Xenon Pharmaceuticals 2026 Q3 Earnings Call

Thank you for joining us on our call and webcast to discuss Xenon's third quarter 2026 financial and operating results. Joining me today are Ian 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 your questions.

Please be advised that during this call, we will make a number of statements that are forward-looking, including statements regarding the status of and potential results from clinical trials, the potential efficacy, safety profile, future development plans in current and anticipated indications, addressable market, regulatory success, and commercial potential of our and our partners' product candidates, the strength of our clinical trial designs, our ability to successfully develop and achieve milestones in our clinical development programs, including the anticipated filing of INDs or equivalent and NDAs, the timing and results of our interactions with regulators, our ability to successfully obtain regulatory approvals, anticipated timing of top-line data readouts for our clinical trials of azetukalner, and our expectation that we will have sufficient cash to fund operations into 2029.

Today's press release summarizing Xenon's third quarter financial results and the accompanying quarterly report on Form 10-Q will be made available under the Investor section of our website at xenon-pharma.com and filed with the SEC and on SEDAR+. I'll now turn the call over to Ian.

Thank you, Colleen, and good afternoon to everyone joining us today. We are excited to recap another productive quarter for Xenon as we make continued progress toward becoming a fully integrated neuroscience company, delivering life-changing medicines to patients. Over the last few months, we remained focused on three key areas. First, advancing azetukalner, or AZK, toward potential FDA approval and launch in the U.S. for the treatment of focal seizures and building our, excuse me, and building our commercial infrastructure and launch plans. Second, broadening the therapeutic opportunities for AZK beyond focal seizures by progressing our additional phase III epilepsy studies, as well as completing enrollment in our first phase III neuropsychiatry study, X-NOVA2.

Third, expanding our pipeline through advancement of our promising early-stage assets, including two of our pain candidates targeting NaV1.7 and Kv7, which we recently announced will be moving to phase II proof-of-concept studies in acute pain based on positive phase I data. Following the submission of our new drug application, or NDA, to the FDA in the third quarter, we are full steam ahead on preparing for the potential approval and launch of AZK. Our NDA package includes strong scientific evidence from two pivotal, randomized, double-blind, placebo-controlled trials in focal seizures, including the phase IIb X-TOLE study and the phase III X-TOLE2 study. Across both studies, treatment with all four doses of AZK demonstrated a statistically significant reduction from baseline in monthly seizure frequency compared with placebo.

X-TOLE2 outperformed X-TOLE with a 42.7% placebo-adjusted median percent change, or MPC, which is, to our knowledge, the highest placebo-adjusted MPC ever seen in a pivotal focal seizure study. Azetukalner was generally well tolerated with a consistent safety profile observed across both studies, as well as in the multi-year open-label extension studies, such that across the entire epilepsy program, we now have more than 1,500 patient years of safety and exposure data. Adding to the efficacy and safety profile is AZK's novel mechanism of action, as well as ease-of-use attributes like once-daily dosing, the ability to start at a therapeutic dose without titration, our expected ability of four therapeutic dose levels, and no ASM adjustments needed for DDIs.

We believe AZK represents one of the most compelling profiles ever seen in epilepsy, and we continue to hear this sentiment in our conversations with potential future prescribers as well, including at congresses, advisory boards, individual meetings with HCPs, as well as in market research. In parallel, the team is hard at work building our commercial infrastructure and preparing its launch plan. We are making great progress engaging a broad set of healthcare professionals, including epileptologists, general neurologists, and APPs, including through multiple scientific exchange opportunities and in the field through our MSL team. We have also been increasing our touchpoints with patient advocacy organizations and payers as we focus on enabling patient access following commercial availability. And we are making progress on selecting critical partners, such as specialty pharmacy partners.

And we engage with a broadening set of stakeholders, and we continue to hear enthusiasm for AZK's compelling product profile, ease of administration, and the ways in which we are looking to innovate and support the complex needs of HCPs, people living with epilepsy, and their care partners. Beyond our commercial plans, we continue to enroll our phase III X-TOLE3 and X-ACKT studies of AZK in focal seizures and PGTCS respectively, which could enable us to expand the potential geographic and therapeutic reach of AZK in epilepsy. Today, we are announcing that we also plan to initiate an important new phase IIIb/IV study called the X-FIRST study, and this will assess AZK earlier in the treatment paradigm as the first add-on therapy on top of standard of care ASMs.

Our clinical teams are working to initiate X-FIRST in the first quarter of next year, and early feedback from epileptologists and general neurologists regarding our plans for this study have been very positive. To round out our epilepsy work, we continue to invest in multiple high-quality candidates targeting various ion channels, including our preclinical NaV1.1 program for Dravet syndrome, as well as our partnered NaV1.2/1.6 program with Neurocrine and the molecule NBI-921355, which continues to advance through a phase I-B study with data expected in 2027. Turning now to psychiatry, we continue to believe in the potential of Kv7 modulation as a novel therapeutic approach based on several clinical studies, including our own phase II X-NOVA study, which showed promising signals of antidepressant effects for this mechanism.

Innovative treatments for disorders like major depressive disorder and bipolar depression are urgently needed, especially treatments that may also impact anhedonia and offer differentiated tolerability profiles without weight gain or sexual dysfunction. Since our last update in September, we have completed enrollment in the phase III X-NOVA2 study in MDD with approximately 360 patients, and we now expect to announce top-line data in December 2026 instead of Q1 2027. These data from our first psychiatry phase III will provide us with the understanding of the benefit-risk profile of AZK in MDD, and this will inform the next steps in our neuropsychiatry program. Finally, beyond AZK, we're very excited about the recent progress in our emerging pain portfolio.

Two weeks ago at the IASP World Congress on Pain, we shared positive results from the phase I studies with our lead NaV1.7 and Kv7 pain assets, XEN1701 and XEN1120 respectively, as well as exciting evoked pain data in preclinical species, including non-human primates. The clinical studies achieved all of our program goals, demonstrating the desired profiles that we hope to see in phase I and supporting the advancement to phase II proof-of-concept studies in acute pain. We're excited to be leading the science around these two innovative non-opioid targets and to increase our visibility within the pain HCP community. Now, to provide more details on our recent pain announcement, as well as our clinical development programs, I'll turn the call over to Chris.

Chris. Yeah. Okay. Thanks a lot, Ian.

It is an exciting time for Xenon as we continue to make great progress across our pipeline. I will start today with more detail about our emerging pain programs. As we look at the pain landscape, there remains a significant persistent unmet need for novel opioid-sparing therapies due to the high risk of abuse and dependency with opioids and limited efficacy of other options. Pain KOLs have expressed strong interest in ion channel modulators as a potentially transformative class of therapies. They want mechanism-based innovation that can deliver real relief without sacrificing safety. Two weeks ago, we presented phase I data for XEN1701 targeting NaV1.7 and XEN1120 targeting Kv7. The data were presented at the International Association for the Study of Pain, or IASP, 2026 World Congress on Pain. This was an exciting moment for us, given our deep history with both NaV1.7 and Kv7.