Xenon Pharmaceuticals Inc (XENE) 2020 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. And welcome to the Q1 2020 Xenon Pharmaceuticals Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions)

I would now like to hand the conference over to your speaker today, Ms. Jodi Regts.

Thank you. Good afternoon. Thank you for joining us on our call and webcast to discuss our first quarter 2020 financial and operating results. Joining me on today's call are Dr. Simon Pimstone, Xenon's Chief Executive Officer; and Ian Mortimer, Xenon's President and Chief Financial Officer.

Following this introduction, Simon will give an overview of Xenon's clinical programs, and then Ian will provide some high-level financial commentary. 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 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 proprietary and partnered product candidates; the potential efficacy, safety profile, future development plans, addressable market, regulatory success and commercial potential of proprietary and partnered product candidates; the anticipated timing of IND or IND-equivalent submissions and the initiation of future clinical trials for proprietary and partnered candidates; the efficacy of our clinical trial designs; our ability to successfully develop and achieve milestones in the XEN496, XEN1101 and XEN007 and other proprietary development programs; the timing and results of our interactions with regulators; the potential to advance certain of our product candidates directly into Phase II or later-stage clinical trials, anticipated enrollment in our clinical trials and the timing thereof; the progress and potential of our ongoing development programs; the potential receipt of milestone payments and royalties from our collaborators; our expectation of having sufficient cash to fund operations into 2022; 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 statement.

Today's press release summarizing the results of Xenon's first quarter of 2020 and the accompanying quarterly report on Form 10-Q 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. At the end of March, we issued a statement outlining our response to the COVID-19 pandemic. Xenon continues to put the safety and well-being of people first, including the clinicians and patients involved in our clinical trials as well as our employees and their families. We are fortunate that we have the cash runway to support our business objectives and to weather this unprecedented health and economic crisis.

Despite the global impacts of the COVID-19 pandemic, I'm pleased to report exciting progress in both our proprietary and partnered neurology programs over the last quarter, and we anticipate several important clinical and regulatory milestone events from our pipeline of innovative epilepsy treatments over the next 12 months. Today, I'll provide a status update on each of our clinical stage products as well as on our partnered programs.

I'll start with XEN1101, which is a differentiated next-generation Kv7 potassium channel modulator being developed for the treatment of adult focal epilepsy and potentially other neurological disorders. Patient enrollment for our XEN1101 Phase IIb clinical trial is currently underway in the United States, Canada and Europe. The trial is a randomized, double-blind, placebo-controlled, multicenter study to evaluate the clinical 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. In order to assess safety, tolerability and discontinuations in this X-TOLE trial, we continue to review blinded data from patients who have been treated. To date, XEN1101 has been well tolerated, and the rate of discontinuations from the study are below what was modeled. In addition, more than 90% of subjects to date from the double-blind portion of the trial have rolled over into the open-label extension phase.

Therefore, based on analysis of the blinded safety data to date, we have made a decision that we do not believe an interim analysis is required. As a reminder, this option would have allowed for resizing of lower-dose groups or for other changes to the study if tolerability was different than modeled, which is not the case here.

In the context of the COVID-19 pandemic and its impact on ongoing clinical studies, we are in close collaboration with each of the XEN1101 clinical sites in North America and Europe, taking specific direction from their respective clinical guidelines as they relate to new patient screening and randomization. Our efforts remain focused on patients currently enrolled in the study, either in the double-blind portion or in the open-label extension portion of the study, while making other necessary amendments in the study, including minimizing any in-person patient visits and making provisions for adequate drug supplies to patients wherever possible to ensure that data integrity is maintained.

We're also taking the step to expand the X-TOLE clinical trial to include new sites in both existing as well as new jurisdictions to support enhanced patient screening as soon as the individual clinical trial sites deem it safe to do so. We are seeing some clinical sites resume patient screening and patients entering baseline and being randomized. We believe this will continue to pick up over the coming months. Top line data is anticipated in the first half of 2021, dependent upon feedback from the clinical sites and patient enrollment rates, which may be impacted by the COVID-19 pandemic. Given its unique mechanism of action, we also continue to explore potential indications for a Phase II proof-of-concept trial with XEN1101 outside of epilepsy, and we look forward to going into more detail as these plans develop over the coming months.

Also within our portfolio of proprietary epilepsy products, XEN496 is a Kv7 potassium channel modulator that contains the active pharmaceutical ingredient ezogabine, also known as retigabine, that we have now reformulated and are developing as a treatment for a rare pediatric neurodevelopmental disorder called KCNQ2 developmental and epileptic encephalopathy, or KCNQ2-DEE, a severe pediatric condition for which no medicine has been approved and which is characterized by multiple daily refractory seizures presenting within the first week of life. Most recent epidemiology cites the incidence at approximately 1 in 17,000 live births.

There is a strong genetic rationale to suggest that XEN496 may be efficacious as a treatment for KCNQ2-DEE, which is further supported by noncontrolled clinical case reports and surveys as well as anecdotal parental and physician feedback. These data suggest ezogabine may be well tolerated and may reduce seizure burden, with potential to improve development and cognition in this rare pediatric population.

The FDA has granted orphan drug designation. And in the first quarter, we were also granted fast track designation for the investigation of XEN496 for the treatment of seizures related to KCNQ2-DEE. Over the past few months, we have made considerable progress in our XEN496 program, which I'll outline for you.

First, to support a planned Phase III clinical trial of XEN496 in patients with KCNQ2-DEE, we recently completed a pharmacokinetic, or PK study, testing our proprietary pediatric formulation in 24 healthy adult volunteers. Subjects were given a single 400-milligram dose of XEN496 in either the fed or the fasted states. While the study was not designed to determine bioequivalence, given ezogabine is not available to use as a comparator, the PK profile observed for XEN496 supports our Phase III plans and appears to be comparable to historical PK data for immediate-release ezogabine tablets, with XEN496 showing similar absorption and elimination curves.

Second and importantly, we recently received additional feedback from our second interaction with the FDA related to the Phase III program for XEN496. And we are confident we now have a clear path to initiate a single Phase III study this year. Our proposed safety monitoring plans, including long-term follow-up to monitor potential side effects, were acceptable to the FDA, who also indicated that it is acceptable to study XEN496 in infants and children up to 6 years old. Based on the entirety of the FDA's feedback, we anticipate initiating a randomized, double-blind, placebo-controlled Phase III clinical trial to evaluate the clinical efficacy, safety and tolerability of XEN496 in pediatric patients with KCNQ2-DEE.

The primary endpoint is expected to be the median percent change in seizure frequency from baseline compared to treatment period of active versus placebo. It is anticipated that approximately 40 patients will be randomized in a blinded manner to either an active treatment group or placebo. After initial screening, patients will enter a baseline period to assess the frequency of seizures, followed by a titration and then a maintenance treatment period and then a post-treatment follow-up period. It is expected that there will be an open-label extension period after the double-blind portion of the trial, in addition.

In preparation for the Phase III trial, we have now selected a CRO, and we've named a global steering committee as well as a principal investigator for the study, Dr. John Millichap, with site selection also well underway. In addition, our clinical development team is planning for regulatory submissions outside of the U.S. to support the broader clinical development of XEN496. We expect to submit our Phase III protocol around midyear, as previously guided, and initiate the XEN496 Phase III clinical trial this year in 2020. We believe this is the first study of its kind ever in KCNQ2-DEE, the first time a monogenic epilepsy trial will include infants as young as 1 month of age, and the first precision medicine treatment in a monogenic epilepsy using a drug with known pharmacology and some prior experience in this patient population.

With the recent feedback from the FDA, we do not foresee any hurdles to initiating the Phase III trial in 2020, other than the potential impact of COVID-19. We therefore find ourselves at an exciting juncture, and we are eager and highly motivated to bring significant innovation to a severe and hard-to-treat neurological disorder, where high medical need still exists. We are presenting 3 ePoster presentations related to this XEN496 program using the virtual platform hosted by the American Academy of Neurology, which is in lieu of its annual conference. The first poster summarizes the recent results from our PK study, examining the PK and food effect of XEN496. The second poster summarizes our online survey of caregivers of patients with KCNQ2-DEE. And the third poster examines literature and survey results to evaluate the use of diaries versus video electroencephalography, or video EEG, for counting seizures in patients with KCNQ2-DEE. All 3 of these posters have been added to the Xenon website as well as the AAN virtual platform, so I encourage you to review them.

Turning now to XEN007, with the active ingredient flunarizine. This is a CNS-acting calcium channel modulator that modulates Cav2.1 as well as T-type calcium channels. As a reminder, a physician-led proof-of-concept study is now ongoing to examine the potential clinical efficacy, safety and tolerability of XEN007 as an adjunctive treatment in pediatric patients diagnosed with treatment-resistant childhood absence epilepsy. It is anticipated that the study will enroll approximately 20 patients with CAE in an open-label manner, patients who have failed standard of care because of lack of efficacy or because of adverse events.

Results from this Phase II study are expected in 2020, dependent ultimately upon patient enrollment rates given the ongoing COVID-19 pandemic. Depending on our analysis of the final results from the study, CAE, of course, may represent a potential orphan indication for future development of XEN007.

Before turning to our partnered programs, I should also note that our early-stage drug discovery efforts continue to build upon our robust pipeline of early-stage preclinical candidates, encompassing our work related to a number of sodium and potassium channel targets. We look forward to highlighting this exciting and novel preclinical work as it matures.

We have an ongoing collaboration with Neurocrine Biosciences to develop treatments for epilepsy. Neurocrine has an exclusive license to XEN901, now known as NBI-921352, a clinical stage selective Nav1.6 sodium channel inhibitor, with potential in SCN8A developmental and epileptic encephalopathy, or SCN8A-DEE, and other forms of epilepsy. Neurocrine Biosciences has indicated that it anticipates filing an IND application with the FDA in mid-2020 in order to start a Phase II clinical trial in SCN8A-DEE patients in the second half of this year.

This important milestone would trigger a $25 million milestone payment to Xenon upon the FDA acceptance of an IND for NBI-921352, with 55% of that amount in the form of an equity investment in Xenon. Prior to our collaboration with Neurocrine, the Xenon clinical team conducted a survey of caregivers of SCN8A-DEE patients. These data have been summarized in an ePoster that will also be presented on the virtual AAN platform and posted on the Xenon website.

In addition, we are presenting 2 other posters relating to XEN901 or NBI-921352. One summarizes the relative bioavailability, pharmacokinetic and food effect assessment of 2 immediate-release formulations, including both pediatric granules and adult tablets of XEN901. The other summarizes a study of 18 healthy adult subjects and provides an assessment of the potential pharmacokinetic and pharmacodynamic interactions between XEN901 and phenytoin, a nonselective sodium channel blocker with the intention of providing useful safety information regarding the co-administration of XEN901 with drugs for future clinical trials with XEN901 or NBI-921352.

Moving now to our partnership with Flexion Therapeutics. We acquired the global rights to develop and commercialize XEN402, a Nav1.7 inhibitor. Flexion's preclinical product candidate, known as FX301, consists of XEN402 formulated for extended release from a thermosensitive hydrogel. The initial development of FX301 is intended to support administration as a peripheral nerve block for control of postoperative pain.

In April of this year, Flexion presented new animal data in an ePoster presentation on the American Society of Regional Anesthesia and Acute Pain (sic) [American Society of Regional Anesthesia and Pain Medicine] website that showed FX301 provided sustained postoperative analgesic effect with no impairment in motor function compared to liposomal bupivacaine and placebo.

In addition, high local concentrations of XEN402, the active ingredient in FX301, were measured at the site of administration for the duration of the study, which is consistent with the creation of a depot providing controlled drug release. The start of a GLP tox study with FX301 triggered a $500,000 milestone payment to us in April. Flexion anticipates initiating human clinical trials in 2021, and we look forward to updating you on this exciting partnered program.

I'm so proud of the Xenon team as we support one another and adapt to find ways to stay focused on our work through the COVID-19 public health crisis. Xenon has what we believe to be the most exciting epilepsy pipeline currently in development, and we continue to strive to bring novel, much-needed new therapies to patients in need.

We're also showing great community leadership during the COVID-19 pandemic, leading numerous initiatives that we believe could assist businesses transitioning employees back and managing the workplace in the face of what will likely be a near- to medium-term future that includes COVID-positive employees or close contacts in our workplace.

At this point, I'll ask Ian to recap our financial position and to provide some closing commentary before opening up the call to your questions. Ian?

Thanks, Simon, and good afternoon, everyone. The specific details within our financial statements are covered in today's press release and in our 10-Q filing, but I will provide an overview and conclude with a summary of our upcoming milestones.

In the first quarter, we reported total revenue of $7.1 million related to the recognition of $5.8 million of deferred revenue as well as $1.2 million for research and development services from the license and collaboration agreement with Neurocrine Biosciences. There was no revenue recognized for the same period in 2019.

R&D expenses for the quarter were $11.8 million. This compares to $9.1 million for the same period in 2019. The increase of $2.7 million was primarily attributable to increased spending on Xenon's clinical development product candidates XEN1101 and XEN496, and to a lesser extent, increased spending on preclinical, discovery and other internal program expenses. This was partially offset by decreased spending on NBI-921352 as clinical development costs are now borne by Neurocrine.

G&A expenses for the quarter were $3.3 million compared to $2.6 million for the same period in 2019. And this increase primarily is attributable to increased stock-based compensation expense, salaries and benefits, insurance premiums and business development expenses, partially offset by a decrease in legal fees for intellectual property protection. This gives us a net loss for the quarter of $7.5 million compared to $11.3 million for the same period in 2019, the change primarily attributable to revenue recognized during the first quarter of 2020 and partially offset by an increase in R&D and G&A expenses as compared to the same period in 2019.

Cash and cash equivalents and marketable securities as of March 31, 2020, were $229.7 million, and this compares to $141.4 million as of December 31, 2019. I should also mention that subsequent to quarter end, we paid our outstanding loan with Silicon Valley Bank. The $15.5 million in debt was put in place in 2017 and 2018 and provided a meaningful bridge enabling our current epilepsy pipeline to mature. It is now prudent to repay the loan as the repayment today is accretive from a cash flow perspective given our current cash runway.

Based on current assumptions, which include fully supporting the planned clinical development of XEN1101, XEN496 and XEN007, we anticipate having cash -- sufficient cash to fund operations into 2022, excluding any revenue generating from existing partnerships or potential new partnering arrangements. Importantly, we believe we have the cash runway to support the -- our business objectives that we have outlined today, and we continue to make prudent business and spending decisions to manage through these unprecedented times.

And I'd also like to echo Simon's comments and commend the Xenon team for their diligent efforts and their flexibility that have enabled us to stay on track for important clinical milestones over the next 12 to 18 months. Briefly, we expect top line data in the first half of 2021 from the XEN1101 Phase IIb X-TOLE study currently underway in adult focal epilepsy and continue to explore other potential indications for this novel Kv7 potassium channel modulator.

We expect to initiate in 2020 a Phase III clinical trial to examine XEN496 efficacy in KCNQ2-DEE. We expect results from the physician-led Phase II open-label study in treatment-resistant childhood absence epilepsy with XEN007. And we expect a $25 million milestone payment upon the FDA acceptance of an IND that our partner, Neurocrine, intends to file in mid-2020 to start a Phase II clinical trial for NBI-921352 in SCN8A-DEE pediatric patients. And we expect Flexion to continue the development of FX301, supporting the initiation of human clinical trials in 2021. And Xenon is eligible for various regulatory and development milestone payments up to $9 million through the initiation of a Phase II proof-of-concept clinical trial.

With these important milestone opportunities ahead, we look forward to updating you on our progress.

At this point, operator, we can open the call up for questions.

(Operator Instructions) Our first question comes from Paul Matteis with Stifel.

Congrats on the progress. I have a few, if you don't mind. One on 1101, Simon, I was wondering if you could clarify some of the numbers you put around retention rates in the study. So where exactly is your discontinuation rate tracking? And when you say 90% have rolled over to the OLE, is that 90% of patients who finished the double-blind portion or 90% of total? And then just separate, on 496, 2 quick questions. One, can you just clarify the seizure type you're using for the primary endpoint and your confidence that that's an easily countable seizure across patient age? And two, how are you thinking about the statistical hurdle for success for that study? Do you need a p-value of 0.05? And if so, are you powered for it?

Yes. I'll work backwards. So yes, in the current draft protocol, we're not going to go into all the details today, Paul. The plan is as we launch that study would be to have a call and update on sort of the details of the study specifically. But just at a higher level, this is going to be a p-value-driven study. We are powered based on what we think are reasonable assumptions. And of course, building into that is studies that others have done in rare pediatric monogenic epilepsies as well as what we know and KOL and steering committee input into the protocol about the disease itself and natural history. So I think we've made -- we've given a ton of thought to the assumptions that go in and I think have been reasonably conservative and believe that an n of about 40, as I said, divided at this point between active and placebo arms, would suffice to meet a p-value. So that's the first question.

The second question on seizure type. Yes, I think we're looking at tonic and focal tonic seizures as your endpoint, and this would be captured by diary, just as is done -- has been done in other pediatric epilepsies. You may recall, there was some discussion early on whether video EEG would be required. We'll be looking at video EEG as part of screening, but it's not a requirement based on the interaction we've had for measurement for the endpoint, which we think is a big win for us and we think makes sense. We feel very confident that the caregivers can determine these focal tonic seizures, which would be counted in diary form.

And then your first question was on 1101. Yes, the 90% rollover is of those that complete the double-blind period because those are the individuals that roll over. So we can't say to this date that 90% of those randomized have rolled over because not everyone has completed the double-blind. So the portion of subjects that have completed the double-blind have rolled over. And as I said, it's over 90% of those. Within those that have entered the randomization phase of the study, the dropout to date -- and again, patients are at different segments of the study, from a few weeks to many weeks to beyond. So those rates differ, Paul. But to date, the dropout rate has been lower than what we've modeled. And so that's all we can say at this point in time.

Ian?

Yes. I was just going to go back to, Paul, one of your earlier questions and just point you and others on the call. We had a nice poster. It's actually in the slide presentation for the virtual AAN meeting on the video EEG, the types of seizures. And we've actually collaborated with academics and with the advocacy group to ensure that caregivers can be trained and that you can correlate that back to EEG, to the video EEG.

So we feel very comfortable that the caregivers can do that. That was our presentation to the FDA via a white paper. We presented that data at AAN in this virtual format, and that will be the subject of a future publication as well. So some really nice work to feel comfortable in using caregivers to look at the seizure numbers in the upcoming 496 study.

And our next question comes from Tim Lugo with William Blair.

This is Lachlan on for Tim. I was just wondering how the screen failure rate in the X-TOLE study has been. 1101 has -- sort of compared to your expectations going in. And if that's been a factor in the layer, that's all.

Yes. It's in -- the screen failure rates are about what we had modeled, so pretty standard. Again, we're not giving percentages and numbers for all our rates of this and that. But it's what we have modeled, what we had expected. So we're not seeing -- again, this is, let's say, pre-COVID. We haven't seen screen failure as a major impediment. What happens post-COVID, I can't say. Whether that's going to change from a percentage standpoint, I don't know. We're hopeful, based on what we're seeing, particularly in Europe, that sites are starting to kind of emerge from COVID again, and we'll see what the next month or 2 holds in that regard. But I don't expect screen failure rates are going to go up. But I certainly -- we haven't seen higher failure rates than modeled or anticipated.

Okay. Great. And just sort of to follow up on that. With the potential introduction of cenobamate in the adult partial onset epilepsy field, would you expect patients enrolling to be failing that moving forward once that's on the market?

I think that's going to be a very small impact, if any. By the time that gets out -- remember, again, coming out of COVID, this is not a drug that is easy to initiate. It requires -- by this, I mean the cenobamate drug. It does require a very, very careful dose titration because of this DRESS, eosinophilic syndrome, which has -- can be quite severe in some patients. And so I think we really have to be a pretty back to normal clinical environment, I think, before a drug like that is going to be easily rolled out at specialty centers. This is not a drug that's going to be used by your average neurologist. It's going to be at epilepsy centers. Still, most specialty centers are doing virtual consults. Most virtual consults are not starting patients on drugs that have difficult titration strategy.

So to -- I don't think this is going to have a major impact on trial recruitment. What impact that has from a commercial standpoint over the next number of years, we can talk about at length, but wasn't the purpose of your question. But I think that should -- that suffices in terms of how I see cenobamate risk over the next 6 to 12 months.

Okay. Great. And if I could squeeze in one more on the 496 trial. Have you outlined what the sort of standard of care is in the control for that trial?

Yes, it's going to be, we believe, just a local center decision on standardized treatment. Now again, centers -- there aren't standardized guidelines for these patients. But centers, I would say, in general, would likely be using sodium channel blocking drugs. So these kids often present very young. As you know, they're put often on valproate or phenobarb and then are transitioned generally onto drugs like lamotrigine, lacosamide, oxcarbazepine, carbamazepine, those are generally your agents used. And so while I don't think it will be specified, I think we'll definitely see an aggregation of drugs probably within the sodium channel blocking class as your baseline use.

Our next question comes from Yatin Suneja with Guggenheim.

This is Eddie on for Yat. Just a couple on the 496. You had previously guided that you thought you'd need about 20 to 30 patients and your age group was like 1 month to 2 years old. And now you're saying that there are about 40 patients needed, and you're going to go up to 6 years old. So can you give us any other details on what the regulators saw or what your meeting minutes said about why those requirements changed? And does that change your estimated time for enrollment or site number? And then as a follow-up, what's the current gating factor for initiating this trial? Like what are you still waiting on from the regulators?

Right. So we aren't waiting on anything from the regulators other than we have to submit the final protocol. So that's sort of the gating item. As I said, we expect to submit in and around the middle of the year. So we don't see anything gating between now and then in terms of drug supply, but we're -- we have to finish everything up, finish the protocol up and submit the protocol. So we expect that to happen in the pretty near term.

In terms of some of your other questions, the age adjustment was put forward by us, not by the FDA. That was with the recognition that the age at which you study your patient is important in many, many ways. One is there's a label impact. Number two, it may give us benefits of the drug outside of the traditional sort of high-seizure burden when it comes to some of the other endpoints we're going to be looking at, obviously, as secondary endpoints in development.

And remember, independent of the age, kids can only get into the study if they meet the inclusion criteria, which is a certain seizure frequency at baseline. So the fact that they're up to 6 years of age, they will still have to meet the certain number of weekly seizures to be allowed into the study. So I don't -- I think the age going beyond 6 is only a benefit to us from a label perspective. There's no downside.

Your other question was the patient number, yes. And that really just came down to the ultimate design that we've landed on and will be going forward on. It's just a matter of numbers of patients in one group versus another time of patients in placebo and crossing over versus not crossing over. So it really just came down to the fact that we think the cleanest design will be a parallel, placebo-controlled study. And based on the assumptions we've built into it, we feel that number is going to be about right for the statistical significance. We don't think it's going to impact enrollment in a meaningful way. Yes, you are right, we will probably need more sites to keep time lines as aggressive as we would have with 24 to 30 subjects. So another 10 or 15 subjects, as we will need for the study, will require some more sites.

We really have had an unbelievable response from sites in terms of participating. This is a really unique study. And I actually think will be a pretty high-profile study, given its kind of precision medicine nature. And so I don't think our challenge is identifying sites to participate. And as I mentioned in my remarks, we are going to look to submit in Europe and conduct the study, both in the U.S. and in Europe. So site number, again, shouldn't be a limitation, but we may land up certainly needing more sites open to recruit for 40 than we would have had at 24. But it's not going to hold us back or add another year in terms of time line.

Our next question comes from Laura Chico with Wedbush Securities.

I guess one question on 1101. I think I heard you say that you were starting to have some sites reopen. I was just curious if you could kind of put a percentage number on that or frame it a little bit more relative to the overall sites. Are the majority now reopening? And if not, do you have a better estimate as to when the remaining sites will open? And then on 496, is there any additional color you might be able to provide in terms of the titration scheme and how long the maintenance period might last?

Sure. Yes. So on 1101, sites are starting to reopen. It's not the majority of sites at this point, and this isn't just our trial. I think this is the majority of trials out there. I think the next few months is obviously going to be very important to see how that builds. As I mentioned in my remarks, we are looking to open up other jurisdictions as well as new sites in existing jurisdictions, and we've purposefully looked at other jurisdictions that we think will be opening sooner. So the answer is not the majority, but they are starting to open. And I think over the next few months, we expect there will be more meaningful recruitment in the study for sure. But just too early, Laura, to give you kind of an estimate in terms of impact. We still think this should allow us, and we've built in a bit of cushion, to hit our guidance that we've provided, which is top line first half of 2021. So that's that question.

The 496 in terms of titration, yes, there will be a titration. We've talked about that previously. It will be a few weeks, and patients will get to a maximum dose or a maximum tolerated dose. We haven't disclosed at this point what the maintenance period is, but it's going to be fairly standard. It's going to be fairly standard. This isn't a 2-week maintenance phase. So this is going to be a couple of months and likely to have a few weeks of titration to get there.

Laura, maybe just -- I can add a little bit to Simon as well. And on 1101, we didn't -- just to be clear, we didn't close any sites, right? We were -- we made the decision that we really wanted to be guided by the individual clinicians at those sites when they were comfortable, and that enabled us to continue all of the patients on study to get drug and make adjustments there. So we even had some patients that went longer in baseline before they were randomized until physicians were comfortable randomizing. So again, we've never shut anything down and "need to reopen." It's really more -- and we're talking to clinicians every day that are getting comfortable doing a randomization visit. And so we're seeing that come online, as Simon mentioned.

On 496 on the titration. So ezogabine was titrated as a drug. So again, this isn't specific to the trial design or to the patient population. It's really specific to the drug. We don't have titration in 1101 based on the drug, it kind of self-titrates. But for 496, based on the active ingredient being ezogabine, you do titrate that drug up to a certain level, and we'll be doing PK draws. And then after that, they would go on to the maintenance phase.

Our next question comes from Maury Raycroft with Jefferies.

For the decision not to do the 1101 interim, just wondering if you could say -- if that means there were no notable differences in tolerability across the different doses. And can you talk more about what specific blinded data you had access to for that?

So because it's blinded, we don't know about tolerability differences across doses, Maury, so that I can't answer. But if you look at the overall tolerability, the overall AEs in the cohort, we're very comfortable with what we're seeing. Very happy with what we're seeing to date. Obviously, still got to finish the study. But so far, we're comfortable. So we don't have specific rates to disclose or to discuss at this point. But I'd say that the incidence of AEs are lower than what we had expected at this point in the study.

Was there another part to the question?

Yes, I think so. So it's basically -- it was based on just the AEs that you're seeing across the group and then also the dropout rate, those are kind of the 2?

Yes, not so much the AEs. But remember, the whole reason to have built in the option to do an interim was to know whether if we had high dropout rates because if tolerability was poor and high dropout rates for various reasons, we may need to upsize to ensure we get sufficient numbers to hit our statistical significance. And so we built a certain dropout model into the statistical plan. We're well below that in terms of numbers of people who actually have dropped out of the double-blind portion of the study.

So what that means is that we should have a at least equivalent if not higher power than what was initially modeled to observe the effect we've projected based on the numbers we'll get. So with fewer people dropping out, our power goes up to determine. That just means the chances of this happening randomly -- or should I say, the chances of seeing a significant effect is higher with higher numbers. And so we're -- we feel very confident based on what we've seen, such that we don't think there is a need to do an interim for this point in the study.

Got it. Okay. That's helpful. For the 496 Phase III, just wondering if you could say how many sites you think you're going to need for this study, if you can provide a range.

I don't know. It's going to be probably north of 20, but I can't tell you exactly how many at this point. I think it's probably looking at about around 1 to 2 patients per site is the initial expectation over the course of the study. But we already know some sites have more patients than that. We just -- we haven't done obviously prescreening, and that needs to all happen to see available patients, whether they -- what proportion fit the criteria. It's just a bit premature at this point to know exactly. But we'll be aggressive on sites initiation to make sure that we can recruit as quickly as possible.

Got it. Okay. And then last quick question for the Phase III with 496, can you say how long the run-in period is going to be and what the frequency of seizures per week is at baseline?

We haven't disclosed that. Our plan is to give this kind of detail over the near term once we submit the protocol and we're ready to go. So we'd like to hold off those types of details until the study is essentially final in its protocol, and we can disclose all elements of it together.

(Operator Instructions) Our next question comes from David Martin with Bloom Burton.

The first question is the pediatric formulation of 496, you had thought at one point that maybe it would eliminate the bluing and possibly the urinary retention. I think the bluing is, in part, stability in the vial and part of it how it acts in the body. So I'm wondering, now you're through the Phase I, have you seen a reduction in the bluing?

No. Remember, Dave, the pigmentation for ezogabine was seen very late. In fact, it wasn't observed actually in the clinical studies of the drug, which included fairly long-term Phase III studies in adults. So it started to get reported post-launch in post-market work and as it was used commercially. So we don't expect to see pigmentation changes in a Phase I setting like this. Of course, we've submitted -- as part of the meeting we've just had with the FDA, we submitted our monitoring plans, which they're in agreement with, so we are going to monitor for this over time. The formulation itself, I don't think -- I've said before that we don't expect urinary effects based on the formulation, but we do know ezogabine does have a degree of urinary retention. And -- but in all reported cases, that was well managed and there's no bladder toxicity that has been reported in a patient. In terms of the pigmentation itself, we'll monitor for it.

I don't believe, given this appears to be cosmetic, that, as I've said before, even if we do observe it, there has not been a case -- to the best of our knowledge, there has not been a case described of visual toxicity associated with this retinal pigmentation. So even if we were to observe it, which it hasn't yet been observed in any patient used off label, right? This is, of course, in the earlier days of Potiga, the drug was used in a number of these patients, not described and in some patients, for a number of years, it's been used. That just may be a cumulative effect. So I don't think we'll likely see anything, Dave, one way or the other in a shorter-term study. But even if we were to see pigmentation, the nature of this disease, I believe, is such that I don't think this is going to impact the commercial opportunity of this drug. It appears to be just a cosmetic finding at this point.

Okay. Second question also on XEN496. Is it going to be the drug added to standard of care versus standard of care alone? Or is it the drug alone versus standard of care?

No, no, drug on top of. So these are, again, going to be refractory patients who have a certain seizure count over and above what they're currently on. So all of these kids will have been started on something. And depending on the age at which they get recruited into the trial, they may have been on 1 drug, 2 drugs or 10 drugs before, but usually, these drugs -- these kids have a spectrum of drugs on -- at baseline. They're generally on 2 to 3 drugs in the first month or so of their life, so we do expect this will be on top of probably 1 to 2 or 2 to 3 other agents.

And in the standard of care arm, if they move on to another drug because they're failing what they're on, will that be counted as a failure? Will you no longer be counting their seizure rate?

Sorry, in this "placebo group" that's on top of standard of care?

Yes, yes.

Your question is -- so right now, the way the study is designed is they are not crossing over to the active arm.

No, no. I mean in the placebo group, placebo on top of standard of care, if they're failing and the physician says, "Well, I have to move them on to the next drug, not to 496, but to another drug," how will those patients be treated? Will they be failures and out of the trial at that point? Or will you continue to measure their seizure rate?

So very standard in these studies and similar to 1101, they have to be on stable background standard of care, right? And that can change from individual to individual, site to site. So they'll be on a background set of antiepileptic drugs, they'll still be having a baseline number of seizures which will meet the entry criteria. And then in study, they'll be blinded as we will to whether they're on placebo or active. If they are breaking through and having a significant number of seizures, there's always an ability to rescue. And if they rescue, then obviously, that's going to impact in that all of their seizures are going to be taken into consideration. Obviously, if that's in the placebo arm versus the drug arm, it's going to have an impact on the outcome of the study. But there will always be an ability for patients in a study to rescue.

Okay. Last question. I know in the 1101 trial that you're blinded as to which arm the dropouts are coming from. But do you know the cause of the dropouts, if it's a tolerability issue or if it's something else? And are you seeing low tolerability rates, and that's why you're comfortable?

We're seeing good tolerability. So low dropout rates for tolerability is, I guess, what you're asking. Yes. And dropouts are generally in a study for a whole host of reasons, patients move cities, just decide they don't want to be in it. There are a whole host of reasons. And we're seeing -- the dropouts that we've seen are across all of those reasons. So there's nothing that looks consistently drug-related for the majority of dropouts. So that's probably about what I can say there. We don't see anything that stands out as a drug-related cause for dropouts. But yes, there will always be some patients who, for tolerability reasons, will step out of a study and others for a host of other reasons. And we've seen it across the -- all of these possibilities.

Ladies and gentlemen, this concludes our question-and-answer session. I would now like to turn the call back over to Jodi Regts for any closing remarks.

Thank you. Thanks for joining us today.

Operator, we will now end the call.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.