Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Xenon Pharmaceuticals Inc (NASDAQ:XENE) has made significant advancements in its pipeline, including the progress of its ZEU calendar in the Phase 3 epilepsy program.
• The company has launched a Phase 3 MDD program and is planning further indication expansion of the ZEU calendar in bipolar depression.
• Xenon Pharmaceuticals Inc (NASDAQ:XENE) has a strong presence in the epilepsy community, highlighted by its participation in the American Epilepsy Society meeting.
• The company has a robust financial position with cash and cash equivalents sufficient to fund operations into 2027.
• Xenon Pharmaceuticals Inc (NASDAQ:XENE) is expanding its product portfolio through the advancement of early-stage ion channel programs, including promising candidates targeting KV7 and Nav 1.7.

Negative Points

• The company faces challenges in the recruitment and completion of enrollment for its clinical trials, which could impact the timing of data readouts.
• There is competition in the KV7 space, with other companies also developing KV7 drugs for bipolar mania, which could impact Xenon Pharmaceuticals Inc (NASDAQ:XENE)'s market position.
• The company's focus on expanding into bipolar depression and other neuropsychiatric disorders involves risks and uncertainties related to clinical trial outcomes and regulatory approvals.
• Xenon Pharmaceuticals Inc (NASDAQ:XENE) is experiencing an increase in R&D expenses due to the expansion of its pipeline and multiple ongoing Phase 3 studies.
• The departure of Sherry Allen, the Chief Financial Officer, could lead to transitional challenges as the company searches for her successor.

Q & A Highlights

• Warning! GuruFocus has detected 2 Warning Sign with XENE.

Q: Can you provide an update on the enrollment status for the first phase 3 epilepsy study and whether data could be expected in Q3 or Q4? Also, how do you interpret results from other KV7 readouts this year? A: (Ian Mortimer, CEO) We are comfortable with our guidance of phase 3 epilepsy data in the second half of the year. As we get closer, we will narrow that timeframe. Regarding bipolar depression, our focus is on the strong scientific rationale for KV7 in bipolar depression, and we remain confident in our plans regardless of other KV7 readouts. (Dr. Chris Kenny, CMO) The attributes of our drug are appealing for both depression and bipolar, with a strong genetic association for KV7 in bipolar disorder.

Q: Can you clarify if enrollment in the extoll 2 study is complete? Also, could you provide more insight into the design of the phase 3 studies for bipolar depression? A: (Ian Mortimer, CEO) We have not specifically commented on the completion of enrollment but will provide updates as the year progresses. Regarding bipolar depression, we are planning a registration program with more details on trial design to be disclosed in subsequent quarters. (Dr. Chris Kenny, CMO) Both studies will include a combination of bipolar 1 and bipolar 2 patients.

Q: What is the minimum efficacy threshold for Azeocalner in the phase 3 focal epilepsy study to achieve best-in-class status? Also, what level of detail can we expect from the phase 2 MDD study at Mount Sinai? A: (Ian Mortimer, CEO) Success in the phase 3 epilepsy program is about showing statistical significance to support our NDA filing. We are confident in the molecule's profile based on existing data. For the phase 2 MDD study, we expect to provide data on key secondary endpoints like Madras and SAPS, along with the primary functional MRI endpoint, in the first half of this year.

Q: How do you see Azeocalner fitting into the treatment paradigm compared to current competitors like Excor and Rivarazepam? A: (Sherry Allen, CFO) Excor's strong sales indicate a commercial opportunity for a drug with a better profile. Azeocalner's novel mechanism, rapid onset, lack of titration, and potential mood benefits position it as a first-choice branded drug after generics. (Dr. Chris Kenny, CMO) Azeocalner's seizure freedom data and lack of titration requirements make it competitive, with potential mood benefits as an additional advantage.

Q: For the bipolar depression study, will you look at the drug as an adjunct to lithium or valproate? Also, what is the focus for the second-generation KV7? A: (Ian Mortimer, CEO) Details on the bipolar depression study design, including mono versus adjunctive therapy, will be disclosed closer to the study's initiation. Regarding second-generation KV7, while we have chemical diversity, there's nothing specific we're trying to solve for beyond building on Azeocalner's success. We plan to explore both existing and novel indications.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.