Xenon (XENE) Q1 2026 Earnings Transcript

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Date

May 7, 2026

Call participants

• President and Chief Executive Officer — Ian Mortimer
• Chief Medical Officer — Christopher John Kenney
• Chief Commercial Officer — Darren S. Cline
• Chief Financial Officer — Thomas Kelly
• Head of Investor Relations — Colleen Alabiso

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Takeaways

• Cash, cash equivalents, and marketable securities -- $1.3 billion at period end, up from $586 million at December 31, primarily due to a $747.5 million public offering.
• Clinical cash runway -- Management stated, "this provides cash to fund operations into 2029."
• AZK focal onset seizure (FOS) data -- The XTOL-2 trial met its primary endpoint with median percent change (MPC) reductions in monthly FOS frequency of 53.2% (25 mg), 34.5% (15 mg), and 10.4% (placebo); results were "highly statistically significant."
• Efficacy in refractory population -- XTOL-2 tested patients with a median of 13 seizures per month and prior use of five antiseizure medications, with more than half on three concomitant ASMs at baseline.
• Seizure freedom (open-label extension) -- After at least 48 months of AZK, 91% reduction in monthly seizure frequency occurred in all-comers, with 100% reduction among those entering on one or two ASMs, and nearly 40% achieving seizure freedom for at least 12 months; one in four for at least two years.
• Safety profile -- Across XTOL and XTOL-2, most common treatment-emergent adverse events were dizziness, somnolence, headache, and fatigue, with serious adverse event rates and discontinuation rates consistent with other ASMs.
• Commercial timing -- NDA submission for AZK is planned for 2026, with expected approval and launch in 2027 or early 2028, assuming standard FDA and DEA review timelines.
• Payer and market engagement -- Management has begun ongoing discussions with pharmacy benefit managers and payers, initiated at the March PCMA meeting, and plans to expand its field-based payer team this year.
• Pipeline progress -- First-in-human studies for XEN1701 (Nav1.7) and XEN1120 (Kv7) are on track to complete in 2026, with both programs advancing to Phase II pain proof-of-concept studies.
• Neuropsychiatry studies -- Three Phase 3 trials for AZK in major depressive disorder and bipolar depression remain on track, with topline data from EXNOVA-2 expected in 2027.
• Nav1.1 (Dravet syndrome) program -- IND-enabling studies are ongoing as preclinical data suggest potential disease modification, and results were presented at the AAN meeting.
• Partnered asset development -- Neurocrine's 121,355, a Nav1.2 and Nav1.6 inhibitor, is in Phase 1b, with data expected next year.

Summary

Xenon Pharmaceuticals (NASDAQ:XENE) delivered XTOL-2 Phase 3 data for AZK showing superior efficacy and a consistent safety profile among patients with highly refractory focal onset seizures, reinforcing clinical and prescriber enthusiasm. Management articulated a clear regulatory and commercial pathway for AZK, anticipating NDA submission in 2026 and potential U.S. market entry in 2027 or early 2028, while confirming payer and market engagement are already underway. The company’s strengthened capital position, supported by a $747.5 million public offering, funds operations through 2029 and enables concurrent expansion across epilepsy, depression, pain, and pediatric rare disease pipelines.

• Long-term open-label extension findings reveal nearly 40% of patients maintained 12 months seizure freedom after 48 months of AZK, a substantial outcome in a population resistant to existing treatments.
• Ongoing Phase 3 depression and bipolar studies and first-in-human pain trials support management's assertion that the Kv7 mechanism may represent a further commercial opportunity outside epilepsy.
• AZK’s profile—no titration, once-daily dosing, and lack of drug-drug interactions—was repeatedly highlighted by both management and healthcare professionals as a differentiator likely to influence adoption in general neurology and community practices.
• Nav1.1 preclinical results in Dravet syndrome models suggest not just symptom reduction but potential effects on disease modification, with IND-enabling efforts progressing.

Industry glossary

• ASM (antiseizure medication): Drug used to control or reduce the frequency of epileptic seizures.
• FOS (focal onset seizure): Seizure type beginning in a localized area of the brain, targeted by specific clinical trials in epilepsy.
• OLE (open-label extension): Extended phase of a clinical trial where all participants receive the investigational drug without blinding, used to gather long-term safety and efficacy data.
• MPC (median percent change): A statistical measure commonly used in epilepsy trials representing the median reduction in seizure frequency.
• Kv7: Family of potassium channels targeted by AZK and other pipeline candidates, implicated in neuronal excitability and seizure control.
• Nav1.7/Nav1.1: Subtypes of voltage-gated sodium channels; Nav1.7 is genetically linked to pain signaling, Nav1.1 is implicated in Dravet syndrome.
• IND: Investigational New Drug application, required for U.S. FDA approval to begin human clinical trials.
• NDA: New Drug Application, required for U.S. FDA marketing approval of a pharmaceutical product.
• DEA scheduling: The process by which the Drug Enforcement Administration classifies drugs with abuse potential before commercial launch.
• SAD/MAD: Single ascending dose / multiple ascending dose studies, common Phase 1 designs to assess safety and pharmacokinetics in healthy volunteers.
• PCMA: Pharmaceutical Care Management Association, representing pharmacy benefit managers and a key stakeholder group in payer strategy.

Full Conference Call Transcript

Colleen Alabiso: Good afternoon. Thank you for joining us on our call and webcast to discuss Xenon Pharmaceuticals Inc.’s first quarter 2026 financial and operating results. Joining me today are Ian Mortimer, President and Chief Executive Officer; Christopher John Kenney, Chief Medical Officer; Darren S. Cline, Chief Commercial Officer; and Thomas 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 timing 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 partner’s product candidate.

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 and NDAs; the timing and results of those filings and our interactions with regulators; our ability to successfully obtain regulatory approval; anticipated timing of top line data readouts for our clinical trials of AZET2 calendar and other candidates; and our expectation that we will have sufficient cash to fund operations into 2029. Today’s press release summarizing Xenon Pharmaceuticals Inc.’s first quarter financial results and the accompanying quarterly report on Form 10-Q will be made available under the Investors section of our website at xenon-pharma.com and filed with the SEC on SEDAR+.

I will now turn the call over to Ian.

Ian Mortimer: Thanks, Colleen, and good afternoon to everyone joining us today. We are excited to recap an exceptional quarter for Xenon Pharmaceuticals Inc., where we made tremendous progress toward our goal of becoming a fully integrated neuroscience company delivering life-changing medicines to patients. In March, we reported results from our Phase 3 XTOL-2 study of azetu calder, or AZK, in focal onset seizures that exceeded our expectations. Now with these positive data in hand, we are focused on our NDA submission to the FDA expected in 2026, and we also continue to work on increasing AZK awareness and education through our scientific engagement amongst HCPs, as well as our commercial readiness activities.

In addition, we continue to broaden the therapeutic opportunities for AZK beyond epilepsy with potential neuropsychiatric indications where we have strong preclinical, clinical, and genetic evidence. Our three Phase 3 depression studies in major depressive disorder and bipolar depression continue to enroll and we are on track to deliver top line results from EXNOVA-2 in 2027. Successful studies in MDD, BPD, or both would serve to benefit patients and substantially expand the commercial opportunity for AZK. Finally, we remain focused on expanding our pipeline through the advancement of our promising earlier-stage ion channel programs, with exciting candidates that provide the potential to drive our long-term growth.

This includes completion of our first-in-human studies for XEN1701, targeting Nav1.7, and XEN1120, targeting Kv7, later this year, with the intent to advance both programs to Phase II proof-of-concept studies in pain. As we continue to execute our clinical programs and prepare for the anticipated approval and launch of AZK, we also continue to prioritize maintaining a strong balance sheet. So today I am going to focus most of my comments on AZK and epilepsy, and then I will turn the call over to Chris, Darren, and Tucker.

As you all know, in Q1 we announced positive top line results from the XTOL-2 study in focal onset seizures, which exceeded our expectations by surpassing the already strong results from the Phase 2b XTOL study and, to our knowledge, demonstrated the highest placebo-adjusted median percent change in monthly focal seizure frequency ever seen in a pivotal FOS study. Similar to XTOL, we observed a rapid onset of efficacy, strong and dose-dependent responder rates, and a consistent safety and tolerability profile. Following the top line announcement, we were excited to present the data as a late-breaking oral presentation at the American Academy of Neurology Annual Meeting in Chicago.

Around these two milestones, we have engaged with hundreds of epileptologists and neurologists and the feedback we have received has been incredibly positive. HCPs are enthusiastic about the magnitude of the efficacy benefits seen in our two randomized trials; the breadth and consistency of our safety and tolerability data; the impressive rates of seizure freedom in the OLE; and the key differentiating attributes of AZK. This includes a novel Kv7-targeting mechanism of action, no titration, once-daily dosing, and no dose adjustments for other ASMs. If approved, this profile would add a meaningful new medicine to their toolkit and provide the opportunity for rational polytherapy.

We feel increasingly confident in AZK’s potential to become a preferred ASM for the significant number of patients who do not achieve seizure freedom with initial treatment. We are working hard to submit our new drug application to the U.S. Food and Drug Administration in 2026. Our base case assumption is a standard review period followed by DEA scheduling, which would put the anticipated launch timing at 2027 or early 2028. At the same time, we are focused on building out our commercial infrastructure and finalizing our go-to-market strategy, and Darren will speak to this a little bit later on the call.

Beyond FOS, we are encouraged by the potential of AZK in primary generalized tonic-clonic seizures, and our Phase 3 EXACT study continues to enroll. Positive results in EXACT would enable us to submit a supplemental NDA for an additional epilepsy indication, which would meaningfully increase our addressable patient population. Outside of epilepsy, we are making good progress enrolling our three ongoing neuropsychiatry studies: EXNOVA-2 and EXNOVA-3 in major depressive disorder, and EXEDE in bipolar depression. There is strong rationale for Kv7 openers in depression. Several preclinical and clinical studies, including our own NOVA study, have shown promising signals of antidepressive effects for the Kv7 mechanism. Additionally, in bipolar depression, there are genetic links with Kv7, including evidence of Kv7 downregulation.

We look forward to sharing our first top line Phase 3 data set in MDD in the first half of next year. We also continue to progress our early-stage programs, including our first-in-human studies with XEN1701, targeting Nav1.7, and XEN1120, targeting Kv7. These are both compelling targets to treat pain with non-opioid approaches. These programs are exciting as they leverage our deep expertise in ion channel science and the strength of our discovery capabilities, and would address large unmet medical needs. Acute and chronic pain affects more people than diabetes, heart disease, and cancer combined, yet effective non-opioid options are scarce.

There is a significant opportunity for Xenon Pharmaceuticals Inc. to be a leader in unlocking the next generation of pain therapeutics. We are also excited about our early-stage epilepsy programs, including our Nav1.1 program in Dravet syndrome. IND-enabling studies are ongoing, and we continue to showcase our encouraging preclinical findings at large congresses, such as the recent AAN meeting. Our collaborators at Neurocrine are also progressing a Phase 1b study for 121,355. This is an investigational selective inhibitor of voltage-gated sodium channels Nav1.2 and Nav1.6, which is being investigated as a potential treatment for certain types of epilepsy. Data from this study are expected next year.

Finally, I want to highlight another major accomplishment for Q1, which was the completion of our $747.5 million financing. It significantly extends our cash runway into 2029, allowing us to transition to a commercial-stage company and advance our depression and pain programs to key data milestones. Now with that overview, I will turn it over to Chris to provide an update on our activities at AAN and our broader clinical program. Chris?

Christopher John Kenney: It has been a really exciting time at Xenon Pharmaceuticals Inc. since we reported our top line XTOL-2 data. As you would imagine, there is a great deal of enthusiasm in the epilepsy community with the prospect of a new anti-seizure medicine that could address many of the gaps in today’s treatment paradigm, including the limited number of mechanisms available. With the strong XTOL-2 data that exceeded all expectations, coupled with the long-term OLE data showing sustained effects and impressive seizure freedom, I am incredibly excited about the potential for AZK to positively impact the lives of patients in the near future and for decades to come.

Recently, our team spent a week in Chicago at the American Academy of Neurology Annual Meeting, where we gave several important clinical, preclinical, and real-world data presentations, which collectively underscored the significance for AZK and our growing leadership within epilepsy. I will start by highlighting the XTOL-2 data that were featured as a late-breaking science presentation. Every year, AAN receives more than 300 late-breaking science submissions, and this year they selected just 18 abstracts for data that they viewed as warranting expedited presentation and publication to their neurologists. Dr. Jackie French of NYU and chair of the XTOL-2 steering committee presented the XTOL-2 data in both an oral platform presentation as well as a poster.

The reactions were very positive, with the session moderator from Harvard University and Massachusetts General Hospital characterizing the data as outstanding, and Dr. French highlighting rapid onset of efficacy and no titration as key differentiating aspects of AZK that will appeal to physicians. Our XTOL-2 presentation reinforced the positive top line data we announced in March, including that the study met its primary endpoint of median percent change in monthly FOS frequency from baseline to Week 12 in both the 25 mg and 15 mg AZK dose groups compared to placebo.

Specifically, we observed an MPC reduction of 53.2% for 25 mg, 34.5% for 15 mg, and 10.4% for placebo, results which were highly statistically significant and actually outperformed the Phase 2b XTOL study. We also observed early dose-dependent MPC in weekly FOS from baseline to Week 1, which was sustained through the double-blind period with both AZK doses, reinforcing AZK’s rapid and sustained anti-seizure activity. These efficacy results are even more impressive when you consider that XTOL and XTOL-2 included the most treatment-resistant FOS population ever trialed.

At baseline, patients in XTOL-2 were experiencing a median of 13 seizures per month, had been treated with a median of five prior ASMs, and more than half were already using three concomitant anti-seizure medications. About 60% were on or had already tried and stopped cenobamate, and still they had not achieved seizure control. We also provided additional data from our responder rate analysis, where we observed dose-dependent increases in the proportion of participants with at least 75% and 90% reductions in monthly seizure frequency through the double-blind period.

We also presented 100% responder rate data, which demonstrated that a 100% reduction in seizures over the double-blind period was attained by a greater proportion of participants with AZK 25 mg than placebo, results which were highly consistent with the results of XTOL. While AZK has a rapid onset of efficacy, it also takes a few weeks to reach steady-state levels, and we have seen in other instances, such as the XTOL OLE, that efficacy continues to build over time. Therefore, we also conducted a post hoc analysis of the XTOL-2 data to see if a greater proportion of participants experienced a 100% reduction in seizures over time.

Indeed, the 100% responder rate increased steadily over the last eight, six, and four weeks. For example, the 100% responder rate over the 12-week double-blind period for 25 mg was 6.5%, but over the last six weeks it increased to 11.3%, and over the last four weeks it increased further to 13.7%. We are looking forward to continuing to follow this trend in the Phase 3 OLE. This brings me to our other key AZK presentation at AAN: our 48-month XTOL OLE data, where the trend of efficacy building over time is even more compelling.

The OLE is also where we are best positioned to evaluate whether patients are truly achieving seizure freedom, which has been a consensus definition of no seizure for 12 months or more. This definition also aligns to practical, real-world outcomes for patients, as in many states 12 months without seizures means they are able to drive again. Our long-term OLE data demonstrated continued reductions in focal seizures, with a 91% reduction in monthly seizure frequency for those treated for at least 48 months. Those who entered the study taking one or two ASMs demonstrated a 100% reduction in monthly seizure frequency, compared with an 82% reduction in seizure frequency among those taking three ASMs at baseline.

With regard to seizure freedom, among patients treated for at least 48 months, almost 40% were seizure-free for at least 12 months, and one in four were seizure-free for at least two years. If you consider how treatment-resistant the overall patient population was at baseline, this is truly remarkable. Based on feedback from our investigators, we understand some of these patients have never experienced seizure freedom before taking AZK, and their stories fuel our desire to bring AZK to patients and clinicians as quickly as possible. Finally, I will also note that our AZK data at AAN continue to support a generally well-tolerated profile.

The safety data are remarkably consistent between XTOL and XTOL-2 in terms of types of treatment-emergent adverse events, the frequency at which they occurred, the number and types of serious adverse events, and the events that led to discontinuations. The most common treatment-emergent adverse events across both studies in the AZK dose groups were dizziness, somnolence, headache, and fatigue. With more than 800 patient-years of safety and exposure data, we are comfortable that this profile is consistent with other well-tolerated ASMs and with a drug that is potent and active in the central nervous system. We will continue to add to these robust safety and tolerability data with our ongoing Phase 2 and Phase 3 OLEs in epilepsy.

Another focus for Xenon Pharmaceuticals Inc. at AAN was education around unmet needs in epilepsy care, including the impact that titration has on both patients and HCPs, the opportunity for no-titration options to improve treatment experiences, outcomes, and healthcare resource utilization. We presented real-world data that captured the challenges reported by patients around medication schedules, daily life, and quality of life during titration periods, while physicians reported challenges related to treatment complexity and cross-titration. When questioned on their perceptions of ASMs without titration, most patients noted that they either agree or strongly agree that initiating an ASM without needing to titrate to a stable dose would boost their confidence, reduce anxiety, and improve adherence.

Physicians noted that no titration would increase simplicity, as many patients are already on complex drug regimens. These findings suggest using ASMs that do not require titration may reduce stress and simplify FOS management, and we heard this echoed in our discussions at AAN as well, especially for general neurologists who value ease-of-use attributes in prescribing decisions. We rounded out our AAN scientific program with an oral presentation of preclinical data from our Nav1.1 program in Dravet syndrome.

These data demonstrated that selective potentiation of Nav1.1 channels in Dravet mice improves motor function, suppresses spontaneous seizures, prevents sudden unexpected death from epilepsy, increases long-term potentiation (which is a potential cellular correlate of learning and memory), and produces more mature dendritic spine morphology. The data continue to support our belief that targeting Nav1.1 with a small molecule could potentially address the underlying cause and symptoms of Dravet syndrome. IND-enabling studies for this program are currently ongoing. All in all, we are very proud of our scientific contributions at AAN, as well as how positively they were received by the community.

Moving on to our other clinical programs, we have had a lot of activity as we continue to enroll three Phase 3 studies in depression and two Phase 1 programs in pain. Depression is an area where the differentiated profile of AZK, including its novel mechanism of action, rapid onset of action, and potential benefits on anhedonia, could meaningfully benefit patients. Like epilepsy, the depression landscape has experienced a dearth in innovation for some time, and new mechanisms are urgently needed. Our clinical development team has made great progress with EXNOVA-2 and EXNOVA-3, which are ongoing and enrolling patients with major depressive disorder. As Ian previously stated, we anticipate sharing top line data from EXNOVA-2 in 2027.

In addition, EXEDE, a Phase 3 clinical study evaluating AZK in patients with bipolar I and bipolar II depression, also continues to enroll. This is another area where there is significant unmet need for safe and effective therapies due to nonadherence related to side effects and other factors. The physicians that we have spoken with are keenly interested in AZK’s novel selective Kv7 mechanism of action, potential benefit on anhedonia, rapidity of onset, and differentiated safety profile. To round out my remarks, pain continues to be an area of growing focus and we are looking forward to completing our first-in-human studies for our novel pain programs this year.

There remains a strong desire for non-opioid pain therapies given the limited efficacy of current options and substantial risk of abuse and dependency tied to opioids. We know that analgesics can act along multiple different points of the pain pathway and interrupt the pain signal on its way to the brain, and we believe in the potential for Nav1.7 inhibitors and Kv7 potentiators to play important roles at multiple points in this pathway, including 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.

We believe Nav1.7 is the best genetically validated pain target, with striking genetic data in patients with loss-of-function mutations that have no ability to feel pain. Gain-of-function mutations have also been identified that drive pain disorders, further underscoring the critical role Nav1.7 plays in pain signaling. With XEN1701, as well as other Xenon Pharmaceuticals Inc. programs in preclinical development, we believe we have solved for some of the critical limitations of prior Nav1.7 compounds. Kv7 is also a compelling target to modulate neuronal hyperexcitability at multiple points along the pain pathway, and we believe Kv7 potentiators have the potential to treat a range of pain conditions.

This is supported by high levels of Kv7 expression throughout the pain pathway, and our preclinical data show that Kv7 is enriched in the C and A-delta subtypes of sensory neurons. In addition, Kv7 openers can block action potential firing in both DRG and spinal cord neurons, thereby significantly inhibiting pain signals from reaching the brain. Evidence supports that dysfunction or downregulation of Kv7 activity has been observed in altered pain states. We are excited to be advancing an optimized Kv7 opener with our XEN1120 program. We are really encouraged by our Nav1.7 and Kv7 work in pain and look forward to providing more details later in the year.

With that, I will turn it over to Darren to provide an update on our path to commercialization, including interactions and discussions at AAN. Darren?

Darren S. Cline: Thank you, Chris. I would like to reinforce the comments from Ian and Chris regarding the strong interest in our XTOL-2 data since we first reported the results in early March. Since then, we have seen sustained engagement and interest from a broad group of epileptologists and neurologists attending AAN. Across these interactions, they reiterated the strength of our XTOL-2 and OLE datasets and AZK’s differentiated profile, and we consistently heard enthusiasm about the potential to use AZK in clinical practice. Physicians highlighted the importance of efficacious therapies that are also straightforward to incorporate into routine patient care.

AZK’s unique mechanism and its expected profile of once-daily dosing, an effective starting dose, no drug interactions, and no dose adjustments with other ASMs remain among the most frequently cited and most compelling attributes. Looking ahead, we plan to increase our understanding through primary research, advisory boards, and one-on-one meetings as we continue to deepen our insight of AZK in advance of potential approval and launch. Based on our growing engagements with this audience, we believe AZK has the potential to become the preferred branded ASM for general neurologists.

We also continue to hear that AZK’s profile may support greater confidence in treating a broader range of epilepsy patients within community practices, rather than referring patients to a level three or four epilepsy center after exhausting existing available options, which could contribute to broader adoption, improve patient outcomes, and meaningful prescription growth over time. Launch readiness remains a key enterprise priority. Over the past several months, we have focused on increasing our scientific engagement with epilepsy specialists, neurologists, and advanced practice providers, while continuing to expand our field-based capabilities, including the recent addition of several medical science liaisons.

In parallel, we have initiated discussions with payers to introduce Xenon Pharmaceuticals Inc., better understand unmet needs, and communicate the potential value proposition of AZK. In March, we attended the Pharmaceutical Care Management Association, or PCMA, meeting for the first time and held a number of productive introductory discussions with pharmacy benefit managers and payers. The timing of these conversations alongside our XTOL-2 data release helped drive interest and momentum. We plan to participate in several national payer meetings this year, and in the coming months, we expect to expand our field-based payer team to continue dialogue with this important constituency and further strengthen our launch preparedness.

As we execute on these launch readiness priorities, we remain focused on building an experienced launch and lifecycle management organization, advancing innovation across channels and patient services, and increasing awareness across our customer universe. Our commercial objective is to establish Xenon Pharmaceuticals Inc. as a leader in epilepsy, and we believe we are making meaningful progress toward that goal. We are highly motivated by the opportunity to deliver meaningful benefits to patients and the physicians who care for them. With that, I will turn the call over to Tucker to review our financial results.

Thomas Kelly: Thank you. As Ian mentioned, the exceptional results in XTOL-2 allowed us to complete a highly successful public offering of nearly $750 million, which fortified our balance sheet as we move toward potential approval and launch. We ended Q1 with cash, cash equivalents, and marketable securities of $1.3 billion, compared to $586 million as of December 31. Based on our current operating plans, this provides cash to fund operations into 2029. Given our strong balance sheet and fiscal management, we are well positioned to support AZK’s U.S. launch, multiple registrational programs for AZK, and the continued maturation of our early-stage pipeline.

I would refer you to our press release and our 10-Q filed today for further details on our financial results. Overall, it is a very exciting time at Xenon Pharmaceuticals Inc. as we continue to build momentum in our pipeline spanning epilepsy, depression, and pain, and make progress against our critical priorities, with our first priority being the submission of our NDA for AZK to the FDA in 2026, as well as the advancement of our commercial readiness activities to support a strong launch in FOS.

We also remain focused on broadening the therapeutic opportunities for AZK beyond FOS, and we continue to make good progress enrolling our studies in major depressive disorder and bipolar depression, with the readout of our first depression study anticipated in 2027. Lastly, we are pleased with the momentum in our early-stage pain programs, and we anticipate completing the first-in-human studies for 1701 targeting Nav1.7 and 1120 targeting Kv7 later this year, and we seek to advance both programs to Phase II proof of concept.

We are in an excellent position to execute our priorities due to our strong cash position, and we are feeling very optimistic about a bright future as we begin to transition to a commercial-stage company delivering meaningful medicines to patients. With that, we will now open the call for questions.

Operator: At this time, I would like to remind everyone that in order to ask a question, please press star then the number one on your telephone keypad. We will pause for just a moment. Your first question comes from the line of Paul Matteis with Stifel. Your line is open.

Paul Matteis: Great. Thanks very much. Congratulations on everything from the first quarter. I wanted to ask a couple of questions on the pain programs, if that is okay. First, as it relates to the Nav1.7 compound, I was wondering if you could talk about where you have gotten to in your Phase I program at this point, and how much you feel like you have de-risked some of the safety issues that have plagued other drugs? And then separately, can you maybe speak to more specifics around these Phase II plans in acute pain? What would the size and scope of those studies potentially look like, assuming the Phase I data later this year lets you advance? Thank you.

Ian Mortimer: Thanks, Paul. Chris, I am happy to start and then you can provide your perspective, especially on the future clinical development. At JPMorgan earlier this year in January, we discussed progress we had made on both Nav1.7 and Kv7. You asked specifically around Nav1.7. At that time, we said that we already felt that we were at high enough exposures to get receptor occupancy that would mimic the human genetics, so we had already made good progress in those early cohorts of dose escalation. Bringing it forward to today, we have continued to enroll additional healthy volunteers in that Phase 1 study.

Sitting today, we feel really good that we can safely dose, have the appropriate therapeutic index, and give this mechanism a real shot to show proof-of-concept data in Phase II. Based on what we know today, our plans are to move forward into a Phase II acute pain proof-of-concept study. Obviously, on the acute pain side, we are looking at studies like bunionectomy or abdominoplasty. We have not yet fully designed the studies. We would want to have them of sufficient size and power, and these would be placebo-controlled studies to show a difference between active and placebo. The question we continue to think about internally is how many arms, active comparators, how many doses—those things we are still planning.

That will become clearer as we finish Phase 1 and we have a really good idea of what we are seeing in terms of the dose response and safety profile in those Phase 1 healthy volunteer studies. Chris, any color to add on additional details for future development?

Christopher John Kenney: I will just double down on your point that we think we have what we need to go forward into Phase II on both programs, and we have not worked out exactly what the plan would be after the proof of concept that would be with abdominoplasty and/or bunionectomy.

Paul Matteis: Alright. All good. Thank you very much.

Unknown Speaker: Thank you.

Operator: Your next question comes from the line of Tessa Thomas Romero with JPMorgan. Your line is open.

Tessa Thomas Romero: Hey, thanks so much for taking our question, and congratulations from us on all the progress. Ian and Chris, I was wondering if you could provide your perspectives on how the seizure freedom data that you have shared at 12 weeks from XTOL-2 compares to what we know about XCOPRI on a cross-trial basis numbers-wise. How do you think doctors will approach thinking through the seizure freedom data that we have for these two assets, given that nearly 60% of the patient population were taking or had already discontinued XCOPRI in XTOL-2, and, of course, that XCOPRI has to be titrated? Thank you.

Ian Mortimer: Thanks, Tessa. I will start. Chris can provide perspective, but I also want Darren to weigh in because we have had a huge amount of interaction with HCPs and the feedback that they are providing us. Chris mentioned in the prepared remarks that the consensus definition of seizure freedom is really having no seizure for 12 months, and so when we talk about our seizure freedom data with prescribers, we focus more on our open-label data than our double-blind data. In the double blind, you will hear us use terms like RR100, which is the percentage of patients that had a 100% reduction over the double blind. You asked for a comparison between AZK and cenobamate.

It is a cross-trial comparison and it is challenging, but I will make a couple of comments. One, it was a materially different patient population. As Chris walked through and as you have seen in our publications and posters, we believe that both in XTOL and XTOL-2 this was the most refractory population ever trialed in a pivotal FOS study. When we look at the cenobamate double-blind trials done over a decade ago, that was a significantly less refractory population. So we are comparing two different clinical populations within FOS.

You also mentioned another key factor, which is because cenobamate is titrated, when they look at their RR100 during their double blind, they only report over the maintenance period, which is the last six weeks of dosing. One of the reasons why we provided a breakdown of the last eight, six, and four weeks is to enable a better comparison. Another point on the cross-trial comparison is that often they show their data at their 400 mg dose, which—based on feedback and real-world data—patients rarely reach.

If you look at their 200 mg dose and you look at the last period within our double-blind period—within the last six weeks or four weeks of our data—I would actually say that our RR100 is higher than the cenobamate data seen at their 200 mg dose. Then the last point you made is important: we actually had a cenobamate-refractory population in our trial, with close to 40% of patients on background cenobamate and approximately another 20% who had tried it and failed it either for efficacy or tolerability and were no longer on the drug. Overall, I think our data stack up really well, and I have not even talked about the open-label data.

That is just a cross-trial comparison during the double-blind period. I will pass it to Chris to talk about the open-label seizure freedom data and then to Darren on how that is being pulled through into the real world.

Christopher John Kenney: Thanks, Tessa. In the epilepsy field, there is a bit of a disconnect. If you talk to epileptologists and neurologists and ask them what they are hoping to achieve, they talk about seizure freedom on a long time horizon—at least six months, more like a year, sometimes more. Yet, in the same conversation, they will ask what was your seizure freedom over a month or two or three months. As you make comparisons, the details matter. If you are talking about seizure freedom with cenobamate at 400 mg, with hardly anybody taking 400 mg, and many patients treated at 200 mg or lower, it is important to think about dose.

Also, when they talk about seizure freedom in cenobamate, they are excluding the first six weeks of the trial period, which is why we provided those different cuts of seizure freedom to allow a better comparison. Zooming out, general neurologists want something easy to use. With AZK, you do not have to worry about titration, drug-drug interactions, or manipulating other medications to reach therapeutic dose. To wrap up on seizure freedom, what really matters is what happens in the long term. In the data we just presented at AAN, among patients treated for four years or more, we are seeing about 40% with seizure freedom for a year or more.

That is what really matters—not so much what happened over one, two, or three months. Thanks.

Darren S. Cline: Thanks, Tessa. I would reiterate what Ian and Chris said. When we engage with physicians—both epileptologists and general neurologists—at AAN and other forums, XCOPRI is largely an epileptologist drug. When we query about seizure freedom at 400 mg, very few, if any, patients get to the 400 mg dose. As it relates to their own experience, seizure freedom at those doses is not as compelling in the real world. XCOPRI does add benefit, but physicians are not seeing anywhere near what is shown at 400 mg. General neurologists have struggled with using it; many try it once and are done.

What differentiates AZK—and what we believe will make this a tremendous opportunity—is the ease-of-use attributes: lack of titration, once-daily dosing, and no DDIs. These really resonate, and general neurologists look forward to incorporating AZK in their practice.

Operator: Your next question comes from the line of Cory William Kasimov with Evercore. Your line is open.

Cory William Kasimov: Hi. This is Addy on for Cory. Just on the earlier question asked on the pain assets, can you confirm if investors should anticipate any data this year? I believe earlier it was mentioned that maybe Phase 1 SAD/MAD data might be presented. Should we anticipate that data? Thank you.

Ian Mortimer: Thanks. We are very comfortable saying that the Phase 1 healthy volunteer studies for both 1701 and 1120 will complete this year. In terms of how much of those data we provide publicly—for competitive reasons—we will certainly communicate that we believe we have enough receptor occupancy, exposure, and coverage to have a really good shot at seeing an analgesic effect in a proof-of-concept study. It is to be determined whether we will broadly show the Phase 1 data publicly. We are comfortable that those studies will wrap up this year.

Operator: Your next question comes from the line of Analyst with TD Cowen. Your line is open.

Analyst: Hi, thanks for taking our questions. Have you scheduled or had a pre-NDA meeting yet? If you have had the meeting, can you talk about any feedback you have received from the FDA? Then on scheduling, can you walk us through the timeline and your expectations for DEA scheduling if you get approved?

Christopher John Kenney: What we have guided is that we had top line XTOL-2 in March. We expect about a six-month period between that and submitting the NDA. We are expecting a standard review of 12 months, and then DEA scheduling is expected to be three months, which is why Ian stated that we expect approval in 2027 or early 2028. Pre-NDA meetings are standard. We expect that to occur between the top line data and the NDA submission in the fall, but we have not provided specifics on timing. We have had thoughtful and timely interactions with FDA, we think we have a good reputation with them, and we have not foreseen any problems up to this point.

We look forward to future interactions.

Analyst: Great. Thank you.

Operator: Your next question comes from the line of Andrew Tsai with Jefferies. Your line is open.

Andrew Tsai: Hey, good afternoon. Thanks for taking my questions. This is Matt Barkis on for Andrew Tsai. Can you give us a little flavor on what other Phase 3 data analyses you might share later this year, especially at AES in December, which can further showcase AZK’s potential differentiation?

Ian Mortimer: Thanks. Chris, do you want to walk through our thinking around AES and additional analyses?

Christopher John Kenney: We have spent a lot of time digging into the Phase 3 data and are working through what we intend to submit as potential abstracts at AES. As you know, you submit and they may or may not be accepted. We are focusing on analyses that combine efficacy and safety from our two pivotal FOS trials—XTOL and XTOL-2. We may also revisit seizure subtypes as we did in XTOL. And of course, we will update the XTOL OLE data, as we do each year. Those will happen for sure; we are working through whether there will be anything else.

Ian Mortimer: That was great. Thanks, Chris.

Operator: Your next question comes from the line of Brian Skorney with Baird. Your line is open.

Brian Skorney: Hey, thanks for taking the question. This is Charlie on for Brian. Thinking about your Nav1.1 in Dravet—obviously a preclinical space—how do you see this compound and mechanism differentiating from the field, especially considering there are other therapies out there addressing this issue in epilepsy? And one more on pain: what are you thinking about long term in terms of chronic pain versus acute pain, and how each asset might fit into that paradigm? Thank you.

Ian Mortimer: Thanks. I can start on Nav1.1 and then Chris can add, and we can touch on pain strategy. In Dravet syndrome, these children are haploinsufficient in Nav1.1, so they have about 50% of the protein. Currently approved drugs address seizures—like clobazam, Epidiolex, or FINTEPLA—aim to reduce seizure burden. We believe the field is also moving toward correcting the underlying genetics. There are ASO approaches you are aware of. We see an opportunity for a small molecule that is orally administered and can be titrated or weight-based dosed across a wide range of pediatric weights. By potentiating the channel and increasing current through the wild-type channel, there is potential to correct underlying disease physiology.

The preclinical data Chris described—presented at AAN, including in haploinsufficient genetic models that mirror the human phenotype with spontaneous seizures and SUDEP—are quite remarkable. We see not only seizure reduction but also potential disease modification, including protection from death and improvements in long-term potentiation. We are now in tox studies. There is a huge need for better therapies in Dravet, and we think this could fit in nicely, though it is still early days. On pain, our first proof-of-concept studies will be in acute pain—bunionectomy or abdominoplasty. There is nothing in the genetics of Nav1.7 or the mechanism of Kv7 that suggests they should only work in acute versus chronic, or nociceptive versus neuropathic pain.

If these programs look promising in PoC, the plan would be to go broad in late-stage development.

Christopher John Kenney: Maybe it is slightly crowded, but this is a devastating disorder and it is good that multiple groups are working on it. We think we are differentiated because we are advancing a small molecule that addresses pathophysiology in a manner analogous to ASOs targeting the mechanism, but delivered orally rather than intrathecally. Think about the SMA analogy: gene therapy, ASOs, and then orals—all played roles. We think we can offer something meaningful. On pain, we are focused on getting out of first-in-human and into PoC; we still need to figure out chronic versus acute and other parameters in the coming months.

Brian Skorney: Great. Thank you for all the color. Really helpful.

Operator: Your next question comes from the line of Myles Minter with William Blair. Your line is open.

Myles Minter: Thanks for taking the question. One on the commercial side: it is interesting that we are all comparing to XCOPRI when that is not the number one branded product—BRIVIACT is, and I think that went generic at the start of the year. Is that a headwind to marketing a newly branded ASM because costs are coming down in general neurology, or is it a tailwind because you no longer have to compete for that branded slot and can come in and take the market within general neurology?

Darren S. Cline: Thanks, Myles. On the contrary, we think AZK’s attributes—particularly the novel mechanism—stand out after generations of SV2A, sodium channel blockers, and GABAergic approaches. The novel Kv7 mechanism is a benefit. Our ease-of-use attributes that we have outlined and receive positive feedback on—no titration, once-daily dosing, no DDIs—are compelling. Considering the timing, when we ultimately launch it will be almost a decade of what I would characterize as stagnation in focal epilepsy innovation. Along with our clinical data and profile, we see a great opportunity.

BRIVIACT is another “me too” mechanism following a wildly successful parent in Keppra; that is a completely different market and opportunity than what we have with AZK as we look to the future and prepare to launch.

Operator: Your next question comes from the line of Analyst with Deutsche Bank. Your line is open.

Analyst: Hi, thanks for taking my questions. On the commercial side, given the strong balance sheet you have now, how do you think about leveraging that to ensure the best commercial launch for AZK in focal epilepsy? For example, would you increase the number of sales reps you field? And a competitor is doing a monotherapy study, arguing that weaning patients off background meds could allow earlier-line use. Have you thought of a study like that, and would it be helpful for AZK?

Ian Mortimer: Thanks. I am happy to start with a bit of historical context, and then Darren can go through launch preparation details, and Chris can address monotherapy and labeling. Since the XTOL data in 2021, we have invested in commercial preparation at risk. This is a generational, paradigm-shifting opportunity. Given our confidence heading into the XTOL-2 Phase 3 readout, we started commercial prep already. Darren was hired almost a year ago. We have had field medical—MSLs—engaging in scientific exchange; this summer it will be two years since that team has been in the field. Darren’s leadership team is in place. We have had access personnel in place for years.

Early investment gives us an opportunity for real success in the early days of commercialization. Darren?

Darren S. Cline: Thanks. Successful launches share a few ingredients. First is early investment, which was in place when I joined. Second is the team: we have commercial leaders with deep epilepsy experience, relationships, and launch experience—which gives us a leg up. Third, we will be a highly desirable place for epilepsy-dedicated professionals; there has been little new for years, so when we post roles we expect the best talent. On the product, from brand positioning to pricing commensurate with value to services and distribution, we are thinking creatively to extract value and, most importantly, deliver the best patient and physician experience. Creating demand is only part of it; converting to paid scripts, persistency, and compliance complete the equation.

All those variables are being put in place, and with AZK’s clinical profile, we are extremely excited and bullish on the launch. Chris, on monotherapy?

Christopher John Kenney: To be blunt, I do not see the upside of doing a monotherapy study. From a labeling perspective, current labels do not specify adjunctive; they state the indication. I do not see upside from a labeling perspective. If, for whatever reason, I did see upside, I would design a pure monotherapy study—drug versus placebo—from the start. Manipulating background ASMs, trying to back off, and then interpreting efficacy and safety is likely very challenging.

Operator: Your next question comes from the line of Analyst with Wells Fargo. Your line is open.

Analyst: Yes, this is Orpheus on for Ben. Good afternoon, and congrats on the progress. As we look forward to XTOL-3 data and a potential ex-U.S. launch, how are you thinking about commercialization in ex-U.S. territories? I know in the past you have shared you would look to partner in such geographies. Any updates you can share? Thank you.

Colleen Alabiso: I am happy to address that.

Ian Mortimer: We are conducting clinical development to meet regulatory requirements around the world. We have been clear that the clinical program should meet requirements in Europe. An update over the last couple of quarters was our interaction with PMDA and the incorporation of Japanese sites and subjects into XTOL-3 to meet requirements in Japan without having to run a separate Phase 3 program there. We have done what is needed to drive global clinical development and value. We have also been clear that we are not going to build market access and commercial infrastructure outside the U.S. When the time is right, we will engage with potential partners to access those markets. Right now, we are focused on global clinical development.

Analyst: Very helpful. Thank you very much.

Operator: I will now turn the call back over to Ian Mortimer for closing remarks.

Ian Mortimer: Thanks very much, operator, and thanks to everyone for joining us today. I know there were other questions in the queue, so if we did not get to yours, we will reach out to you directly to connect. We look forward to providing continued updates as we advance our programs and deliver on important milestones throughout the remainder of the year. Operator, we can now end the call.

Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.

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