Full Transcript: Xenon Pharmaceuticals Q2 2026 Earnings Call

Xenon Pharmaceuticals (NASDAQ: XENE ) reported second-quarter financial results on Thursday. The transcript from the company's second-quarter earnings call has been provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

Access the full call at Summary Xenon Pharmaceuticals Inc. 2 billion in cash, securing operations funding into 2029. The company is preparing a New Drug Application (NDA) for azetukalner (AZK) for focal seizures, with plans to submit it later this quarter following a successful pre-NDA meeting with the FDA. Xenon is advancing five additional Phase 3 studies for AZK in various epilepsy and neuropsychiatry indications and is expanding its pain programs with multiple Phase 1 studies.

The company has made progress with its commercialization strategy for AZK, focusing on marketing, sales, and distribution to ensure a successful launch. Xenon anticipates the completion of Phase 1 studies for its pain pipeline drugs XCN 1701 and XCN 1120 by the end of the year and plans for Phase 2 studies in acute pain. Management expressed confidence in AZK's potential to become a preferred treatment option due to its efficacy, safety profile, and novel mechanism of action, and is preparing for potential premium pricing. Full Transcript Angela, Operator Ladies and gentlemen, thank you for standing by.

My name is Angela and I will be your conference operator today. At this time I would like to welcome everyone to the second quarter 2026 Xenon Pharmaceuticals Inc. earnings conference call. I'd like to remind everyone that this call is being recorded and that all lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad to raise your hand and enter the queue. If you would like to withdraw your question, press star one again. Thank you.

I would now like to turn the call over to Ms. Colleen Alabiso, Senior Vice President of Corporate Affairs at Xenon Pharmaceuticals Inc. You may begin. Colleen Alabiso, Senior Vice President, Corporate Affairs Good afternoon.

Thank you for joining us on our call and webcast to discuss Xenon's second quarter 2026 financial and operating results. Joining me today are Ian Mortimer, President and Chief Executive Officer, Dr. Chris Kenney, Chief Medical Officer, Darren Cline, Chief Commercial Officer, and Tucker Kelly, Chief Financial Officer. After completing our prepared remarks today, we will open the call up for your questions.

Please be advised that during this call we will make a number of statements that are forward-looking, including statements regarding the 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 partners' product candidates, the strength of our clinical trial design, our ability to successfully develop and achieve milestones in our clinical development program including the anticipated filing of INDs or equivalents 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 AZK and other candidates, and our expectation that we will have sufficient cash to fund operations into 2029.

com and filed with the SEC and SEDAR+. I'll now turn the call over to Ian. Ian Mortimer, President & CEO Thanks, Colleen, and good afternoon to everyone joining us today. We're excited to recap another productive quarter for Xenon as we work toward our goal of becoming a fully integrated neuroscience company delivering life-changing medicines to patients.

In the second quarter, we remained focused on three key areas. First, preparing our new drug application for a Zetukanir, or AZK, for focal seizures, as well as sharing our exciting Phase 3 XTOL 2 results with healthcare providers and preparing our go-to-market strategy. 7 molecule, XCN 1720, demonstrating our belief in and the importance of this target. I'll provide a bit more detail of our recent achievements before passing the call over to Chris, Darren, and Tucker.

First, we are making great progress towards submitting our NDA for AZK and preparing for launch. I'm happy to share that we've completed a successful pre-NDA meeting with the Food and Drug Administration and we're on track for a submission later this quarter. We have continued to share our XTOL 2 data with HCPs, including two important meetings for the epilepsy community. First at the American Academy of Neurology meeting in April, where many of you will recall that the XTOL 2 results were featured as a late-breaking science abstract and podium presentation.

Then in June we had another opportunity to present the top-line XTOL 2 results at the Epilepsy Foundation Pipeline Conference. This is attended by HCPs, researchers, industry, and patient advocates. Beyond these congresses, our MSLs have been out in the community responding to HCP requests to learn more about our data. Overall, we continue to hear very positive feedback and excitement for both the XTOL 2 results, including the best placebo-adjusted efficacy in FOS to our knowledge, and AZK's differentiated profile, including a novel mechanism of action, rapid onset of effect, once-daily dosing with no titration, and no need for dose adjustments with other ASMs.

We feel increasingly confident in AZK's potential to become a preferred add-on therapy for the significant number of patients who do not achieve seizure freedom with initial treatment. Darren will share a bit more on the excitement from the epilepsy community later in the call, as well as the progress we continue to make on preparing for the launch of AZK.

We also continue to focus on expanding the opportunity for AZETU counterpart, including through the XTOL 3 study in FOS to support potential regulatory submissions outside the US, as well as the EXACT study in primary generalized tonic-clonic seizures to support regulatory submissions for an additional epilepsy indication. Through our ongoing Phase 3 EXNOVA 2, EXNOVA 3, and XSEED studies, we continue to advance our work to broaden a Zetu calendar's opportunity to neuropsychiatry. There is strong rationale for KV7 openers in major depressive disorder and bipolar depression.

AZK could deliver a novel mechanism where innovative treatments are urgently needed, especially treatments that may also impact anhedonia and that could offer differentiated tolerability profiles as well as rapid onset of action. We continue to expect our first Phase 3 MDD study results in the first half of 2027, and we will narrow that guidance as we get closer to the top-line readout. Additionally, we're excited about the progress of our early clinical pipeline for pain. We are nearing completion of our Phase 1 studies for both XCN 1701 and XCN 1120, and data generated to date supports the initiation of Phase 2 proof-of-concept studies in acute pain for both programs.

7 candidate for pain into a Phase 1 clinical trial, so this will give us multiple shots on goal for this important pain target. Success in any one of these three novel non-opioid pain programs would meaningfully increase value for Xenon and our opportunity to impact the lives of millions who live with chronic or acute pain. And in line with our continued commitment to epilepsy, we also continue to invest in multiple high-quality candidates targeting various ion channels. 1 program for Dravet syndrome, where we are in IND-enabling studies with the intent of putting the best candidate into the clinic.

6 in development for the potential treatment of certain types of epilepsy, which continues to advance through a Phase 1b study with data expected in 2027. So with that, now I'll turn over the call to Chris who will provide additional clinical and regulatory updates. Chris Kenney, Chief Medical Officer All right, thanks a lot, Ian. It continues to be a very exciting time here at Xenon Pharmaceuticals as we prepare the NDA for azetukalner and share our data with the community through scientific exchange opportunities.

The interactions our team has had at recent meetings as well as out in the field have been incredibly affirming of our belief in AZK's potential to meaningfully impact the FOS treatment paradigm and provide a therapeutic option with appeal to epilepsy specialists, general neurologists, and advanced practice providers alike. As Ian mentioned, we have completed a productive and positive in-person pre-NDA meeting with FDA, where we gained alignment with the Agency on components of the NDA package. We therefore remain on track to submit our NDA this quarter as planned and are encouraged by our continued engagement with the Agency.

Completing the NDA submission is our team's top priority, and I'm very pleased with our progress and look forward to updating you in the coming months. We also continue our focus on presenting and educating on our exceptional X-TOLE2 data and recently presented at two important conferences for the epilepsy community: first, as a late-breaking science abstract and platform presentation at the AAN meeting in Chicago, and second, at the EPI Pipeline Conference in Leesburg, Virginia.

In these presentations, we highlighted the following key points from our X-TOLE2 data: with regards to efficacy, the study met its primary endpoint and demonstrated what we continue to believe is the best placebo-adjusted response of any pivotal focal seizure study, which was highly significant and outperformed our Phase 2b X-TOLE study. This is even more meaningful when you consider the level of treatment resistance in the X-TOLE2 study population, which had failed a median of five prior anti-seizure medications, and 60% of those patients were on or had already tried and stopped cenobamate.

Second, we also observed early, dose-dependent MPC reductions in weekly FOS from baseline to week one, reinforcing AZK's rapid and sustained antiseizure activity. Third, we observed dose-dependent increases in the proportion of patients with at least 75%, 90%, and 100% reductions in monthly seizure frequency through the double-blind period, as well as evidence of efficacy building over time, as evidenced by improvements in the 100% responder rate in the last eight, six, and four weeks of the study. Fourth, with regards to safety, AZK continued to demonstrate a generally well-tolerated profile, which was consistent with the X-TOLE study.

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're comfortable that this profile is consistent with other well-tolerated anti-seizure medications and with a drug that is potent and active in the central nervous system. We also had a tremendous opportunity to interact with general neurologists at AAN, where we highlighted our 48-month X-TOLE Open-Label Extension data demonstrating a 91% reduction in monthly seizure frequency for those treated for at least 48 months.

In the same group, almost 40% were seizure-free for at least 12 months, and 1 in 4 were seizure-free for at least 2 years. This is truly remarkable considering the level of treatment resistance and seizure frequency in the overall patient population at baseline. Now, as we look ahead, we're excited to continue to share the AZK data at the 16th European Epilepsy Congress, or EEC, taking place between September 5th and 9th in Athens, Greece, and at the annual American Epilepsy Society, or AES, meeting taking place December 4th through 8th in Denver. With regards to EEC, our X-TOLE2 top-line results are among the six abstracts accepted and planned for presentation.

Also accepted is a new abstract that will highlight the mechanistic characterization of azetukalner, including Kv7 binding, enhanced channel opening, and rational polytherapy potential. In this presentation, we plan to share in vivo data demonstrating the potential additive effects of azetukalner when used in combination with commonly prescribed anti-seizure medications, reinforcing its opportunity to enhance seizure control through the application of rational polytherapy in clinical practice.

Looking ahead, we're planning to have a significant Xenon presence at AES in December and multiple new AZK data presentations, including additional data from the X-TOLE2 study and continued follow-up from the X-TOLE Open-Label Extension study. Moving on to neuropsychiatry, we continue to enroll patients in our three ongoing Phase 3 studies of AZK for major depressive disorder, or MDD, and bipolar depression, or BPD.

Depression remains 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 in a second category with a much larger patient population who continue to have unmet medical needs. There's a strong rationale for Kv7 openers in MDD and BPD. Several preclinical and clinical studies, including our own X-NOVA study, have shown promising signals of antidepressant effects for the Kv7 mechanism. Additionally, in BPD specifically, there are genetic links with Kv7, including evidence of Kv7 downregulation.

AZK would deliver a novel mechanism to the MDD and BPD treatment paradigms where innovative treatments are urgently needed, especially those that may also impact anhedonia and that have the potential to offer differentiated tolerability profiles and rapid onset of action. Our clinical team has made great progress with X-NOVA 2 and X-NOVA 3 in MDD and X-CEDE in BPD. Enrollment remains on track and we anticipate sharing top-line data from X-NOVA 2 in the first half of 2027. Turning now to our pain portfolio, there remains a critical unmet need for non-opioid therapies given the limited efficacy of current options and substantial risk of abuse and dependency tied to opioids.

7, which we view as the best genetically validated pain target. 7 plays in pain signaling. 7, continues to advance. Consistent with what we shared earlier this year, we've seen exposures in both the single- and multiple-ascending dose portions of the study that are predictive of efficacy.

Recall that nociceptive sensory neurons have processes that extend into peripheral tissue as well as behind the blood-brain barrier, such that channels are expressed in both peripheral and central compartments. 7 target engagement is therefore core to our therapeutic hypothesis, and in this Phase 1 study we have confirmed central drug exposure via cerebrospinal fluid collection in healthy volunteers. Based on this, we believe we are achieving both peripheral and central receptor occupancies that exceed what is needed for efficacy, based on our modeling and on human genetic data. We're looking forward to completing the Phase 1 study this year.

7. 7 compounds, continuing to refine our understanding of the biology and to develop novel chemistries. 7, and have initiated a Phase 1 SAD and MAD study. 7, an important pain target with compelling genetic validation.

7, our Phase 1 SAD/MAD study of XEN1120, which targets Kv7, also continues to advance. Kv7 modulates 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 pain 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, and evidence supports that dysfunction or downregulation of Kv7 activity has been observed in altered pain states.