Earnings Call Transcript - XENE Q4 2020

Operator, Operator

Good morning ladies and gentlemen, and welcome to the Quarter Four 2020 Xenon Pharmaceuticals Incorporated Earnings Conference Call. At this time all participants are in a listen-only mode. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host today, Ms. Jodi Regts. Ma'am please go ahead.

Jodi Regts, Head of Investor Relations

Thank you. Good afternoon everyone. Thanks for joining us on our call and webcast to discuss our financial and operating results for the year ended December 31, 2020. 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 announced in January, 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. On today’s call you will hear from both Simon and Ian as they provide a corporate update and overview of our clinical development programs. Sherry will provide some high level financial commentary and we will then open up your call for questions. Please be advised that during this call we will make a number of 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 2020 year-end financial results and the accompanying annual report on Form 10-K will be made available under the Investors section of our website at www.xenon-pharma.com and filed with the SEC and on SEDAR. Now, I would like to turn the call over to Simon.

Simon Pimstone, Chief Executive Officer (transitioning to Executive Chair)

Thank you, Jodi, and good afternoon everyone and thank you all for joining us today. I hope everyone is staying safe and well. I would also like to welcome Sherry to today's call. Over the coming months, leading up to her transition to CFO in June, you’ll have an opportunity to hear her comments on our business and plans moving forward. From my part as you know, I'm moving into the new role of Executive Chair of Xenon’s Board. In this capacity I'll continue to be very active in the company as Ian leads the day-to-day operations. I couldn't be more excited in making the transition at this time when Xenon is at the strongest point in our history, with a talented and capable management team and a neurology pipeline that is one of the most robust in our industry, and meaningful clinical data readouts in the near term. Ian and I have a shared strategic vision and we are looking forward to the next stage of growth at Xenon. With two of our most advanced proprietary product candidates XEN1101 and XEN496 currently in Phase 2 and 3 clinical trials respectively, and numerous earlier clinical and non-clinical assets in development, I'm excited to provide a progress update today. I'd like to begin with some corporate and partner updates, followed by an overview of our clinical development programs. I will then ask Ian to spend some time focusing on XEN1101, including a summary of the new XEN1101 preclinical data that was presented recently at the ASENT 2021 virtual meeting and how we are thinking about next steps for this program. Before diving in into our program update, I'd like to take a moment to thank Dr. Ernesto Aycardi, our Chief Medical Officer, who will be moving on at the end of April to lead Global Development for a pharmaceutical company. Ernesto joined us at a time when we began concentrating our clinical efforts on neurological disorders, with a particular focus on epilepsy. Perhaps his most impactful legacy will be his work building up our clinical development organization with an experienced team capable of supporting multiple mid- to late-stage clinical trials, and we are grateful for his contributions. With the XEN1101 Phase 2b X-TOLE study on track for top line data read out in the third quarter of this year, and with XEN496 Phase 3 EPIK Study now underway, we are looking forward to a very smooth transition. I'm also delighted to announce that Dr. Kenneth Sommerville will serve as our Interim Chief Medical Officer. The Board Certified Neurologist, Ken, is one of the most experienced epilepsy drug developers in the pharmaceutical industry today, with over 20 years of experience at companies including Abbott, GW, Pfizer, King, UCB, and Schwarz Pharma. He has led Phase 2 and 3 epilepsy trials in the U.S. and made major contributions to multiple successful NDA submissions. In addition to leading the development of Epidiolex to a successful NDA submission for GW Pharmaceuticals, Ken was highly involved in the clinical development of sodium valproate, tiagabine, and lacosamide. Ken’s leadership and development experience will be a tremendous asset, as we move our clinical development programs forward, especially at a time when we are anticipating important data readouts from the X-TOLE study and the continued advancement of our Phase 3 EPIK Study. Turning briefly to the latest guidance from our partnered programs, Neurocrine Biosciences anticipates initiating a Phase 2 clinical trial for NBI-921352 in adolescent patients aged 12 years and older who have SCN8A developmental and epileptic encephalopathy, otherwise known as SCN8A-DEE, in the third quarter of 2021 and the trial protocol will be amended to include younger pediatric patients aged 2 to 11 years with SCN8A-DEE as soon as the FDA has reviewed and approved additional non-clinical information. In parallel, Neurocrine Biosciences is advancing clinical plans to develop the molecule NBI-921352 for the treatment of adult focal epilepsy and expects to initiate a Phase 2 clinical trial this year. We look forward to keeping you updated on NBI-921352 and its progress. Flexion Therapeutics is developing FX301, which consists of XEN402, a Xenon Nav1.7 inhibitor formulated for extended release from a thermosensitive hydrogel to support administration as a peripheral nerve block for control of post-operative pain. Recently the FDA cleared an IND for FX301 resulting in a milestone payment due to Xenon. Flexion has guided that it anticipates initiating a Phase 1b proof-of-concept clinical trial of popliteal fossa block with FX301 in patients undergoing bunionectomy in the first half of 2021, with top line results potentially available later this year. Moving to proprietary programs, XEN007 is a CNS-acting Cav2.1 and T-type calcium channel modulator that is being studied in treatment resistant childhood absence epilepsy or CAE in a physician-led Phase 2 proof-of-concept study. At AES 2020 we presented promising interim data from a small number of patients, with all three CAE subjects having completed their maintenance phase of dosing and exhibiting a significant reduction in seizures as measured by seizure diary and confirmed by EEG. In response to COVID-19 impacts on recruitment in the study, which is ongoing, we are working with our study collaborator to include additional sites and we have adjusted guidance to expect results from a larger data set in the second half of 2021. While the AES 2020 representation represents a small dataset, we believe we are seeing drug activity and seizure reduction on the EEG that is supportive of a broader development plan for XEN007, and we expect to make a decision this year regarding XEN007 in CAE. XEN496, a proprietary pediatric formulation of the active ingredient ezogabine, is being developed for the treatment of KCNQ2 developmental and epileptic encephalopathy or KCNQ2-DEE. To provide the regulatory backdrop for this program, Xenon has received Fast Track designation and Orphan Drug designation for XEN496 for the treatment of seizures associated with KCNQ2-DEE from the US FDA as well as Orphan Medicinal Product designation from the European Commission. We recently initiated a Phase 3 randomized double-blind placebo-controlled multicenter clinical trial called the EPIK Study evaluating the efficacy, safety and tolerability of XEN496 administered as adjunctive treatment in approximately 40 pediatric patients aged 1 month to less than 6 years with KCNQ2-DEE. We believe XEN496 may be efficacious and address a significant unmet need in this rare, severe pediatric neuro-developmental disorder, based both on its Kv7 mechanism of action, as well as published case reports from physicians who use ezogabine to treat infants and young children with KCNQ2-DEE. Advancing this program into Phase 3 is such an important milestone for Xenon and we believe it is also significant for the physicians, caregivers, families and patients with KCNQ2-DEE. We look forward to keeping you updated on the progress of this EPIK Study. Before I turn the call over to Ian, I'll provide a few comments on XEN1101. We know that the Kv mechanism is important in the CNS and there has been supportive data in a wide variety of therapeutic approaches, including seizure disorders, pain, motor neuron disease, depressive disorders and tinnitus. Many CNS drugs work in a variety of neurological conditions. Within the Kv mechanism, we have also seen strong clinical validation with the approval of flunarizine in pain and ezogabine in adult focal epilepsy. And in the near term there will be published, randomized clinical data in the American Journal of Psychiatry related to the use of ezogabine in anhedonia. There is tremendous validation of the Kv mechanism, but to date the drug with the right pharmaceutical properties has not been developed. We believe that XEN1101, with this drug, we have an opportunity to be the only in-class drug in adult focal epilepsy with the potential to broaden opportunity into other neurological disorders, given XEN1101 attributes, following the strong Kv scientific and mechanistic rationale and ezogabine’s clinical validation. This is an extremely exciting time for the profile of the Kv mechanism and for XEN1101 and Ian will provide more details on our approach and future plans. Ian.

Ian Mortimer, President and Chief Financial Officer (incoming CEO)

Thank you, Simon, and good afternoon everyone. XEN1101 is Xenon's proprietary, differentiated, Kv7 potassium channel modulator, being developed for the treatment of epilepsy and potentially other neurological disorders. Although we are interested in the potential broader applicability of the Kv mechanism, our near term focus is on our X-TOLE study. The Phase 2b randomized double-blind placebo-controlled, multicenter clinical trial that is currently under way 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 seizure frequency from baseline compared to the treatment period of active versus placebo. This is a well powered study with approximately 90% power. We remain highly confident in the conduct of the study, and in the integrity of the data as captured by Electronic Diary. To-date dropout rates remain lower than modeled and we continue to see excellent continuation into the open label portion of the study. We are on track to complete patient screening and randomization in the first half of 2021, with top line results anticipated in the third quarter of this year. This data readout represents an important inflection point for Xenon, and an opportunity to drive XEN1101 forward into a pivotal program. Last week Xenon hosted four presentations related to XEN1101 at ASENT 2021, the virtual meeting of the American Society for Experimental Neurotherapeutics. When outlining XEN1101 clinical development today, we highlighted a number of its unique properties and potential advantages. XEN1101 is based on a proven anti-seizure Kv mechanism of action, and if successful will be the only drug in this class available commercially. XEN1101 has been well tolerated in Phase 1 clinical studies and we have reported a low drop-out rate and high conversion to open label extension in the ongoing Phase 2b clinical trial today. We observed a strong PK-PD relationship in the Phase 1b Transcranial Magnetic Stimulation or TMS study, with TMS results informing dose selection in our Phase 2b trial. In our ongoing Phase 2b study, XEN1101 is administered once daily at a low daily dose in the evening with no dose titration. In addition, we presented new compelling data from pre-clinical studies, examining XEN1101 in combination with other anti-seizure drugs, including lacosamide, levetiracetam, cenobamate, phenytoin, and valproic acid. We demonstrated that combining sub-efficacious doses of XEN1101 and other ASMs provided robust efficacy in animal models, and was well tolerated in the dose ranges explored. This suggests that XEN1101 may be well suited for use as monotherapy or applied in a rational polypharmacy setting to treat seizures. On the whole, taking into account our conclusions from preclinical studies, and clinical results to-date, along with market research exploring the current gaps in the adult focal epilepsy space, we believe XEN1101 has key ease-of-use attributes that can meaningfully differentiate XEN1101 from other anti-seizure medications. We have also been exploring the use of XEN1101 in other non-epilepsy indications, and presented the scientific rationale, preclinical data and clinical work to-date supporting the use of Kv modulators for the treatment of depression and anhedonia. Results from the Forced Swim Test and Progressive Ratio Test animal models support the potential benefit of XEN1101 in mood disorders. Of note, the efficacious doses and plasma concentrations from the pre-clinical depression, anhedonia and seizure studies overlap and occur at plasma levels achieved during the multi-ascending dose cohorts of our Phase 1 clinical trial, suggesting the current dose being used in the ongoing XEN1101 Phase 2b clinical trial to treat epilepsy may have beneficial impact on depressed mood. Supported by our analysis and these promising preclinical data, we expect our academic collaborators at the Icahn School of Medicine at Mount Sinai to initiate a Phase 2 proof-of-concept clinical trial this year, examining XEN1101 in major depressive disorder or MDD. We look forward to updating you with further details in the coming months. Before I provide a brief conclusion of our upcoming milestones, I’ll ask Sherry to recap our financial position. Sherry.

Sherry Aulin, Vice President, Finance (incoming Chief Financial Officer)

Thanks Ian and good afternoon everyone. I'm excited to take on the role of CFO later this year, and I look forward to keeping Xenon’s shareholders and analysts updated on our continued progress. As Ian noted on the last quarterly call, we are in a sound financial position today and well situated to support Xenon’s business objectives and the advancement of our clinical development programs. Cash and cash equivalents and marketable securities as of December 31, 2020 were $177.0 million, compared to $141.4 million as of December 31, 2019. Based on current assumptions, which include fully supporting the planned clinical development of XEN1101, XEN496 and XEN007, Xenon anticipates having sufficient cash to fund operations into 2023, excluding any revenue generated from existing partnerships or potential new partnering arrangements. Therefore we continue to have a lot of flexibility, as we manage our business and continue to advance our product candidates. As of December 31, 2020 there were approximately 35 million common shares outstanding and approximately 1 million Series 1 Preferred Shares outstanding, which are convertible into common shares on a one-for-one basis at the option of the holder, subject to certain limitations. I would refer you to today's press release and our 10-K filing for other specific details from this year’s financial statements. At this point, I'll turn the call back to Ian, who will summarize the key milestone events we are anticipating this year. Ian.

Ian Mortimer, President and Chief Financial Officer (incoming CEO)

Thanks Sherry. Looking ahead, our key corporate objectives include: the continued advancement of our EPIK Phase 3 clinical trial in patients with KCNQ2-DEE; top line results from the larger data set within the physician-led XEN007 proof-of-concept study, and a decision around future development of XEN007 in CAE anticipated in the second half of the year; continued support of our partner program with Neurocrine Biosciences including the anticipated initiation of two Phase 2 clinical trials with NBI-921352 in 2021; the anticipated Phase 1b trial initiation by our partner Flexion Therapeutics, with results potentially available in late 2021; in coordination with academic collaborators at the Icahn School of Medicine at Mount Sinai, initiation of a Phase 2 proof-of-concept clinical trial examining XEN1101 in major depressive disorder and anhedonia; and importantly within our XEN1101 Phase 2b X-TOLE clinical trial, we expect patient randomization to be completed in the first half of 2021, with top line data anticipated in the third quarter of 2021. Adding this all up, we could potentially have up to seven clinical trials ongoing with five different molecules led by us, our corporate partners and academic collaborators in 2021. In summary, to echo Simon's earlier comments, we believe Xenon has one of the most promising neurology pipelines currently in development and we have the resources and talent in place to support the continued advancement of these promising therapeutics. On behalf of the Xenon team, we look forward to updating you on our progress over the coming months. At this point, we can open the call up for questions. I'll hand it back to the operator.

Operator, Operator

Thank you. First question comes from the line of Paul Matteis from Stifel. Your line is now open. You may ask your question.

Paul Matteis, Analyst (Stifel)

Hey, thanks so much for taking the questions. I wanted to ask you a couple quick ones on the 1101 depression program and some of this recent ezogabine data and then one question on 007. On 1101 in depression, can you just tell us any more about this investigator study that’s going to start and based on the ezogabine trial that was run at Sinai, how long do you think that study will take to complete? And then second, on 1101 in depression, just curious, I don't know if you have a sense of this, but from looking at the population you’ve enrolled in the focal seizure study, what percent of patients do you think may have comorbid depression in this trial, and is there anything we can kind of glean from that subset in the study. And then I have one follow up on 007, but I'll save it. Thanks.

Simon Pimstone, Chief Executive Officer (transitioning to Executive Chair)

Sure Paul, Simon here. Let me start with your second question, which is comorbid depression in X-TOLE. Of course we didn't randomize subjects with that in mind, so comorbid depression will be, it’s not an endpoint per se, primary or secondary. We do have a 31-point questionnaire survey, which is the Quality of Life in Epilepsy or QOLIE-31 survey which is delivered to the subjects in this study at baseline and at the end of study; I think it's just two time points, baseline and then study-end. That is not a PHQ-9 or SHAPS. It’s not a specific depression scale, but it is a good questionnaire to give us a sense of emotional well-being of patients in the study. So that will of course be interesting; we'll have that data this year. Again not strictly an MDD endpoint or an anhedonia endpoint but we certainly will get a sense of patients' quality of life and emotional well-being and you can look up that with a well recognized scoring system.

Ian Mortimer, President and Chief Financial Officer (incoming CEO)

In terms of time to complete, tough to know at this point. We are not guiding on that, I think we’d like to see how things go in the near term. It’s not 2021, but we certainly hope it could be a 2022 time frame, but we'll see.

Paul Matteis, Analyst (Stifel)

Okay. And then just maybe one question on 007 Simon and that was really helpful. On the data coming later this year, I guess what kind of a hurdle for you moving forward. Is it something consistent with the first three patients? How are you thinking about that? And then if you do decide to move forward, because flunarizine was I guess ex-U.S. largely an adult drug, is there additional pre-clinical work you need to do to get the FDA comfortable for you to move right into mid-stage trials in pediatrics. Thanks.

Simon Pimstone, Chief Executive Officer (transitioning to Executive Chair)

Ian?

Ian Mortimer, President and Chief Financial Officer (incoming CEO)

Yeah, I can take that. Thanks Paul. So, you know we think we're seeing a real signal right now in a small number of patients and with the caveat it's open label and it's a small n. But given the seizure reduction and given the confirmation on EEG and that these were highly refractory patients with high seizure burden and had had the disease for quite some time, we feel that we're getting a signal. Some of these patients had quite material reductions, in the 80% to 90% range. I don't think we have to see that to feel comfortable about moving forward, but I think we do have to get above where we would just be concerned that it's noise. So it's probably, if we're anything kind of in the 50% range or greater, I think we would feel comfortable. But we’re really parallel processing this. We have less control over the current 007 study, but what we do have control over is our own development planning and also having some regulatory interactions. So we can't answer your question today on if we need more preclinical data. There's a lot known about this drug in pediatrics. We expect to have regulatory interaction with the FDA later this year, once we have our development plan sorted and get that feedback. If there was a situation where we had to produce some additional data before getting into a study in the U.S., the other option here is given the widespread use of the drug we can always start a study ex-U.S. and then bring it to the U.S. So I think we have some flexibility on the development plan, but we need that regulatory interaction to give us precise feedback.

Simon Pimstone, Chief Executive Officer (transitioning to Executive Chair)

And just to add one additional comment, just a reminder, we do have a license to data that could support a submission using data that has been generated ex-U.S., the one caveat being some of that data is old and so hard to know which of that is up to required ICH standards. But that review is well underway and as Ian said, we expect an engagement with the FDA this year. There are other alternatives as Ian said, so at least to get the study going.

Paul Matteis, Analyst (Stifel)

Got it. Thank you, guys. I appreciate it.

Operator, Operator

Thank you. The next question comes from the line of Andrew Tsai from Jefferies. Your line is now open. You may ask your question.

Andrew Tsai, Analyst (Jefferies)

Thanks and congratulations Simon, Ian and Sherry on your new roles. First question is really just about the market opportunity for 1101. I mean based on my conversations, people seem to be doing a lot more work about the market potential in focal epilepsy. So can you help us understand why some of these approved drugs out there are doing, for example, over $1 billion in sales? What would be some of their more favorable attributes and would 1101 have similar or even better attributes? Thanks and I have a follow-up.

Ian Mortimer, President and Chief Financial Officer (incoming CEO)

Yes, thanks Andrew. We believe that the commercial opportunity for 1101 is sizable. There's 3 million epilepsy patients in the U.S. The majority of the phenotype is adult focal epilepsy and then you've got still a large proportion that are currently not well controlled. In the U.S. we’re in the hundreds of thousands of patients that currently aren’t well controlled and have a need for new drugs and new mechanisms. The drugs that have done extremely well, Keppra and Vimpat, for example, had favorable attributes: Keppra was a novel mechanism and first-in-class SV2A drug, and now there are over 2 million patients globally on Keppra. Vimpat was well tolerated and had strong commercial uptake. We think 1101 and the data we’ve confirmed both through market research and preclinical/clinical results would sit nicely: it would be an only-in-class drug, adding a new mechanism for physicians to use, and has ease-of-use attributes such as once daily evening dosing, no titration, and low risk of drug-drug interactions from what we've seen to-date. Those attributes give it a good opportunity to be a successful drug and an important drug for patients.

Simon Pimstone, Chief Executive Officer (transitioning to Executive Chair)

I'll just add to that Andrew. As we look at this, there are very few properties of the drug that we could consider changing in terms of ease of use. It's as easy as it gets in terms of what we’re seeing today: once a day, no titration, no drug-drug interactions, no QT prolongation. Whether we are able to show, for example, benefits in depression will be a massive differentiator in addition. So as Ian says, we are very bullish on this. We think there’s huge opportunity still and we think this drug can be very, very favorably positioned within the market.

Andrew Tsai, Analyst (Jefferies)

Great! Thank you. And second question is, I'm actually curious how are you guys thinking about sharing the open label data for X-TOLE, the open label extension. I mean should we expect you to share it at the one year mark or when patients have been treated at six months or could you actually potentially share the OLE data at the time of the top line readout in Q3, just a segment of it. Thanks.

Simon Pimstone, Chief Executive Officer (transitioning to Executive Chair)

Thanks Andrew. For the top line results in Q3, the focus is going to be on the double-blind portion and we will obviously provide topline data. In primary and secondary endpoints we’ll have commentary on safety and tolerability. The open label extension, we may be able to give some qualitative directional information. It is being captured not via the electronic diary in the open label extension — we could use a paper diary for the open label extension — and so I think to collect and clean that data as efficiently as we can and focus on the double-blind portion, that's really our goal. We have patients that have hit the 12 months mark already and our guidance remains that we’ve had extremely high rollover to open label extension from the double-blind portion. But I would really focus the topline results in Q3 on the double-blind portion and probably less information at that time on open label extension and then that'll probably come out over time as we have a critical mass of patients going through certain time points like six months or 12 months.

Operator, Operator

Thank you. We do have a question for Marc Goodman from SVB Leerink. Your line is now open. You may ask a question.

Marc Goodman, Analyst (SVB Leerink)

Yes, hey guys. Can you just tell us, for 007 you decided to wait until later in the year to kind of give us the data. Just tell us again, is that because you're trying to increase the number of sites and you’re just trying to make it more robust. I mean what was the rationale there? And secondly at 007, are you considering additional indications to look at besides absence epilepsy, any other type of epilepsy. I guess that's first, I’ll wait a second.

Simon Pimstone, Chief Executive Officer (transitioning to Executive Chair)

Sure, I'll talk about the indications and Ian can talk about guidance. There are a number of potential indications Marc. We've talked about those previously, alternating hemiplegia and hemiplegic migraine, both of which the drug is used off-label. At this point we’d be relying primarily on orphan exclusivity and so while the drug is being approved for larger indications ex-U.S. such as migraine and vertigo, the focus will be at least initially on orphan exclusivity. I think CAE to-date is the stand-out opportunity. It fits in well into our epilepsy basket and we do see an important need. These are patients that are generally adolescents, so from a toxicology and non-clinical perspective probably a bit easier than a very early infant population, which maybe alternating hemiplegia would be. They are a good number; 40,000 to 50,000 CAE patients in the U.S., of which 30% to 40% are either refractory or intolerant of existing agents. So that's really some of the key points. Plus, if our larger cohort provide similar comfort to what we've seen in the first few subjects, I think that's strong validation for that indication. Ian, on timing.

Ian Mortimer, President and Chief Financial Officer (incoming CEO)

Yeah, and the answer is yes Marc. This started as a single center locally and that's where the first dataset was generated from and to accelerate and get some more patients in the study, we are going to expand to at least a couple of additional sites to increase enrollment and get some larger data that we can share. We will need to coordinate with the investigator, it's her study, and it's the PI in terms of how we release that data. So we’ll be working closely with her in order to be able to release that and obviously she'd like to release it likely at an upcoming medical meeting. And then as we mentioned, in parallel we’ll be working on our own regulatory strategy to get some feedback on moving this into a company sponsored study.

Marc Goodman, Analyst (SVB Leerink)

And then just on the 1101, the enrollment, I think your comment was pretty positive. The enrollment, we haven't really missed a beat on COVID in the past two or three months, it's gotten okay and no urinary issues are popping up.

Ian Mortimer, President and Chief Financial Officer (incoming CEO)

So I'll tackle the first one and obviously we have blinded data, so all we can say overall is that tolerability has been good and at that macro level dropout rates have been lower than we modeled and we've had very high rollover to open label extension. I think many people know the history here. This was a challenging study during the first wave of COVID where a lot of clinical sites were completely shut and we did a number of things. We worked to ensure that we could get drug to subjects, that with the electronic diary we could capture all of the data, make adjustments in terms of telehealth and even having caregivers go to homes in order to collect samples. So we've done everything we can for the study and we feel very positive in terms of the integrity of the data. Enrollment started to pick up again last fall and yes, I think your comments are correct. We feel very confident where we sit today, that we’ve had consistent enrollment over the last number of months and we're on track to finish screening and randomization in the first half of this year and on track for top line data in Q3.

Simon Pimstone, Chief Executive Officer (transitioning to Executive Chair)

Marc, in terms of the urinary issues, I mean all we can say is and you know I don't have visibility on every patient, but we've not had any reports of issues of concern, any drug related issues of concern. So we're not seeing any signals that we're aware of as of today, again blinded un-scrubbed data just as a caution and caveat. So again, knock on wood, the study as we've reported on a few times now appears to be going very well. We’re very much on track and we now finally have visibility where we've had a few months of very consistent screening and randomization and it's looking very good.

Marc Goodman, Analyst (SVB Leerink)

Thanks.

Operator, Operator

The next question comes from the line of Kenneth Shields on for Laura Chico from Wedbush. Your line is now open. You may ask your question.

Kenneth Shields, Analyst (Wedbush, on behalf of Laura Chico)

Hi, this is Kenneth on for Laura Chico. Thanks for taking our question. So on 1101 and realizing it's still a little premature here, but the study is on track to report top line in Q3 2021. I'm just wondering if you could revisit what would be necessary to demonstrate on the reductions in seizures and also on the safety and tolerability profile, and I have a follow-up.

Ian Mortimer, President and Chief Financial Officer (incoming CEO)

Do you want me to answer it? Kenneth, I think as we talked about before, but just to remind everyone, we have close to 90% power to the null hypothesis that there's no change between — remember this was a four-arm study. We have placebo and then three active doses and then the alternative hypothesis that there is a dose response trend and we took the linear trend test as the primary endpoint and it'll be positive if at least one dose is better than placebo. The real power of the study has been driven by the high dose 25 mg arm, because that's where we have 100 subjects. We have 100 subjects in placebo and then 50 subjects in the two lower doses, 20 mg and 10 mg. The assumptions in terms of the model and the simulations we run for our power calculations are that the placebo rate would be around 20% reduction and then there'd be a dose response with 10 mg at a 25% reduction, 20 mg at 30% and 25 mg at a 35% reduction. So that’s the way the study is designed from a powering perspective. And then in terms of safety and tolerability, obviously we're going to have to wait and see. I think what is going to be important is how does this stack up in comparison with other anti-seizure medicines and knowing that all of these patients are on concomitant meds, and so obviously we're going to need to take into consideration what that looks like when we're looking at an active group versus placebo.

Kenneth Shields, Analyst (Wedbush, on behalf of Laura Chico)

Okay, thank you. And then a follow-up…

Operator, Operator

Next question comes from the line of Eddie Hickman on for Yatin Suneja from Guggenheim. Your line is now open. You may ask your questions.

Eddie Hickman, Analyst (Guggenheim, on behalf of Yatin Suneja)

Hey guys, thanks for taking my questions. So given that you’ve opened some additional European sites for the 1101 study to speed up enrollments, is there any sort of major differences we should think about in terms of basic criteria or background medications that are sort of more prevalent in Europe there? And then just if you could let us know for the 496 study, if you're going to get enrollment guidance at all or as the study proceeds, let us know when we should think about topline data there. Thanks.

Ian Mortimer, President and Chief Financial Officer (incoming CEO)

So on 1101 Eddie, about half of the clinical sites are in the U.S. and about half are in Europe. And in terms of patients screened and randomized, it's actually been almost even between the two jurisdictions. When we look at the anti-seizure medicines, the drugs that are approved in the U.S. are approved in Europe; we don't expect much imbalance or concerns in terms of background meds depending on the jurisdiction. We have sometimes questioned about cenobamate that was recently approved, but I think there will probably be a small number of patients in the study given the timing that would have had cenobamate exposure coming into the 1101 study. So we don’t have a concern that there is going to be some type of imbalance based on geography. But obviously when we get into the detailed statistical analysis, we are always looking at any of those things, but we don't expect any concerns coming into the study or as we’ve moved through it. In terms of 496 enrollment, you are right, we haven't yet given guidance on enrollment and/or when we would see topline data. We’d like to get the studies up and running, initially in the U.S., and then in other jurisdictions as well. We are looking later this year when we get a critical mass of sites up and running to start to see what those enrollment curves look like. This is obviously a rare condition and so hopefully later this year we’ll be able to provide some guidance on where we are. Normally we don't give specific enrollment guidance, but at some point we'd like to give guidance in terms of when we would expect to see topline data.

Operator, Operator

Next question comes from the line of Serge Belanger from Needham & Company. Your line is now open. You may ask your question.

Serge Belanger, Analyst (Needham & Company)

Hey, good afternoon. First one on 1101, Simon I think in your prepared comments you mentioned that the Kv channel had some data supporting its potential in additional non-epilepsy indications; I think you mentioned pain and tinnitus. Should we expect to see depression as the first of other non-epilepsy indications for 1101?

Simon Pimstone, Chief Executive Officer (transitioning to Executive Chair)

Yeah, right now the focus is on MDD. I think as we've said, that's an investigator-led study we are looking at now, which should initiate soon. We are certainly looking at other indications, but we don't have budget allocated for other indication studies at this point and we haven't made any decisions on any new indications at this point. That being said, there are lots of interesting areas for Kv7. We like MDD as an option for three reasons: validation of the target (you'll see more of that in an academic publication near term); a massive commercial opportunity; and a very important comorbidity with epilepsy. So I think taking those three into consideration, this is where you should expect to see the company focus most of its efforts and resources going forward in non-epilepsy indications for the Kv7 mechanism.

Operator, Operator

Next question comes from the line of Tim Lugo from William Blair. Your line is now open. You may ask your question.

Tim Lugo, Analyst (William Blair)

Thanks for the question. Following up on depression, I know you don't want to go into too many details, but broadly are you looking at randomized placebo controlled studies for this next proof-of-concept study and does 1101 combine well with anti-seizure medications that you have data where it combines well, and what kind of depression therapies do you think you are going with — monotherapy in this indication?

Simon Pimstone, Chief Executive Officer (transitioning to Executive Chair)

Right now we’re thinking of it as monotherapy and certainly we will be looking at combination work as time moves on. But in terms of high-level study design elements, we’d expect to see a randomized controlled study with an active and placebo arm and with typical blinding. So you should expect to see that and then more details around the endpoints, size, number of sites, etc. will be made available as the study kicks off. I'll just remind you as I said to Paul earlier, when the publication comes out, I think there'll be very similar elements in the study that we will be launching as the next study to what is published in the upcoming manuscript that you should see over the next few weeks.

Operator, Operator

There is time remaining for one more question. That question is from the line of Antonia Borovina from Bloom Burton. Your line is now open. You may ask your question.

Antonia Borovina, Analyst (Bloom Burton)

Hi, Simon and Ian. Thank you for taking my question. I'm just wondering, have you compared ezogabine to 1101 preclinically in terms of the mood and depression symptoms? And can you rule out that other subtypes like Kv7.4 and Kv7.5 play any role in mood symptoms?

Simon Pimstone, Chief Executive Officer (transitioning to Executive Chair)

That's a good question Antonia. We don't think the other subtypes do. If you go to the literature, collaborators at Mount Sinai have published quite widely on non-clinical chronic social defeat models, etc., where Kv7.3 stands out as the primary Kv channel in this anhedonic and/or depressive phenotype. We feel pretty confident that it is Kv7.3 predominantly and Kv7.3/ Kv7.2 heterotetramers, which are acted upon by both ezogabine and XEN1101, of course XEN1101 being more active on the target compared to ezogabine. So we really don't think it's a distinct Kv7 mechanism, but a good question. We haven't yet done the head-to-head work. That's something we would like to do, and we'll plan on doing, but similarly we expect to start the study with XEN1101 in humans soon, which we’ve committed to. So we think it's the right mechanism. We think there is a good amount of non-clinical, genetic and pharmacological evidence in animals and we think it's Kv7.3 predominantly.

Operator, Operator

I am showing no further questions at this time. I would now like to turn the conference back to Ms. Jodi Regts. Ma'am, please go ahead.

Jodi Regts, Head of Investor Relations

Thanks everyone for joining us today. Operator, we will now end the call.

Operator, Operator

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.