Xenon Pharmaceuticals Inc

Previous wording

Epilepsy (Primary Generalized Tonic-Clonic Seizures)

Current wording

Azetukalner (XEN1101) is a novel, potent Kv7 potassium channel opener being developed for the treatment of epilepsy, including focal onset seizures, or FOS and primary generalized tonic-clonic seizures, or PGTCS, as well as major depressive disorder, or MDD, with the Company exploring applicability in other neuropsychiatric disorders.

Previous wording

Our Phase 3 X-ACKT clinical trial is intended to support potential regulatory submissions in an additional epilepsy indication of primary generalized tonic-clonic seizures, or PGTCS. This multicenter, randomized, double-blind, placebo-controlled trial is evaluating the clinical efficacy, safety, and tolerability of 25 mg of azetukalner administered with food as adjunctive treatment in approximately 160 patients with PGTCS.

Current wording

Phase 3 X-ACKT clinical trial is currently enrolling patients and is intended to support potential regulatory submissions in an additional epilepsy indication of PGTCS. This multicenter, randomized, double-blind, placebo-controlled trial is evaluating the clinical efficacy, safety and tolerability of azetukalner in patients with PGTCS.

Previous wording

Upon completion of the double-blind period in X-TOLE2, X-TOLE3, or X-ACKT, eligible patients may enter an open-label extension, or OLE, study for up to three years. In addition, the ongoing X-TOLE Phase 2b OLE has been extended from five to seven years and continues to generate important long-term data for azetukalner.

Current wording

X-TOLE Phase 2b open-label extension, or OLE, has been extended to seven years and continues to generate important long-term data for azetukalner beyond the 600 patient-years of exposure to date. Upon completion of the double-blind period in the Phase 3 epilepsy studies, eligible patients may enter an OLE study for up to three years.

Previous wording

In addition, we are collaborating with the Icahn School of Medicine at Mount Sinai to support an ongoing investigator-sponsored Phase 2 proof-of-concept, randomized, parallel-arm, placebo-controlled multi-site study of azetukalner for the treatment of MDD in approximately 60 subjects.

Current wording

We continue to support the investigator-sponsored Phase 2 proof-of-concept study of azetukalner in MDD led by Icahn School of Medicine at Mount Sinai, with patient enrollment anticipated to complete this quarter.

Previous wording

We will continue to require additional capital to develop our product candidates and fund operations for the foreseeable future. We have incurred net losses in each year since inception and expect to continue to incur net losses for the foreseeable future. We had a net loss of $47.9 million and $41.7 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, we had an accumulated deficit of $713.1 million. Substantially all of our net losses have resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. We anticipate that our operating expenses will increase substantially, particularly as we:

Current wording

We will continue to require additional capital to develop our product candidates and fund operations for the foreseeable future. We have incurred net losses in each year since inception and expect to continue to incur net losses for the foreseeable future. We had a net loss of $105.9 million and $89.2 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, we had an accumulated deficit of $771.0 million. Substantially all of our net losses have resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. We anticipate that our operating expenses will increase substantially, particularly as we:

Previous wording

The following table summarizes our operating expenses for the three months ended March 31, 2024 and 2023 (in thousands):

Current wording

The following table summarizes our operating expenses for the three and six months ended June 30, 2024 and 2023 (in thousands):

Previous wording

Research and development expenses represent costs incurred to conduct development of our proprietary product candidates and our drug discovery efforts, including any acquired or in-licensed product candidates or technology, and costs to support our partnered product candidates.

Current wording

Research and development expenses represent costs incurred to conduct development of our proprietary product candidates and our drug discovery efforts, including any acquired or in-licensed product candidates or technology, and costs to support any partnered product candidates.

Previous wording

Project-specific expenses reflect costs directly attributable to our clinical development candidates for which we have incurred significant expenses. All remaining research and development expenses are reflected in pre-clinical, discovery and other program expenses. At any given time, we have several active early-stage research and drug discovery programs. Our personnel and infrastructure are typically deployed over multiple projects and are not directly linked to any individual internal early-stage research or drug discovery program. Therefore, we do not maintain financial information for our internal early-stage research and internal drug discovery programs on a project-specific basis.

Current wording

Project-specific expenses reflect costs directly attributable to our clinical development candidates for which we have incurred significant expenses. All remaining research and development expenses are reflected in pre-clinical and discovery expenses. At any given time, we have several active early-stage research and drug discovery programs. Our personnel and infrastructure are typically deployed over multiple projects and are not directly linked to any individual internal early-stage research or drug discovery program. Therefore, we do not maintain financial information for our internal early-stage research and internal drug discovery programs on a project-specific basis.

Previous wording

There have been no material changes in our critical accounting policies and significant judgments and estimates during the three months ended March 31, 2024, as compared to those disclosed in “Management’s Discussion and Analysis of Financial Conditions and Results of Operations - Critical Accounting Policies and Significant Judgments and Estimates” included in our 2023 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission, or SEC, and with the securities commissions in British Columbia, Alberta and Ontario, or the Canadian Securities Commissions, on February 29, 2024. We believe that the accounting policies discussed in the Annual Report are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

Current wording

There have been no material changes in our critical accounting policies and significant judgments and estimates during the six months ended June 30, 2024, as compared to those disclosed in “Management’s Discussion and Analysis of Financial Conditions and Results of Operations - Critical Accounting Policies and Significant Judgments and Estimates” included in our 2023 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission, or SEC, and with the securities commissions in British Columbia, Alberta and Ontario, or the Canadian Securities Commissions, on February 29, 2024. We believe that the accounting policies discussed in the Annual Report are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

Previous wording

The following table summarizes the results of our operations for the three months ended March 31, 2024 and 2023 together with changes in those items (in thousands):

Current wording

The following table summarizes the results of our operations for the three and six months ended June 30, 2024 and 2023 together with changes in those items (in thousands):

Previous wording

The following table summarizes research and development expenses for the three months ended March 31, 2024 and 2023 together with changes in those items (in thousands):

Current wording

The following table summarizes research and development expenses for the three and six months ended June 30, 2024 and 2023 together with changes in those items (in thousands):

Previous wording

Research and development expenses increased by $4.7 million in the three months ended March 31, 2024 as compared to the same period in 2023. The increase was primarily attributable to direct external costs related to our azetukalner program as well as personnel-related costs due to increased headcount to support late-stage development and stock-based compensation expense due to an increase in the number of options granted at a higher fair value, partially offset by a decrease in spend on XEN496. The increase for our azetukalner program is driven by an increase in manufacturing activities to support current and future clinical trials and a potential NDA submission, partially offset by a decrease in direct external costs related to our X-NOVA Phase 2 MDD clinical trial which completed in 2023. The decrease in XEN496 was attributed to decreased external costs to support the EPIK clinical trial and open label extension as a result of our decision in May 2023 to no longer pursue the clinical development of XEN496.

Current wording

Research and development expenses increased by $5.7 million and $10.4 million in the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. The increases were primarily attributable to direct external costs related to our pre-clinical and discovery programs to advance multiple potential drug candidates targeting Kv7, Nav1.7 and Nav1.1, as well as personnel-related costs due to increased headcount to support late-stage development and stock-based compensation expense due to an increase in the number of options granted at a higher fair value, partially offset by a decrease in spend on XEN496. The decrease in XEN496 costs was attributed to decreased external costs to support the EPIK clinical trial and open label extension as a result of our decision in May 2023 to no longer pursue the clinical development of XEN496. For the six months ended June 30, 2024, the increase in our azetukalner program costs is driven by manufacturing activities to support current and future clinical trials and a potential NDA submission, partially offset by a decrease in direct external costs related to our X-NOVA Phase 2 MDD clinical trial which completed in 2023.

Previous wording

The following table summarizes general and administrative expenses for the three months ended March 31, 2024 and 2023 together with changes in those items (in thousands):

Current wording

The following table summarizes general and administrative expenses for the three and six months ended June 30, 2024 and 2023 together with changes in those items (in thousands):

Previous wording

General and administrative expenses increased by $5.3 million in the three months ended March 31, 2024 as compared to the same period in 2023. The increase was primarily attributable to personnel-related costs due to increased headcount to support our expanding research and development activities and stock-based compensation expense due to an increase in the number of options granted at a higher fair value, higher professional and consulting fees, and information technology costs related to our ongoing business activities.

Current wording

General and administrative expenses increased by $7.8 million and $13.1 million in the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. The increases were primarily attributable to personnel-related costs due to increased headcount to support our expanding research and development activities and future potential commercialization, stock-based compensation expense due to an increase in the number of options granted at a higher fair value and higher professional and consulting fees, including legal costs and pre-commercial expenses.

Previous wording

The following table summarizes our other income for the three months ended March 31, 2024 and 2023 together with changes in those items (in thousands):

Current wording

The following table summarizes our other income for the three and six months ended June 30, 2024 and 2023 together with changes in those items (in thousands):

Previous wording

Other income increased by $3.9 million in the three months ended March 31, 2024 as compared to the same period in 2023. The increase was primarily attributable to an increase in interest income in 2024 driven by a higher balance of marketable securities and an increase in market yields on investments. This is partially offset by a decrease in the unrealized fair value gain on trading securities as we did not hold any marketable securities classified as trading securities as of March 31, 2024.

Current wording

Other income increased by $2.9 million and $6.8 million in the three and six month periods ended June 30, 2024, respectively, as compared to the same periods in 2023. The increases were primarily attributable to an increase in interest income due to a higher balance of marketable securities and an increase in market yields on investments. This is partially offset by a decrease in the unrealized fair value gain on trading securities as we did not hold any marketable securities classified as trading securities during the three and six month periods ended June 30, 2024.

Previous wording

To date, we have financed our operations primarily through the sale of equity securities, funding received from collaboration and license agreements, and debt financing. Since our initial public offering through March 31, 2024, we have raised aggregate net cash proceeds of more than $1.3 billion primarily from the issuance of equity securities. As of March 31, 2024, we had cash and cash equivalents and marketable securities of $885.4 million.

Current wording

To date, we have financed our operations primarily through the sale of equity securities, funding received from collaboration and license agreements, and debt financing. Since our initial public offering through June 30, 2024, we have raised aggregate net cash proceeds of more than $1.3 billion primarily from the issuance of equity securities. As of June 30, 2024, we had cash and cash equivalents and marketable securities of $850.6 million.

Previous wording

We have incurred significant operating losses since inception. As of March 31, 2024, we had an accumulated deficit of $713.1 million. We expect to continue to incur significant expenses in excess of our revenue and expect to incur operating losses over the next several years. Our net losses may fluctuate significantly from quarter to quarter and year to year. We expect to incur significant expenses and increasing operating losses for the foreseeable future as we continue our research and pre-clinical and clinical development of our product candidates; expand the scope of our studies for our current and prospective product candidates; initiate additional pre-clinical, clinical or other studies for our product candidates; manufacture drug supply and drug product for clinical trials and commercialization; seek regulatory and marketing approvals for any of our product candidates that successfully complete clinical studies; hire and retain additional personnel; seek to identify, and validate additional product candidates; acquire or in-license other product candidates and technologies; make milestone or other payments under our in-license or other agreements, including, without limitation, payments to 1st Order Pharmaceuticals, Inc and other third parties; maintain, protect and expand our intellectual property portfolio; establish a sales, marketing, distribution and other commercial infrastructure to commercialize any products for which we may obtain marketing approval; create additional infrastructure and incur additional costs to support our operations and our product development and planned future commercialization efforts; and experience any delays or encounter issues with any of the above.

Current wording

We have incurred significant operating losses since inception. As of June 30, 2024, we had an accumulated deficit of $771.0 million. We expect to continue to incur significant expenses in excess of our revenue and expect to incur operating losses over the next several years. Our net losses may fluctuate significantly from quarter to quarter and year to year. We expect to incur significant expenses and increasing operating losses for the foreseeable future as we continue our research and pre-clinical and clinical development of our product candidates; expand the scope of our studies for our current and prospective product candidates; initiate additional pre-clinical, clinical or other studies for our product candidates; manufacture drug supply and drug product for clinical trials and commercialization; seek regulatory and marketing approvals for any of our product candidates that successfully complete clinical studies; hire and retain additional personnel; seek to identify, and validate additional product candidates; acquire or in-license other product candidates and technologies; make milestone or other payments under our in-license or other agreements, including, without limitation, payments to 1st Order Pharmaceuticals, Inc and other third parties; maintain, protect and expand our intellectual property portfolio; establish a sales, marketing, distribution and other commercial infrastructure to commercialize any products for which we may obtain marketing approval; create additional infrastructure and incur additional costs to support our operations and our product development and planned future commercialization efforts; and experience any delays or encounter issues with any of the above.

Previous wording

The following table shows a summary of our cash flows for the three months ended March 31, 2024 and 2023 (in thousands):

Current wording

The following table shows a summary of our cash flows for the six months ended June 30, 2024 and 2023 (in thousands):

Previous wording

For the three months ended March 31, 2024, net cash used in operating activities totaled $43.2 million, compared to $34.4 million for the same period in 2023. The increase in cash used in operating activities was primarily related to higher research and development and general and administrative expenses, as well as changes in operating assets and liabilities. This was partially offset by higher interest income.

Current wording

For the six months ended June 30, 2024, net cash used in operating activities totaled $75.9 million, compared to $67.6 million for the same period in 2023. The increase in cash used in operating activities was primarily related to higher research and development and general and administrative expenses, as well as changes in operating assets and liabilities. This was partially offset by higher interest income.

Previous wording

For the three months ended March 31, 2024, net cash used in investing activities totaled $46.2 million, compared to net cash provided of $46.6 million for the same period in 2023. The change was driven primarily by an increase in the purchases of marketable securities, net of redemptions.

Current wording

For the six months ended June 30, 2024, net cash provided by investing activities totaled $64.5 million, compared to $74.5 million for the same period in 2023. The change was driven primarily by an increase in the purchases of marketable securities, net of redemptions. This was partially offset by a decrease in the purchases of property, plant and equipment.

Previous wording

As of May 6, 2024, we had 75,468,883 common shares issued and outstanding, outstanding pre-funded warrants to purchase an additional 2,173,081 common shares, outstanding stock options to purchase an additional 10,777,848 common shares, outstanding PSUs convertible into 192,000 common shares and an outstanding warrant to purchase an additional 40,000 common shares.

Current wording

As of August 5, 2024, we had 75,764,505 common shares issued and outstanding, outstanding pre-funded warrants to purchase 2,173,081 common shares, outstanding stock options to purchase 10,656,473 common shares, outstanding PSUs convertible into 195,000 common shares and an outstanding warrant to purchase 40,000 common shares.