Earnings Call Transcript - XENE Q1 2021

Operator, Operator

Ladies and gentlemen, thank you for standing by and welcome to the First Quarter 2021 Xenon Pharmaceuticals Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker host, Jodi Regts. Please go ahead.

Jodi Regts, Speaker Host

Thank you. Good afternoon. Thank you for joining us on our call and webcast to discuss our first quarter 2021 financial and operating results. Joining me on today's call are Dr. Simon Pimstone, Xenon's Chief Executive Officer; Ian Mortimer, Xenon's President and Chief Financial Officer; and Sherry Aulin, Xenon’s Vice President, Finance. As a reminder, this coming June, at the time of the company’s Annual Meeting of Shareholders, Simon will be transitioning to his new role as Executive Chair of Xenon’s Board. At the same time Ian will be appointed President and CEO, while Sherry will be appointed Chief Financial Officer. Please be advised that during this call we will make several statements that are forward-looking, including statements regarding the anticipated impact and timing of the COVID-19 pandemic on our business, research and clinical development plans, and timelines and results of operations, the timing of and results from clinical trials and preclinical development activities of our proprietary and partnered product candidates, the potential efficacy, safety profile, future development plans, addressable market, regulatory success, and commercial potential of our proprietary and partnered product candidates. The anticipated timing of IND or IND-equivalent submissions and the initiation of future clinical trials for our proprietary products and those related to our other partner candidates. The efficacy of our clinical trial designs, our ability to successfully develop our proprietary development programs, the timing and results of our and our collaborators' interactions with regulators, the timing and anticipated enrollment in our clinical trials, the potential receipt of milestone payments and royalties from our collaborators, our expectation of having sufficient cash to fund operations into 2023 and the timing of potential publication or presentation of future clinical data. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the risks and uncertainties described from time-to-time in our SEC filings. Our results may differ materially from those projected on today's call. We undertake no obligation to publicly update any forward-looking statements. Today's press release summarizing the results of Xenon'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 and filed with the SEC and on SEDAR. Now, I would like to turn the call over to Ian.

Ian Mortimer, CFO

Thanks, Jodi and good afternoon. Thanks everyone for joining us. I hope everyone is healthy and well. We have made significant progress over this past quarter and I'm excited to provide an update today as we enter a period of important clinical data readouts over the coming quarters. I'll focus on our two proprietary Kv7 programs XEN1101 and XEN496. Later on the call, Simon will update you on our XEN007 CAE program, as well as partnered programs with academic and industry collaborators, followed by a financial update from Sherry. We'll then open the call up for your questions. So, I'll begin with XEN1101, which is a novel next-gen Kv7 modulator being developed for the treatment of epilepsy and potentially, other neurological disorders. We are very encouraged about the compelling product profile that is emerging for XEN1101. In addition to my comments on XEN1101, Simon will provide some commentary on our work examining XEN1101 in indications outside of epilepsy. In the near-term, our focus on the upcoming data readout from our Phase 2b X-TOLE study. As a reminder, X-TOLE is defined as a Phase 2b randomized double-blind, placebo-controlled, multicenter clinical trial to evaluate the efficacy, safety, and tolerability of XEN1101 administered as adjunctive treatment in approximately 300 adult patients with focal epilepsy. The primary endpoint is the median percent change in monthly focal feature frequency from baseline compared to the treatment period of active versus placebo. We believe that this is a well-powered and well-run study, which gives us confidence in the integrity of the key efficacy endpoints as captured by eDiary. I am pleased to report that we have now completed patient screening with the final patients now in the baseline period of the study. Patient randomization is expected to be completed in June, with topline data anticipated by the end of the third quarter of this year. Given our current numbers already randomized and those last subjects in baseline, we expect we will randomize more than 300 subjects. This upcoming data readout represents a notable inflection point for Xenon and an opportunity to drive XEN1101 forward into a late-stage pivotal program. Given this importance, I'd like to expand upon the unique properties and potential advantages associated with XEN1101. First, some comments on the potential efficacy of XEN1101. XEN1101 is based on a previously proven Kv mechanism of action with broad anti-seizure activity. We reported strong target engagement in our Phase 1b trans-cranial magnetic stimulation study. Interestingly, from our interviews and research with KOLs and community healthcare providers, we understand that the efficacy of many anti-seizure medications is perceived to be roughly equivalent, and that the ease of use and tolerability attributes are important in prescribing decisions. Therefore, if we obtained efficacy measures that are statistically significant and within the range of other anti-seizure medications, there are a number of other positive attributes of XEN1101 that we believe could further differentiate it within the adult focal epilepsy market. We believe that XEN1101 has the potential to address some key ease of use considerations for physicians and XEN1101's Kv7 mechanism would represent the only drug in its class available on the market. From our discussions, we believe that this unique mechanism of action and currently apparent low DDI risk may be leveraged in a rational poly-pharmacy approach. We believe XEN1101's one pill once daily dosing may be attractive to both physicians and patients with a forgiving PK profile that may provide coverage for missed doses. Additionally, no drug dose titration is envisaged, which compares favorably to the majority of other therapies used to treat adult focal seizures. Further, given that ASMs are generally perceived as having non-differential efficacy, the safety and tolerability profile is another key treatment driver. XEN1101 was reported as safe and well tolerated in a Phase 1 clinical trial. When taken as an evening dose, the drug Cmax is reached during sleeping hours and thus patients may avoid some Cmax related CMS AEs. Additionally, based on the lower than modeled dropout rates and high conversion to open label extension and X-TOLE, we have further reasons to believe that XEN1101 could have competitive safety tolerability properties. Digging in a little deeper into the potential mood benefits of XEN1101, we have strong scientific rationale to further explore major depressive disorder or MDD based on preclinical data and clinical work to-date that supports the use of Kv7 modulators for the treatment of depression and anhedonia. If XEN1101 could present a mood benefit beyond its impact on seizures, this added positive effect would also be a key differentiator. And if XEN1101 has a good safety and tolerability profile, without psychiatric AEs, this too could potentially encourage its use. On the whole, taking into account our conclusions from preclinical studies and clinical results to-date, along with the market research exploring the current gaps in the focal epilepsy space, we believe XEN1101 has a product profile that could be meaningfully differentiated from other anti-seizure medications. Turning now to XEN496, which is a proprietary pediatric formulation of the active ingredient ezogabine that we're developing for the treatment of KCNQ2 developmental and epileptic encephalopathy or KCNQ2-DEE, a rare severe pediatric neurodevelopmental disorder. Now, in Phase 3 development, XEN496 represents our most advanced program in the clinic and we have received fast-track designation and orphan drug designation in the U.S. as well as orphan medicinal product designation from the European Commission. Our Phase 3 EPIK clinical trial is evaluating the efficacy, safety, and tolerability of XEN496 administered as adjunctive treatment in approximately 40 pediatric patients aged one month to less than six years with KCNQ2-DEE. Designed as a randomized double-blind placebo-controlled parallel group, multicenter clinical trial enrollment is underway. Our team continues to collaborate with KOLs, physician, and patient efficacy groups to identify potential patients. We recently hosted a webinar in partnership with the KCNQ2 Cure Alliance Foundation, which featured Dr. John Millichap, our Principal Investigator of the EPIK study, who outlined study details and answered questions about the clinical trial from the families of the KCNQ2-DEE patients. Based on its Kv7 mechanism of action as well as published physician case studies, we believe that XEN496 has the potential to address an important unmet medical need for these young patients. And we look forward to keeping you updated on the progress of the EPIK study. At this point, I'll ask Simon to provide an update on our work with academic collaborators and industry partners, including the investigator-led studies with both XEN007 and XEN1101.

Simon Pimstone, CEO

Thank you, Ian. This is an exciting time for Xenon as our partnered and proprietary programs continue to make great progress. As Ian mentioned, we're exploring other neurological indications for XEN1101 outside of adult focal epilepsy. I wanted to highlight for you today the recent Costi et al article published in the American Journal of Psychiatry examining the use of ezogabine on the reward circuit activity and clinical outcomes in patients with depression in a randomized clinical trial. Ezogabine compared with placebo was associated with a significant improvement in depression as measured by the Montgomery Aspect Depression Rating or MADRS Scale and associated with a significant improvement in hedonic capacity as measured by the Snaith-Hamilton Pleasure or SHAPS scale. We believe these new data provides further validation of the great potential of the Kv7 mechanism to differentiate from other anti-seizure medicines in patients with epilepsy and the comorbidity of depression or a standalone to treat MDD. We recently announced a collaboration with the Icahn School of Medicine at Mount Sinai in New York, and we expect that an investigator-sponsored Phase 2 proof-of-concept randomized parallel arm placebo-controlled clinical trial examining XEN1101 as a treatment for MDD and anhedonia, as measured by specific functional and clinical endpoints will be initiated in the coming months. In parallel, we're planning a company-sponsored study in MDD, focusing on clinical endpoints. Both of these planned MDD studies are supported by promising preclinical data with XEN1101 as well as clinical data generated from open label and randomized placebo-controlled studies that explored targeting the Kv7 mechanism using ezogabine as a potential treatment for MDD. We're excited about this focus on the potential of the Kv7 mechanism and the related promise for XEN1101 to be the only in-class drug in adult focal epilepsy with the potential for broader opportunities in other neurological disorders given XEN1101's unique pharmaceutical attributes. Turning now to XEN007, which is a CNS-acting Cav2.1 and T-type calcium channel modulator being studied in treatment-resistant childhood absence epilepsy or CAE in a physician-led Phase 2 proof-of-concept study. At the Virtual AES 2020 Meeting, we presented promising interim data from a small number of patients that showed three CAE subjects exhibiting a significant reduction in seizures as measured by seizure diary and confirmed by EEG. And while this is a small data set, we believe we are seeing drug activity and seizure reduction that is supportive of a broader development plan for XEN007. As we have stated previously, the COVID-19 pandemic has impacted recruitment in this investigator-led study. However, we are adding other sites and we expect to be able to provide results from a larger data set in the second half of 2021. I'm pleased that our industry-partnered programs also continue to advance and progress. Our collaboration with Neurocrine Biosciences continues to guide the initiation of two Phase 2 clinical trials this year to evaluate the use of NBI-921352, which used to be called XEN901 in both pediatric and adult indications with planned studies in patients with SCN8A, developmental and epileptic encephalopathy or SCN8A-DEE and in focal epilepsy respectively. In addition, we continue to make good progress on the advancement of earlier stage molecules within our ongoing discovery-based collaboration with Neurocrine. We're also excited to report that our partner Flexion Therapeutics recently announced treatment of the first patient in a Phase 1b proof-of-concept trial, evaluating the safety and tolerability of FX301 administered as a single dose popliteal fossa block in patients undergoing bunionectomy. Flexion's FX301 consists of Xenon-developed molecule previously known as XEN402, which has been formulated for extended release from a thermo-sensitive hydrogen. Flexion has guided that it anticipates data from the Phase 1b trial of FX301 in late 2021. I'll now ask Sherry to recap our financial position.

Sherry Aulin, VP of Finance

Thanks, Simon. We are in a solid financial position today and I believe we are well-situated to support Xenon's business objectives and the advancement of our clinical development programs. Today, I will focus on some highlights from this quarter's financial statements and would refer you to our news release and 10-Q report for further details. Following up on Simon's comments on the progress made by our partner Flexion, this quarter, we recognized $3 million in milestone revenue and we are eligible to receive additional milestones and royalties in the future. This past quarter, we also closed an oversubscribed $115 million public offering with strong support from both existing and new high-quality institutional investors. Cash and cash equivalents and marketable securities as of March 31, 2021 were $274.7 million compared to $177 million as of December 31, 2020. Based on current assumptions, which include fully supporting the planned clinical development of the XEN1101 actual trial, and MDD proof-of-concept study, the XEN496 EPIK study, the XEN007 physician-led proof-of-concept study, as well as funding our preclinical and discovery activities, we anticipate having sufficient cash to fund operations into 2023. Excluding any revenue generated from existing partnerships or potential new partnering arrangements. We plan to revisit our cash runway guidance post actual data with increased visibility on our spend in 2022 and beyond. With our strongest balance sheet to date, we continue to have a lot of flexibility as we manage our business and continue to advance our product candidates. As of March 31, 2021, there were approximately 41 million common shares outstanding, 1.1 million pre-funded warrants, and 1 million Series 1 preferred shares outstanding. I would refer you to today's press release and our 10-Q filing for other specific details from this quarter's financial statements. At this point, I will turn the call back to Ian who will summarize the key milestone events we are anticipating for the remainder of this year.

Ian Mortimer, CFO

Thanks, Sherry. Looking ahead, our key corporate objectives include; the continued advancement of our EPIK Phase 3 clinical trial in patients with KCNQ2-DEE; the development decision and results from a larger data set in the second half of the year from the physician-led XEN007 proof-of-concept study in CAE; continued support for our partner program with Neurocrine biosciences, including the anticipated initiation of two Phase 2 clinical trials with NBI-921352 in 2021; results from Flexion's FX301 Phase 1b trial anticipated in late 2021; anticipated initiation of an investigator led Phase 2 proof-of-concept study; as well as the ongoing planning for a company-sponsored clinical trial examining XEN1101 in MDD. And importantly, within our XEN1101 Phase 2b X-TOLE clinical trial, we expect patient randomization to be complete in June with topline data anticipated by the end of the third quarter of this year. In summary, we are incredibly proud of the breadth and depth of our neurology pipeline. There is an immense amount of momentum in both our proprietary and partner programs. For the first time in Xenon's history, we can have up to eight clinical trials underway with five different molecules led by us, our corporate partners, and academic collaborators in 2021. Before we open the call up for your questions, Simon has a couple of concluding remarks.

Simon Pimstone, CEO

Thank you, Ian. So, this is my last quarterly call as Xenon's CEO. As you know, I'm handing that baton over to Ian who has worked alongside me for the past seven years. I leave this role with great anticipation and optimism, in part driven by the strength of our current pipeline, in part driven by the exciting data readouts ahead of us, and in part driven by the strong leadership of Xenon, that will continue to work tirelessly for you, our shareholders, as well as the patient communities we serve. It's been a privilege to serve such a talented executive team and to work alongside such wonderful colleagues. This has been an incredible honor and a mission for me, a journey I'll always treasure. As you know, I'll be working in a different capacity as Executive Board Chair and in that capacity; I look forward to continuing to support Xenon and to interacting with all of you. I wanted to thank you all for the faith that you have shown in me, and the faith you've shown in Xenon. I firmly believe that our best is yet to come. I'll now ask the operator to open the line for any questions.

Operator, Operator

Thank you. Our first question is from Paul Matteis with Stifel. Your line is now open.

Ian Mortimer, CFO

Paul, can you hear us?

Operator, Operator

And our next question coming from the line of Laura Chico with Wedbush Securities. Your line is open.

Laura Chico, Analyst

Best wishes, Simon and congratulations to Ian and Sherry again. I guess I have one question on 1101. So, obviously, exciting to hear that the X-TOLE readout is coming up in the third quarter. Beyond the primary endpoint, I'm wondering if you could talk about the communication strategy around some of these perhaps non-seizure related assessments, quality of life measures? And then I just have one follow up for you.

Ian Mortimer, CFO

Thanks. Yes, thanks Laura. Maybe I'll answer that by providing a little bit of background and color. So, as we mentioned, we'll have topline data by the end of Q3. That will be by way of a press release, we'll have key added points, we haven't mapped out everything that will be in that first press release. It will come after we un-blind the data, just how much of the data analysis we can do balancing getting out that topline data in this quicker manner as we can. Key efficacy endpoints primary and secondary for sure, as you know, the primary we talked about on today's call. Key secondary endpoints focus on a lot of the responder analyses and we'll have some data on those. We'll definitely comment on safety and tolerability and some other metrics within the study and, as you mentioned, we do have some additional endpoints around quality of life, how much of that full data analysis will be completed and ready for the topline data? We don't know right today. So, we will be ready to talk about that at the next quarter and advance of data. And then as a standard, we'll have more detailed analyses upcoming and scientific meetings, we may be able to get just under the wire for a late breaker at AES this year, which would be excellent. And then, obviously, we have AAN next spring, our conferences that we’re looking forward to presenting additional analysis.

Laura Chico, Analyst

That's great, Ian. Thank you. And then maybe one follow-up on a commercial market in the focal epilepsy setting. It's been about a year since XCOPRI has been on the market. Obviously, there'll be some additional studies to conduct with 1101, if successful here, but I'm just curious if you could talk about any learnings or takeaways that you can take from Cenovo made on the market? Thanks very much.

Simon Pimstone, CEO

It's Simon. I'll make a comment and then hand over to Ian for more details. Cenovo has shown a good effect size in some patients with this condition at its final dose. However, it requires significant titration over three to four months to achieve that. The real question is how well the drug can be integrated into the refractory focal epilepsy patient population, who experience regular seizures and must wait for the drug to reach the necessary concentration for optimal effect. This presents challenges. One important advantage of 1101 is that it doesn't require titration and reaches a maximum steady-state exposure in about two to three weeks without long-term accumulation, which is a significant difference. We haven't observed any of the Hypereosinophilic Syndrome associated with higher doses of XCOPRI in our studies, and we don't expect to. The ease of use and once-a-day dosing are crucial differentiators. For context, consider Vimpat, or lacosamide, which is less effective in reducing median seizure frequency yet generates about $1.5 billion to $2 billion a year due to its ease of use. That's my insight. Ian?

Ian Mortimer, CFO

Yes, maybe just a couple of comments. So, we don't have perfect information on your specific question on how the launch has gone for XCOPRI, but our understanding is that it's gone reasonably well. And obviously, this is a large market opportunity with still significant unmet need where there's absolutely room for a number of branded drugs to do well. I think Simon walked through a lot of the differentiating points. The other thing that I would mention that we didn't cover on this call, but we have presented recently is that we've generated some really nice preclinical data of 1101 in combination with Cenovo made. Obviously, different mechanisms of action and when you dose these drugs together, you can get quite significant efficacy in the in-vivo models that we've run. So, we look forward to having 1101 as another drug available for physicians and their patients.

Laura Chico, Analyst

Thanks very much, guys.

Operator, Operator

And our next question coming from the line of Paul Matteis with Stifel. Your line is open.

Paul Matteis, Analyst

Hey. Thank you. Can you guys hear me?

Ian Mortimer, CFO

We can.

Simon Pimstone, CEO

We now can, yes.

Paul Matteis, Analyst

All right. Awesome. Thank you. Sorry about that. Well, first-off congrats, Simon and congrats Ian on your new roles. Always appreciate the dialogue we've had. I wanted to ask the question on the MDD plans, and then also on the 007 plans. On MDD, what's your kind of current thinking on when you're going to engage the FDA what the next study could look like? And how are you thinking about dosing and MDD? Is it same as epilepsy or might you try to go a little bit lower due to just tolerability dynamics? And then for 007, I guess, similar question just plans to engage the FDA. Would you do that after this initial investigator data? Would you start before? And how do you think about next steps? Thank you.

Ian Mortimer, CFO

Sure, I'll start, and then Simon can add. Regarding MDD, we believe that an upfront engagement with the agency is not necessary to proceed with a company-sponsored MDD study. We aren't seeking specific feedback at this stage, but we will follow a protocol to get started. We have a solid protocol synopsis in development, taking into account the ezogabine experience from Dr. Morrow's group at Sinai and other running MDD trials. While we haven't finalized the dosage yet, we plan to use the dosage currently applied in our epilepsy study, where we have extensive experience. In terms of timing, the Sinai study will commence before we start the MDD study, and we will have access to un-blinded X-TOLE data on 1101 before initiating the company-sponsored MDD study. This data will help us refine our approach. For 007, our plans are progressing concurrently. This year, we aim to expand the dataset based on the few patients who provided intriguing results at AES last year. Additionally, we expect to have regulatory discussions regarding the next steps in development, planning a company-sponsored development if the data continues to support it. The specifics of this development planning are what we are currently working on, and we anticipate regulatory interactions later this year.

Simon Pimstone, CEO

Paul, its Simon. The only thing I'd add is just going back to the MDD, key distinctions, I guess from the ezogabine study and also from the current study Dr. Morrow will run with 1101, is in those studies, functional MRI was the primary endpoint with clinical secondaries. We're much more interested in our sponsored study as clinical primaries. I think the other unknown at this point, which will define X-TOLE is going to be the interplay with anhedonia in our sponsored study. So, as you know, the ezogabine study was done in MDD and anhedonic patients and will similarly be tested with Dr. Marrow's 1101 trial. We're currently sort of looking through that to decide whether we'll have a purer MDD patient population meeting thresholds of severity in terms of inclusion. I think that's the only additional comment I'd make.

Paul Matteis, Analyst

Great. Thank you, Simon. Appreciate it.

Operator, Operator

Our next question in queue coming from the line of Marc Goodman with SVB Leerink. Your line is open.

Marc Goodman, Analyst

Yes, hi. Simon in the past you kind of hinted at work that's going on behind the scenes, you're talking about disclosing some of that work soon. I was just wondering, are we getting closer? What's going on behind the scenes? Maybe you could just give us a little hint. Thanks.

Simon Pimstone, CEO

You're likely asking about our non-clinical programs, Marc. We have some very exciting projects in progress. Some of these have been mentioned previously, including our Kv7 program, which is exploring next-generation molecules and has made remarkable advancements. We also have a NaV 1.1 program targeting various indications that has shown promising progress. Additionally, there are a few other programs we aren't ready to discuss yet, but we'll share more information in the coming months. This is simply the current phase of the programs, Marc. We'll provide updates when we feel they have reached a significant stage, and until then, we'll keep the details private. Those are just two of the programs we've talked about before, but there are more. That's all we can share for now.

Marc Goodman, Analyst

And then just one quick follow-up from a previous question. How many patients do we currently have enrolled, and what is our goal for this year?

Ian Mortimer, CFO

Hey Marc, it's Ian. We don't provide updates on our clinical trials every quarter; we only share information when we reach significant milestones. As we've mentioned, the data from the first three patients was quite promising. Our aim is to enroll over 10 patients and continue expanding our study in that population. The more subjects we add to the study, the more confidence we gain in that opportunity and indication. So, we aim to grow from a small number to double-digit enrollments and continue from there.

Operator, Operator

Our next question coming from the line of Tim Lugo with William Blair. Your line is open.

Tim Lugo, Analyst

Thank you for the question, and congratulations to the team on their new roles. Regarding 1101 in MDD, I think the Mount Sinai study will take a considerable amount of time to enroll, partly due to the NIH's involvement. Could you discuss the company-sponsored study and whether it might be quicker to conduct, particularly if you're using clinical endpoints instead of fMRI?

Ian Mortimer, CFO

Yes, that's correct, Tim. I believe you are referring to the clinicaltrials.gov posting regarding the Mount Sinai study, which may take several years. Currently, we don't have specific timelines, but as the study progresses, we hope to obtain more details on when we might see topline data. Our expectation is that the Sinai study will commence first, but our study will likely yield results before it does. This is primarily because Sinai will be conducted at two centers, whereas we plan to operate at more than two locations and, with our partnership with a CRO, we expect our enrollment to be more robust than that of the Mount Sinai study. We are currently developing 1101 and have not yet completed all necessary DDI work. We have conducted standard DDI evaluations regardless of the therapeutic indication. Based on a lot of the in-vitro work and other profiling, we believe it will generally have a low DDI risk. The Mount Sinai study involves dosing as a single agent, and we have not made a final decision on our MDD study regarding the inclusion of concomitant medications. Overall, we think that 1101 has a low risk of DDI. We are also beginning more detailed PK/PD modeling, using the clinical data we have generated so far in Phase 1 as our initial dataset. Once we acquire all the Phase 2 X-TOLE data, our PK/PD modeling will become more comprehensive, allowing us to assess any potential differential exposure from 1101 or other concomitant medications. Since all patients in X-TOLE will be on the background therapies, we will gain better insight into any DDI as we accumulate more data and conduct further modeling.

Tim Lugo, Analyst

Great. Thank you for the color.

Operator, Operator

Our next question coming from the line of Andrew Tsai with Jefferies. Your line is open.

Andrew Tsai, Analyst

Hi everyone, thank you and good afternoon. Congratulations on the progress as well. It's great to see that the X-TOLE study is concluding soon. Can you discuss what you consider to be positive safety data? I expect you'll show adverse events in the topline results, but will you also share biomarker data or other assessments like eye exams? Could you provide some insights on that?

Simon Pimstone, CEO

Yes, as Ian mentioned, we haven't finalized what will be disclosed in the topline yet. High-level safety tolerability will definitely be included. We need to consider this carefully. We understand that there are specific safety tolerability data sets that will be very relevant, and some of this will be particularly important over time. Eye measurements are currently being conducted, and we're also looking at urine analysis. Any urinary hesitancy or retention that occurs is being captured. So, we will have that data. Ian pointed out earlier that the key consideration in the topline is balancing the speed of presenting material information with the amount of data analysis needed. We typically conduct staged releases, ensuring we have the topline material data before issuing a press release as Ian mentioned. Following that, we will provide a number of important analytics, likely between now and AES. It's difficult to specify exactly what will be included in the first press release at this point, but we will come up with a plan. As Ian indicated, after the second quarter, we should be able to provide a clearer picture of what will be presented.

Andrew Tsai, Analyst

That's very clear. And my second question is actually back at SN Conference. I believe one of your team members affirmed that a handful of patients had completed the open label phase, none of them had seen any safety issues. If that's true, I'm wondering if there have been more patients who have completed the open label phase and the safety profile still looks pretty pristine as you had expected? Thanks.

Ian Mortimer, CFO

I won't make any specific comments on safety, but I can confirm the design of the study for the open label extension. Initially, it was an eight-week double-blind study that allowed every subject, regardless of their dose group or whether they received a placebo, to transition into the open label extension. We have seen a very high conversion rate into the open label phase, which consists of a single 20-milligram dose and was initially designed for 12 months, a common practice. At the end of last year and into early this year, as patients completed the 12-month period, physicians and steering committee members expressed interest in extending the open label phase, so we extended it to three years. We have conducted several key regulatory filings to facilitate this. Regarding our long-term safety data, it will be critical when addressing safety events observed with ezogabine after extended cumulative dosing. The more data we collect from patients over one or multiple years, particularly concerning pigmentation risks, will be important. Our position is that we do not believe 1101 poses any pigmentation risk, but accumulating more data from the open label extension will benefit various stakeholders.

Andrew Tsai, Analyst

Great. Thanks for the color.

Operator, Operator

And our next question is coming from Serge Belanger with Needham. Your line is open.

Serge Belanger, Analyst

Hey, good afternoon. A couple of questions for me. The first one on 1101, more specifically the MDD program. Just wanted to clarify something, you plan on initiating the company-sponsored study before you get results from the physician study and at this point, maybe I miss any prepared comments, but is this be open label or placebo controlled and dose ranging? And then secondly, on the 496, EPIK trial like it's too early to give an enrollment update here, but maybe just give us an idea of how many sites are up and running and maybe, with COVID restrictions as they've been a serious impediment to enrollment and should we expect a significant improvement once restrictions are lifted? Thanks.

Ian Mortimer, CFO

Thank you, Serge. Regarding the MDD question, we anticipate that the Sinai study is prepared to begin shortly. Our current plan is to start a company-sponsored MDD study prior to the results from the physician-sponsored Mount Sinai study. Although we cannot predict with certainty, we expect to have our study results available before the Sinai results. Concerning the trial design, we are still in the planning phase and have a protocol synopsis prepared. We expect it to be a randomized study with a placebo control, focusing on determining several factors such as dose response and minimum effective dose, likely selecting a dose for the proof of concept study in MDD within this controlled setting. Moving to EPIK, the study is active and currently on 496 for the Phase 3 program. As mentioned previously, we don't go into specifics about site numbers, but we do anticipate activating multiple sites in the US over the first few quarters of this year, with additional sites outside the US opening up as the year progresses. We are still on track, though some COVID-related challenges have affected site operations, with some being busy with COVID clinical trials or managing pandemic-related cases. This has likely had some impact, though it's hard to quantify. As we approach further into enrollment in a couple of quarters, we should be able to provide some preliminary guidance on when we expect to see data from that study.

Operator, Operator

Next question coming from the line of Yatin with Guggenheim Your line is open.

Eddie Hickman, Analyst

Hey, guys. Thanks. This is Eddie on for Yatin. Just a high-level question on 1101. How should we think about the potential efficacy coming next quarter in comparison to the old ezogabine data? Do you need to show an enhanced efficacy profile over those older data? Or is it really just a story about safety and dosing regimens? How should we think about those top line data? Thanks.

Ian Mortimer, CFO

That's a great question, Eddie. We often get asked about this. We designed the statistical analysis plan and the power for the study with the ezogabine data in mind, as it shares the same mechanism. The results from ezogabine, which were statistically significant and impressive in adult focal epilepsy over a decade ago, influenced our modeling and calculations. However, ezogabine, also known as potiga, is no longer available on the market and is not an active competitor. The current treatments and drugs for these patients differ from those during the ezogabine trials. While we consider ezogabine as a backdrop, we don't necessarily need to compare our data to it. Our focus is on how 1101 will fit into the current anti-seizure market, especially in terms of advocacy. As we've discussed extensively today, our market research emphasizes the safety and tolerability profile as well as the ease of use.

Eddie Hickman, Analyst

Got you. Thanks. And then just one really quickly on AE profile. In the Phase 1, you did show some mild cognitive effects. I'm just wondering if that's something that you think could be exacerbated in a larger study that we tend to be concerned about?

Simon Pimstone, CEO

I'll take that Simon, Eddie. Yeah, look, any Phase 1 study with a CNS acting drug in volunteers is likely to exaggerate the tolerability of the drug. When you go to a community-based study and patients or an outpatient-based study, it's generally very, very different. These are patients that are used to taking are more used to taking anti-seizure meds. Remember, these individuals in our trial have been on many, but are on one to three additional meds at the time of inclusion. So they are quite used to the tolerability. And we have also, as you probably recall, designed the study such that with dosing in the evening, which was different from our Phase 1 setting, which were the dosing was in the morning, but dosing in the evening in this trial as Ian mentioned in his notes earlier, we should see Cmax during sleeping hours and that was specifically designed given the PK of the drug to allow for any of the more significant CNS tolerability issues to hopefully be slept through. And so we don't expect the AE profile to be the same as Phase 1. I will just say and reiterate that actually the Phase 1 safety was relative to other drugs actually good, and relative to ezogabine was excellent. I mean, we had almost over mild and they were reversible. And clearly a dose dependency with the aggregation of AEEs of the 25 mg dose, remember our study is dosed at night and in a patient populations, our population is quite distinct, and we expect to see much improved tolerability. I think Ian mentioned earlier, the very low dropout rates, and the very high conversion to overly suggest would suggest that at least the patients are tolerating a drug to a degree where they stay in the study and move into the open label where they and the investigators know, they're getting the active drug.

Eddie Hickman, Analyst

Got you. Thank you. And then just one final one. Is there any possibility that this Phase 2 could be potentially pivotal that being considered? And then if it's successful like do you have a baseline assumption on how many other trials you need to get approval?

Simon Pimstone, CEO

Yes, that's a good question. We don't know because it's going to require an FDA discussion. But certainly if the study is very significant, remember, it's a one sided Phase 2 trial, so we'd have to essentially double the effect size in the terms of the p-value for this to potentially be deemed significant at a two sided, which will be a requirement for this to be deemed registration. But assuming we were to see that, so in other words, if p less than 0.025, rather than less than 0.05, we would certainly engage the FDA on that discussion. And then of course, the obvious discussion is, do we just require one additional for the US at least, one additional Phase 3 trial for Europe, it's almost certain one would require two distinct studies, 12 weeks dosing designed as two sided. But for the US, it is possible that this could be deemed a registration, or should we say one of two registration trials. Remember, we still have to have a certain number of subjects in the safety database, and that number is around 1500, but they don't all have to come from efficacy trials. They can come from clinical pharmacology studies, open label studies, single dose studies, etc. So, we're going through that, Eddie, right now, but our goal would be to engage the FDA on that exact discussion if we see a highly statistically significant effect.

Eddie Hickman, Analyst

Thank you, and congrats Simon.

Simon Pimstone, CEO

Thank you.

Operator, Operator

Our next question coming from the line of Antonia Borovina with Bloom Burton. Your line is open.

Antonia Borovina, Analyst

Hi. Thanks for taking my question. I just have one, which was kind of related to a question asked earlier for maybe another way of asking it. So I know that your actual trial is powered to show a 15% delta between placebo and active. So I'm just wondering if you just reach this threshold, do you believe this is competitive commercially from an efficacy perspective?

Simon Pimstone, CEO

That's a tough question because prescribing decisions are based on the overall picture, not just one data point. Many community-based prescribers may not have detailed knowledge of the clinical trial efficacy data like we do. They focus more on their own experiences with the drug and how their specific patients have responded to it. I wouldn't see a single data point as the main factor for the commercial success of 1101. However, the study is statistically well-powered to demonstrate a linear trend and dose response, with a 15% differential observed between the placebo and the high dose of 25 milligrams. Other factors also influence this modeling in terms of standard deviation and p-values. We believe if we achieve a median reduction in the range of 30% to 40% and it’s statistically significant, we would be competitive with current anti-seizure medications. Additionally, when comparing 1101 to other generic and branded drugs for adult focal epilepsy, it aligns very well in terms of other important attributes such as ease of use, safety, and tolerability, which we have highlighted in our prepared remarks.

Antonia Borovina, Analyst

Thanks.

Operator, Operator

And our next question coming from the line of David Koh with SMBC. Your line is open.

David Koh, Analyst

Hi, Thanks for the update and fitting my questions in. So I just had a couple quick ones. With 1101, I know the inclusion criteria for the Phase 2b study allows one to three concomitant or background AEEs. So I was just wondering if you had a sense of how many patients are actually on only one background therapy? And in the real world setting, do you think that you'd be able to pick up some patients in second-line usage? Or would it mostly be third line plus that you expect?

Ian Mortimer, CFO

Thanks, David, good questions. We don't have neither Simon or I are in the details of exactly what the patient demographics look like in the current study. We purposely kind of stay away from that. So I don't know the answer today of your question on how many are on one, two or three background meds in the study? Obviously, we'll be able to disclose that data once the trial is complete. When we think about the prescribing decisions, I mean, why don't we just spend a quick minute walking through them, because we've done a lot of this work recently. So generally, yes, at first line, many of these, so first line, meaning newly diagnosed patients, they are going to be on a generic drug. At second line, you're going to often see branded Keppra show up. And again, not every patient is the same and not every physician prescribing habits are the same. But you often see branded Keppra show up or other generics. And at that point, still we see a percentage of patients often it's quoted in the 30% to 40% range that are still not well controlled. And that's when physicians are starting to think about rational polypharmacy. That's where Vimpat often shows up as the first branded agent. And I think we believe that's where 1101, based on its attributes, also has the opportunity to play a role based on it's going to be the only in-class drug at launch with a Kv mechanism. So, it'll be a novel mechanism, and some of the other ease of use attributes that we've seen. And obviously, once we have the safety and tolerability and efficacy data in hand. But that's generally, as we think about the progression of a patient, and potentially where 1101 could fit in there, or as additional agents are added to treat these patients.

David Koh, Analyst

Got it. Thanks for applying color. That's really helpful. And then my second question was 007. I know the active ingredient is narizine, and there's been some experience commercially with that molecule. So just trying to get a better sense of what has the experience historically been with 007 or flunarizine in terms of safety, tolerability and efficacy and such?

Ian Mortimer, CFO

Yes. Thanks. So it's approved on label outside of the US in a number of countries, European, South American and others for chronic migraine prevention and vertigo. It's a CNS acting primarily calcium channel modulator, but it has some other effects. And one of the actual very interesting features of the drug, which was compelling for us is not only had there been some non-clinical data supportive of the use in CAE, but actually the tolerability of the drug particularly in the pediatric population is actually very, very good. So there are some side effects known flunarizine particularly in an elderly population. Depression and pyramidal or extrapyramidal features can be observed again at low frequency, but in the elderly. I'd say the only AEE outside of that population that one would need to consider is some weight gain. It's not that significant, but it is there in some subjects. But interestingly, in the pediatric population, this drug is very, very well tolerated, which is actually very important, because often drugs used in kids for their seizure control independent of type of seizure, this could be focal, this could be generalized, this could be absence, is often these are often drugs that impair the scholastic ability of these kids that have cognitive impairment and kids feel sleepy. And so this is a drug which appears to be mostly devoid of those certainty relative to the gold standard drugs in this indication being valproate, ethosuximide this would be a very good alternative from a CNS perspective. So, it's actually one of the reasons David we wanted to move this product forward in this population, was because of the predicted excellent safety, tolerability that's now being shown in 10s and 10s and 10s of thousands of uses of flunarizine around the world.

David Koh, Analyst

Okay. Thanks.

Ian Mortimer, CFO

If the drug does not succeed, I don't believe it will be due to safety or tolerability issues. That's my impression for this group of patients. While we don't yet have the final efficacy results, it appears promising based on a small sample. However, safety and tolerability are well-established.

Operator, Operator

No, I'm not showing any further questions at this time. I would now like to turn the conference back over to Jodi Regts for any closing remarks.

Jodi Regts, Speaker Host

Thank you. On behalf of the Xenon leadership team, we look forward to updating you on our progress over the coming months. Operator, we will now end the call.

Operator, Operator

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.