Xenon Pharmaceuticals Inc (XENE) 2017 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the First Quarter 2017 Xenon Pharmaceuticals Earnings Conference Call. (Operator Instructions) As a reminder, today's conference may be recorded.

I would like to introduce your host for today's conference, Ms. Jodi Regts, VP, Corporate Affairs and Investor Relations. Ma'am, please begin.

Good afternoon. Thank you for joining us on our call and webcast to discuss our financial and operating results for the first quarter ended March 31, 2017. Joining me on today's call are Dr. Simon Pimstone, Xenon's President and Chief Executive Officer; and Ian Mortimer, Xenon's Chief Financial Officer and Chief Operating Officer. Following this introduction, Simon will provide perspective on Xenon's progress, and then Ian will review our financial results. After that, we will open up the call to your questions.

Please be advised that during this call, we will make a number of statements that are forward-looking, including statements about the sufficiency of our capital position to execute on our business objectives and our ability to operate in a capital efficient manner; the timing of IND or IND equivalent submissions with regulatory agencies; the initiation of future clinical trials, the potential efficacy, future development plans (technical difficulty) many of which are beyond (technical difficulty) 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 statement. Today's press release summarizing our first quarter 2017 results and the accompanying quarterly report on form 10-Q will be made available under the Investors section of our website at xenon-pharma.com and filed with the SEC and on SEDAR.

Now, I'd like to turn the call over to Simon.

Thank you, Jodi, and good afternoon, everyone, and thank you all for joining us all on this webcast. Today, I'll focus my comments on our overall corporate strategy in the upcoming milestone events we anticipate across our pipeline in 2017 and into early 2018.

As we have illustrated, in our executed strategies to date, we intend to expand our pipeline both through our own internal research efforts as well as through the in-licensing or acquisition (technical difficulty) of other product candidates. We believe our small molecule ion channel capabilities enable us to identify, and develop selective and differentiated modulators of carefully selected, highly validated neurology targets.

Consistent with our goal of building a diverse neurology-focused portfolio of ion channel modulators, we have assessed numerous compounds (technical difficulty) pipeline programs and upcoming milestones.

We continue to advance XEN901 towards an IND or [IND] filing. XEN901 is a (technical difficulty) inhibitor of the sodium channel Nav1.6 for the potential treatment of adult partial onset epilepsy and rare or intractable childhood epilepsy, such as SCN8A or their Nav1.6 gain-of-function epilepsy.

Nav1.6 is the most highly expressed sodium channel in the excitatory pathways in the central nervous system. When mutations in this target cause a gain of function, children present with a very severe form of epilepsy. So we believe this is a very compelling and differentiated targets, and we are not aware of any other company developing a selective Nav1.6 inhibitor.

As with [April], we are excited about the expansion of our epilepsy pipeline with XEN1101, an innovative next generation Kv7 potassium channel opener. Based on its mechanism of action, XEN1101 could represent a therapeutically differentiated alternative to the anti-epileptic drugs currently available and potentially provide a better safety and tolerability profile when compared with the first generation potassium channel modulator, ezogabine.

Our plan is initially to develop XEN1101 for treatment-resistant focal or partial onset seizures in adults, a strategy supported by the clinical validation of the target with ezogabine (technical difficulty).

I'll now discuss the upcoming 2017 milestones emerging from our collaborative programs in our partnerships with Genentech and Teva, which are focused on the development of novel inhibitors of the sodium channel Nav1.7 for the potential treatment of pain. We are collaborating with Teva on developing a topical sodium channel blocker for peripheral application to treat neuropathic pain.

TV-4570 targets Nav1.7 as well as other sodium channels including Nav1.8. Teva has now completed enrollment in the randomized double blind placebo-controlled Phase 2b trial in patients with postherpetic neuralgia or PHN. The primary endpoint is to change from baseline (technical difficulty) for the treatment of pain.

GDC-0310 has completed a Phase 1 clinical trial in healthy volunteers. Pending the assessment of ongoing pre-clinical work, Genentech has guided that it anticipates initiating a Phase (technical difficulty) trial in 2017.

In summary, as we have (technical difficulty) 1101, a next generation Kv7 potassium channel opener (technical difficulty).

We expect to submit to an IND or IND equivalent for XEN901, a novel Nav1.6 inhibitor for the potential treatment of epilepsy in the fourth quarter. Additionally, we expect Genentech will advance its Nav1.7 pain program into Phase 2 this year.

With our strong balance sheet and the continued efficient management of our financial resources, we believe we are well positioned to achieve our goals and support our (technical difficulty) --

-- first quarter financial results focusing on our operating expenses and cash position, and I'll provide some color as to our spend post the asset acquisition of XEN1101.

Research and development expenses for the quarter ended March 31, 2017 were $5.9 million compared to $4.4 million for the same period in 2016. This increase of $1.5 million is primarily attributable to increased spending on XEN801, XEN901, and other internal pre-clinical and discovery programs.

General and administrative expenses for the quarter ended March 31, 2017 were $2.1 million compared to $1.9 million for the same period in 2016. This increase of $0.2 million was primarily attributable to increased cost for business development and salaries and benefits partially offset (technical difficulty) the change is primarily attributable to lower revenue, higher R&D and G&A expenses, and lower unrealized foreign exchange (technical difficulty).

Cash and cash equivalents, and marketable securities as of March 31 (technical difficulty) were $58 million, and this compare to $64.1 million as of December (technical difficulty) in clinical development milestones Therefore, the remaining milestones are for regulatory events around filing and approval, and sales-based milestones. Therefore, we believe it is a very well structured deal from a financial perspective.

For the remainder of 2017, we don't expect our operating expenses to change significantly with the addition of XEN1101. With no future spend on XEN801, we will be allocating our internal resources from XEN801 to XEN1101 and XEN901 as well as our other internal per-clinical and discovery efforts. And as a reminder, our Teva and Genentech collaborations are fully funded by those partners.

So, in summary and to recap Simon's earlier comments, we continue to manager our financial resources efficiently, and we're excited about the multiple milestone opportunities from our internal pipeline (technical difficulty) partners anticipated in the remainder of 2017.

Operator, we can now open the call up for questions.

(Operator Instruction) Our first question comes from the line of John Newman with Canaccord.

John, are you there?

Mr. Newman, is your phone on mute?

Okay, we'll move on to the next question. And if Mr. Newman would like to queue back up, that would be great. We'll move on to our next question from Stephen Willey with Stifel.

(Technical difficulty) but can you (technical difficulty) --

(Technical difficulty) on this side of the call, can you re-prompt?

(Operator Instruction) And our next question comes from the line of David Martin with Bloom Burton.

Hi, there. This is [Antonia] on the line for Dave. Can you all hear me? I know there's been some trouble with the line.

Yes --

Yes, we can hear you, Antonia.

Oh, okay, great. So, just one quick question from us. In addition to the completed Phase 1 study, can you describe some of the preclinical work that Genentech is doing for [GDC-0310] prior to advancing programs to Phase 2?

Antonia, it's Simon. I can just say generally, this is a preclinical safety toxicology work that they're doing in support of the Phase 2 submission. We aren't able to discuss specifically the studies done. All of these studies, of course are under the confidentiality agreement we have with them.

And our next question comes from the line of John Newman with Canaccord.

I just wondered if you can describe what you expect in the top line data readout from the Phase 2 study for Teva later this year.

Hey, John, it's Ian. So we'll work with Teva to announce the data. But in our conversations with them, we would see a top line press release that we cover; the primary endpoint, as well as key secondary endpoints, as well as safety. You'd also know in the study we are looking at a genotype population. So we'd look to make sure that, that analysis was complete for the top line data also.

(Operator Instructions) And our next question comes from the line of Stephen Willey with Stifel.

Hi, this is [Philomena] in for Stephen Willey. Thanks for taking our questions. For the XEN1101 asset, the -- you initiated that you were going to be doing Phase 1 first-in-human trials. So these would include both single ascending dose and multiple ascending dose trials, correct?

That's correct.

And will they include [TMS] as a (multiple speakers) of those trials?

Yes. So that's currently the plan. The final decision will form part of the protocol that gets submitted, the plan is to submit in Q3 to initiate the Phase 1 in Q4.

Okay.

Right now, we are in discussions with a number of sites that run the TMS model. And so, we are in the midst of formalizing the protocol and the final decision we made obviously over the coming months as we conclude the diligence. The plan is certainly to run the TMS. It's a very interesting model that's being run with multiple anti-epileptic drugs, including, in fact, with ezogabine previously, as well as with sodium channel modulators like lamotrigine, drugs like levetiracetam, and one can look using TMS at either an EEG response or an EMG response.

And those are the kind of details we still have to work through in terms of just finalizing the protocol. This is generally done as a single dose study so another element of the design of the protocol would be at what point can one introduce the TMS (technical difficulty) the Q1 2018.

Understood. And so, will you be in a position to report results if the TMS is actually included into the trial in both the single dosing, single ascending, and multiple dosing sections of the trial? Will both of those be reported in 1Q '18?

Unlikely. I mean we certainly -- the goal is for us this to be a part of the same protocol, Phase 1 protocol. So we would certainly not report anything until the Phase 1 is completed. We expect it to complete in Q1. What we'll present thereafter, we haven't made that decision at this point. But certainly it wouldn't be before the completion of the SAD/MAD TMS that's currently contemplated to be a single protocol.

OK. And just finally, the second question. Could you just let us know what needs to be completed on the IND filing for XEN901?

Yes, XEN901 is in the -- has not yet initiated GLP tox. So there's some scale-up manufacturing that's being done at the moment. There is some non-GLP safety pharmacology work that is being completed. We expect that CMC manufacturing and additional non-GLP safety pharm work to be completed in the coming few months. And therefore -- and thereafter, we will be looking to submit for 901. So it's really just some additional safety pharm, and it is mainly scale-up manufacturing and CMC.

Thank you. And I'm showing no further questions at this time. And I would like to turn the conference back over to Ms. Jodi Regts for any closing remarks.

Thanks for joining us on the call today. We look forward to keeping you informed of our progress throughout the year.

Michelle, we will now end the call.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a great day.