Xenon Pharmaceuticals Inc (XENE) 2020 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Quarter 4 2020 Xenon Pharmaceuticals, Inc. Earnings Conference Call. (Operator Instructions)

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.

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 COVID-19 pandemic on our business, research and clinical development plans and time lines 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 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.

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. For 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 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 2 of our most advanced proprietary product candidates, XEN1101 and XEN496, currently in Phase II and III clinical trials, respectively, and numerous earlier clinical and nonclinical 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 into our program updates, 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 IIb X-TOLE study on track for top line data readout in the third quarter of this year, and with XEN496 Phase III 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 neurologists, 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 II and Phase III 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 III EPIK study.

Turning briefly to the latest guidance from our partnered programs. Neurocrine Biosciences anticipates initiating a Phase II 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 nonclinical 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 II clinical trial this year. We look forward to keeping you updated on NBI-921352 in 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 postoperative 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 Ib 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 our 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 II proof-of-concept study. At AES 2020, we presented promising interim data from a small number of patients with all 3 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's impact 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 presentation represents a small data set, we believe we are seeing drug activity and seizure reduction and on 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 U.S. FDA as well as orphan medicinal product designation from the European Commission. We recently initiated a Phase III 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 maybe efficacious and addresses significant unmet need in this rare severe pediatric neurodevelopmental disorder, based both on its Kv7 mechanism of action as well as published case reports from physicians who used ezogabine to treat infants and young children with KCNQ2-DEE. Advancing this program into Phase III 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. This is very common. 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 flupirtine in pain and ezogabine in adult focal epilepsy. And in the near term, there will be published randomized clinical data in the high-impact American Journal of Psychiatry related to the use of ezogabine in major depressive disorder and anhedonia.

There is tremendous validation of the Kv mechanism. But to date, a 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 the opportunity into other neurological disorders, given XEN1101's 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?

Thanks, 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 broad applicability of the Kv mechanism, our near-term focus is on our X-TOLE study, a Phase IIb randomized, double-blind, placebo-controlled multicenter clinical trial that is currently underway to evaluate the efficacy, safety and tolerability of XEN1101 administered as adjunctive treatment in approximately 300 adult patients with focal epilepsy. The primary end point 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-tolerated 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 4 presentations related to XEN1101 at ASENT 2021, the virtual meeting of the American Society for Experimental Neurotherapeutics. When outlining XEN1101's clinical development to date, we highlighted a number of its unique properties and potential advantages. XEN1101 is based on a proven antiseizure Kv mechanism of action and if successful, we'll be the only drug in this class available commercially.

XEN1101 has been well tolerated in Phase I clinical studies, and we have reported a low dropout rate and high conversion to open-label extension in the ongoing Phase IIb clinical trial to date. We observed a strong PK/PD relationship in the Phase Ib transcranial magnetic stimulation or TMS study with TMS results informing dose selection in our Phase IIb trial. And in our ongoing Phase IIb study, XEN1101 is administered as a once-daily and a low daily dose in the evening with no dose titration.

In addition, we presented new compelling data from preclinical studies examining XEN1101 in combination with other antiseizure drugs, including lacosamide, levetiracetam, cenobamate, phenytoin and valproic acid. We demonstrated that combining sub-efficacious doses of 1101 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 could meaningfully differentiate XEN1101 from other antiseizure medications. We have also been exploring the use of XEN1101 in other non-epilepsy indications and presented a 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 4 swim tests and progressive ratio test animal models, support a potential benefit of XEN1101 in mood disorders.

Of note, the efficacious doses and plasma concentrations from the preclinical depression, anhedonia and seizure studies overlap and a current plasma levels achieved during the multi-ascending dose cohorts of our Phase I clinical trial, suggesting the current dose is being used in the ongoing XEN1101 Phase IIb clinical trial to treat epilepsy may have beneficial impact on depressed mood. Supported by our analysis in these promising preclinical data, we expect our academic collaborators at the Icahn School of Medicine at Mount Sinai to initiate a Phase II 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?

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 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're anticipating this year. Ian?

Thanks, Sherry. Looking ahead, our key corporate objectives include the continued advancement of our EPIK Phase III clinical trial in patients with KCNQ2-DEE. Top line results from a 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 2 Phase II clinical trials with NBI-921352 in 2021. The anticipated Phase Ib 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 II proof-of-concept clinical trial examining XEN1101 in major depressive disorder and anhedonia. And importantly, within our XEN1101 Phase IIb 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 7 clinical trials ongoing with 5 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 Instructions)

First question comes from the line of Paul Matteis from Stifel.

I wanted to ask you a couple of quick ones on the 1101 depression program and some of this recent ezogabine data and then one question 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 seizures study, what percent of patients do you think may have comorbid depression in this trial? And is there anything we could kind of glean from that subset in the study? And then I have one follow-up on 007, but I'll save it.

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 -- is not an end point per se, primary or secondary. We do have a 31-point questionnaire survey, which is a quality of life in epilepsy or QOLIE (sic) [QOLIE-31] , Q-O-L-I-E-31 survey, which is delivered to the subject in the study at baseline and at the end of study. I think it's just 2 time points, baseline and then study end. That is not a Madras or shops. It's not a sort of specific depression score, but it is a good questionnaires 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 at -- whether it's a top line or beyond, I can't say today, but certainly, we'll have that data this year.

Again, not strictly an MDD end point or an anhedonia end point, but we certainly will get a sense of patient's quality of life and emotional well-being, and you can look up that it's a well-recognized scoring system.

I mean in terms of the depression study, what I would say is that when the study comes out, as Ian referenced, we probably are weeks away from a publication or at least our collaborators weeks away from a publication, our investigator-led study with Sinai will look very similar in design. So not to preempt the publication, which is an assurance we've given them, stay tuned, we'll have that publication soon. And I think you could expect a very similar design.

In terms of time to complete, tough to know at this point. We're not guiding on that. So 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.

Okay. And then just maybe one question on 007, Simon. That was really helpful. On the data coming later this year, I guess, what's kind of the hurdle for you moving forward? Is it something consistent with the first 3 patients? And how are you thinking about that? And then if you do decide to move forward, because flunarizine was, I guess, ex U.S., largely in adult drug, is there additional preclinical work you need to do to get the FDA comfortable for you to move, I guess, right into mid-stage trials in pediatrics?

Ian?

Yes, I can take that. Thanks, Paul. So 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 end. But given the seizure reduction and given the confirmation on EEG, and that these were highly refractory patients with high seizure burden and they had the disease for quite some time, we feel that we're getting a signal. I mean some of these -- a couple of these patients had a quite material reductions kind of 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 in 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 is 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.

And just 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 we're -- 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.

Next question comes from the line of Andrew Tsai from Jefferies.

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, investors seem to be doing a lot more work about the market potential in focal epilepsy. So can you help us understand why, I guess, some of these approved drugs out there are doing, for example, over $1 billion in sales, what would be some of the more favorable attributes? And would 1101 have similar or even better attributes? And I have a follow-up.

Yes. I mean we've talked about for some time that 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 aren't currently well controlled. And so in the U.S., we're in hundreds and hundreds of thousands of patients that currently aren't well controlled and have a need for new drugs and new mechanisms. Some of the drugs that you've been referring to, we agree. I think these kind of ease-of-use attributes or the really totality of the package of a drug is really important. The 2 drugs that have done extremely well, Keppra and Vimpat. Keppra was a novel mechanism and the first SV2A drug that was launched. And now Keppra, even as a branded generic, there's over 2 million patients globally that are on Keppra. And Vimpat was a drug that even as a BID drug was very well tolerated and has -- the peak sales as guided by UCB, I think, is approaching closer to $2 billion than $1 billion. So yes, there's a large commercial opportunity and where we think 1101 and this is some of the data that we've confirmed both through market research as well as we presented at the ASENT meeting recently, is that we think 1101 would fit really nicely in terms of it will be an only in class drug. It will be adding a new mechanism for physicians to use. And then as we've talked about in terms of QT even in dosing, so far, no titration. We think low risk of DDI from what we've seen to date, really gives a good opportunity to be a successful drug and a really important drug for patients.

Yes. I'll just add to that, Andrew. I don't think -- 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 DDI, no QT prolongation. Whether we are able to show, for example, benefits in depression, will be a massive differentiator in addition. So as Ian said, we're 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.

Great. And second question is, I'm actually curious, how are you guys thinking about sharing the open-label data for to X-TOLE, the open label extension? I mean should we expect you to share it at the 1-year mark or when patients have been treated 6 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, Andrew. Yes. So for the top line results in Q3, obviously, the focus is going to be on the double-blind portion. And we'll obviously provide top line data in primary and secondary end points. We'll have commentary on safety and tolerability. The open-label extension, we may be able to give kind of some qualitative directional information. It is being used. It's not via an electronic diary. We use a paper diary for the open-label extension. And so I think to collect and clean that data as efficiently as we can in the double blind portion that's really not our goal. I mean we have patients that have hit the 12-month 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 top line results in Q3 on the double-blind portion and probably less information at that time on open-label extension. And then that will probably come out over time, as you say, as we have kind of a critical mass of patients going through certain time points like 6 months or 12 months.

We do have a question from Marc Goodman from SVB Leerink.

Can you just tell us for 007, you've 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 just trying to make it more robust, I mean what was the rationale there? And secondly, on 007, are you considering additional indications to look at besides absence epilepsy, any other type of epilepsies? I guess that's first -- I'll wait a second.

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, hemiplegic migraine, where the drug is used, both of which indications of the drug is used widely off-label. Just as a reminder, at this point, we'll be relying primarily on orphan exclusivity. And so while the drug has been approved for larger indications, ex U.S., such as migraine and vertigo, I think the focus will be at least initially on orphan exclusivity. I think CAE is, to date, is the standout opportunity. It doesn't mean there won't be others, but that's really where the bulk of our focus is. And primarily because I think the -- firstly, it fits in very well into our epilepsy basket. But secondly, we do see a an important need. These are patients that are generally adolescents. So from a toxicology and nonclinical perspective, probably a bit easier than the very early infant population, which may be alternating hemiplegia, for example.

And they're 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 what I think is -- are some of the key. Plus, I would just say that, again, if our larger cohort provide similar comfort to what we've seen in the first few subjects, I think, strong validation for that indication. Ian, just on timing?

Yes. So I mean the simple answer to your question. The answer is yes, Marc. We're -- this started as a single center locally, and that's where the first amount of data 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 kind of a larger data set that we can share. We will need to coordinate with the investigator. It's her study as 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 it. 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 regulatory strategy to get some feedback on moving this into a company-sponsored study.

And then just 1101, the enrollment, I think your comment was pretty positive. The enrollment. We haven't really missed a beat on COVID in the past 2, 3 months, it's gotten okay. And no urinary issues are popping up?

So yes, I'll tackle the first one. And obviously, we have blinded data. So all we can say overall is that, that tolerability has been good and kind of at that macro level, dropout rates have been lower than we modeled, and we've had very high rollover to open-label extension. Yes, I think many people know the history here. This was a challenging study during the first wave of COVID, and where a lot of clinical sites were completely shut. And we did a number of things. We obviously worked to ensure that we could get drug to subjects that we could 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 to -- 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 interpretation is 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 screen and randomization, first half of this year and on track for top line data in Q3.

Marc, in terms of the urinary issues, I mean, all we can say is -- and Ian and I don't have visibility on every AE 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 unscrubbed 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 to Ian's point, we now, I think, finally, do have visibility, where we've had a few months of very, very consistent screening and randomization, and it's looking very good.

(Operator Instructions) Next question comes from the line of Laura Chico from Wedbush.

This is Kenneth on for Laura Chico. So on 1101, realizing it's still a little premature here, but is it still a study on track to report top line in 2Q '21? Or just wondering if you could revisit here, 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.

Sorry, is the question, what are -- what would we consider successful? Or what is the study modeled on? Just can you...

What is necessary to demonstrate on reduction in seizures?

Okay.

Let me answer, yes. So Kenneth, I think as we've talked about before, but just to remind everyone, we have close to 90% power to the now hypothesis is that there's no change between -- remember, this is a 4-arm study. We have placebo and then 3 active doses. And then the alternative hypothesis that there is a dose-response trend. And so it's a linear, what we call a linear trend test as the primary end point, and it will be positive. If at least 1 dose is better than placebo. The real power of the study is being 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 2 lower doses, 20 milligrams and 10 milligrams. And then the assumptions in terms of the model and the simulations, we run for our power calculations, is -- and obviously, these will change, but just to give you an idea that we've spoken about in the past, is that the placebo rate would be around a 20% reduction. And then there'd be a dose response with 10 milligrams at a 25% reduction, 20 milligrams at 30% and 25 milligrams at a 35% reduction. So that's the way that the study is designed from a powering perspective.

And then in terms of safety and tolerability, I mean, obviously, we're going to have to wait and see. I think what is going to be important is how does the stack up in comparison with other antiseizure medicines and knowing though that all of these patients are on con-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.

Okay. And then a follow-up on...

(technical difficulty)

He just got disconnected from the queue. (Operator Instructions) Next question comes from the line of Yatin Suneja from Guggenheim.

This is Eddie on for Yatin. So for...

(technical difficulty)

Are you there Eddie?

He just got disconnected from the queue. (Operator Instructions) Next question from the queue comes from the line of -- we have the line from Yatin Suneja from Guggenheim.

Can you hear me?

Yes.

That's good, Eddie. Thanks.

Great. So yes, so given that you've opened some additional European sites for the 1101 study to speed up enrollment, is there any sort of major differences we should think about in terms of baseline criteria or background medications that are sort of more prevalent in Europe there? And then just like if you could sort of let us know for the 496 study, if you're going to give enrollment guidance at all or sort of as a study proceed, let us know when we should think about top line data there?

So on 1101, Eddie, so yes, about half of the clinical sites are in the U.S. and about half are in Europe. And we've seen so far in patient screening, randomization, it's actually been almost even between the 2 jurisdictions. So in terms of most -- when we look at the antiseizure 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. So we have sometimes questions about cenobamate that was recently approved. But I think there'll be probably a small number of patients in the study, given the timing they would have had cenobamate exposure coming into the 1101 study. So we don't have a concern that there's going to be some type of imbalance based on geography. But obviously, when we get into the detailed statistical analysis, we're 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, so you're right, we haven't yet given guidance on enrollment and/or when we would see top line data. We'd like to get the studies up and running initially in the U.S. It will be in other jurisdictions as well. We're looking later this year when we get a critical mass of sites up and running, and we can 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 top line data.

Next question comes from the line of Serge Belanger from Needham & Company.

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 in tinnitus. Should we expect to see depression as the first of other non-epilepsy indications for 1101?

Yes. Right now, the focus is on MDD. I think as we've said, that's investigator-led study we're looking at now, which should initiate soon. We're 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, as you've correctly pointed out, lots of interesting areas for Kv7. We like MDD as an option of all of those for 2 reasons -- or 3 validation, obviously off the target, and you'll see more of that in an academic publication near term; number two, massive commercial opportunity; and number three, a very, very important comorbidity with epilepsy. And so I think taking those 3 into consideration, I think 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.

Next question comes from the line of Tim Lugo from William Blair.

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 the next proof-of-concept study and 1101, obviously, combines well with antiseizure medications, but you have data where it combines well with kind of the depression therapies? Or are you thinking of it as a monotherapy in this indication?

Yes. I mean, right now, we're thinking of it as monotherapy, and certainly, we'll be looking at combination work as time moves on. But in terms of the high level study design elements, yes, I think what we can say is we'd expect to see a randomized controlled study with an active and placebo arm and -- with typical blinding. So expect to see that. And then more details around end points, size, number of sites, et cetera, will be made available as the study kicks off.

I'll just remind you, as I said to Paul earlier, Tim, when the publication comes out. I think there'll be very similar elements in the study that we will be launching as a next study. To what is published in the upcoming manuscript that you should see over the next few weeks.

There is time remaining for one more question. And we had a question from the line of Antonia Borovina from Bloom Burton.

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 the other subtypes, like 7.4 and 7.5, play any role in mood symptoms?

That's a good question, Antonia. We don't think the other subtypes do. We -- if you go to the literature, in fact, collaborators at Mount Sinai have published quite widely on the nonclinical chronic social defeat model, et cetera, where really Kv7.3 stands out as the primary Kv channel in this anhedonic and on depressive phenotype. We're pretty -- we feel pretty confident that it is the Kv7.3 primarily and 7.2/7.3 heterotrimer, which is acted upon by both ezogabine and 1101, of course, 1101 being more active on the target compared to ezogabine. So we really don't think it's a distinct Kv7 mechanism, but a very 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 1101 in humans soon, which obviously, we've committed to. So we think it's the right mechanism. We think there's a good amount of nonclinical genetic and pharmacological mechanism for this in animals. And we think it's Kv7.3 predominantly.

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

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

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