label, the 10, 15, 20 and 25. And the plan currently is to have flat pricing. So regardless of the dose the physician starts and then decides to escalate, those patients will all be equally valued. Regarding scheduling, we've done a lot of work here. And if you look historically at the most recent ASMs and our adverse event profile, we anticipate a schedule 5 like other ASMs. And typically, that review is done in 90 days post approval.

Yes. So I don't think there would be any commercial impact of scheduling as that's kind of -- that's the norm in the field. Brian, going back to your question just on 15 and 25, I mean, obviously, we're thinking about it and very consistent with other ASMs because of the titration of other drugs and there's multiple dosages available that that's the way normally these ASMs and focal seizures are priced. So we would be consistent in our approach there. I think maybe a few other comments. When a patient starts at probably at 15 milligrams or at a lower dose that's going to be very well tolerated, often, there's a lot of switching and changing in focal onset seizures. I actually think the opportunity here on what we've seen in the data set and because we have a richness throughout this dose range of information is it's really starting -- it's probably starting lower than 20 or 25, but the next switch or the next change is a higher dose of azetukalner. It's not trying to change any of the other medications, which I think is really powerful. The other thing that we had at AES was those patients that had -- that were on the long-term open-label extension that had a breakthrough seizure is that we showed a really interesting analysis that they had a breakthrough seizure, they could regain seizure freedom on azetukalner. And again, didn't have to switch. So obviously, there's a huge unmet medical need, but I also think we have a profile where patient retention could be really important, and we'll be focused on that.

Your next question comes from the line of Myles Minter of William Blair.

Congrats on the data again, sensational. Question on background cenobamate usage and what you sort of saw in the trial there and if you've had a look to see whether that impacted azetukalner exposure response. That's the first question. And then secondly, intrigued on the week 1 efficacy data. I think we hear from clinicians that seizure freedom is on their cards and a broader quality of life improvement. But what about the rapidity of effect? Is that going to be a key commercial driver of the story here?

Thanks, Myles. So let's start on cenobamate. Chris, do you want to -- maybe we can review both Phase II and Phase III, and then what we saw on the efficacy side? And then let's move to the rapidity of onset commercially.

Yes. I mean before I dive into this, I just kind of want to repeat what I said earlier, which is as we've looked at our data, basically, this drug is appearing to be useful regardless of what people are taking before they start AZK. That said, so going from Phase II, cenobamate usage was quite low in the X-TOLE study, around 3%. And then in this study, it was substantially higher as about 40% of patients were taking cenobamate at baseline, and an additional 20% had failed taking cenobamate. We welcome those patients in the study as we believe they're a surrogate for patients who are being taken care of by epileptologists who are willing to do everything they can to try and control seizure frequency.

Yes. So a pretty interesting difference, Myles, from Phase II to Phase III, right, moving from less than 5% of patients now to 60% of patients that had either failed cenobamate was of it either maybe for tolerability or efficacy reasons or the 40% that had that as one of their background medications and still seeing this type of efficacy in what you would consider now a cenobamate refractory population. So I think we were really pleased for those data and to see that. Darren, do you want to talk about rapidity of onset?

Yes. Myles, Rapidity of onset is just another component of AZK's ease-of-use attributes that we have with this novel Kv7 mechanism. So yes, I think it's part of the broader story of the rationale, a compelling rationale to incorporate AZK into a patient's treatment.

Maybe just one other thing on rapidity of onset. I mean the question has been coming up a lot about 15 versus 25. I think that one of the questions an epileptologist will ask him or herself before they start is whether they need that rapidity of onset because it does seem as though the rapidity of onset is there for all doses, but maybe demonstrates a higher consistency in the higher dose relative to the lower dose.

Your next question comes from the line of Joseph Thome of TD Cowen.

Congrats on the excellent results. Maybe based on the data today, how early in the treatment paradigm do you think you could get this used and reimbursed, particularly with all the comments on uptake in the general neurology community? And has this kind of changed based on the X-TOLE2 data versus what you had seen previously? And maybe just briefly on the AEs, can you talk a little bit about the proportion of patients that are able to stay on drug but maybe had to dose reduce during the study or when you might have that data?

Thanks, Joe. Yes, why don't we start with the dose reduction question, and then we can move to maybe talking a little bit about the treatment paradigm and maybe where this would fit in. Chris, on dose reductions?

Yes. So again, this is probably going to annoying at this point, but incredibly consistent with X-TOLE. So very low number of dose reductions in placebo and 15 milligrams, think like low single digits, 3% or 4%, and then a bit higher in the high dose on the order of about 20% of patients who needed a dose reduction. But those are patients that we were able to capture in the study without losing them to a discontinuation. So I think even for those patients that start on a higher dose and run into a bit of tolerability, they're going to, in the real world, be able to just simply lower to a lower dose, bring it down to a lower dose and adjust accordingly.

Yes. And then, Joe, sometimes the pull-through of that question is the discontinuations due to treatment-emergent adverse events, which, again, we were a little bit lower in X-TOLE2 versus X-TOLE at the 25 milligram dose, but again, remarkably consistent. In terms of the TEAEs that led to discontinuation. So again, we feel very comfortable with the profile. And why don't we move to your commercial question on just where will this show up in the patient's journey?

Yes. So we think about when AZK becomes -- if we're so fortunate, becomes commercially available, there's going to be a tremendous amount of refractory patients that have not responded to anything. And I think with this data set, particularly in the trial population that we've exhibited, we're going to have epileptologists offering it to those pretty refractory patients. But I think over time, you're going to see a natural progression, particularly with the data, the novel mechanism, as we've talked about, this is different. And so we anticipate that this will move up in lines of therapy as an earlier add-on. And I think in the general neurologists, I go back to now they have an opportunity to offer something to their patients, where typically they may feel they need to refer a heavily refractory patient. Now they have a patient they can treat in their office. So I think if you think about antiseizure medications in the long game, this can be transformative, and we believe will be the branded ASM of choice across both epileptologists and general neurologists.

And actually interesting, Darren, one thing I know we've referred back to some of the open-label data at times, which I do encourage people to look at our AES work. But when we've looked at those patients that had -- you'd consider them less refractory. So on either 1 or 2 background medications instead of 3, those patients had 100% reduction in their seizures in the open-label data. So I think that's really impressive as well and shows just the power and potential of AZK as we get into less refractory patients. Thanks, Joe, for your question.

There are no further questions at this time. And with that, I will now turn the call over to Ian, President and CEO of Xenon Pharmaceuticals. Please go ahead.

Thank you, and thanks, everyone, for joining us today. And a real special thank you to the entire Xenon team for your dedication to our programs and to our mission to advance innovative medicines for patients. If we do not manage to get to your question today during the allotted time, we can reach out directly to connect. And we really look forward to continuing to provide updates as we advance azetukalner towards NDA submission and potential approval. So thanks, everyone. And operator, we can now end the call.

Ladies and gentlemen, this concludes today's call. We thank you for participating. You may now disconnect your lines.