Xenon Pharmaceuticals Inc.

Previous wording

the initiation, timing, cost, progress and success of our research and development programs, pre-clinical studies and clinical studies;

Current wording

the initiation, timing, cost, progress and success of our research and development programs, preclinical studies and clinical studies;

Previous wording

Azetukalner is a novel, potent Kv7 potassium channel opener in late-stage development for multiple potential indications, including two in epilepsy – focal onset seizures (FOS) and primary generalized tonic-clonic seizures (PGTCS) – as well as neuropsychiatric disorders, including major depressive disorder (MDD) and bipolar depression (BPD).

Current wording

Azetukalner is a novel, potent Kv7 potassium channel opener in late-stage development for multiple potential indications, including two in epilepsy – focal seizures (FS) and primary generalized tonic-clonic seizures (PGTCS) – as well as neuropsychiatric disorders, including major depressive disorder (MDD) and bipolar depression (BPD).

Previous wording

We remain on track to submit our New Drug Application (NDA) for azetukalner in FOS in the third quarter of 2026, having completed a pre-NDA meeting with the U.S. Food and Drug Administration (FDA).

Current wording

We submitted our New Drug Application (NDA) for azetukalner in FS to the U.S. Food & Drug Administration (FDA) in September 2026.

Previous wording

The Phase 3 X-TOLE3 study of azetukalner in FOS continues to enroll and is intended to support regulatory submissions outside of the United States. X-TOLE3 enrollment outside of Japan is expected to complete in 2026.

Current wording

The Phase 3 X-TOLE3 study of azetukalner in FS continues to enroll and is intended to support regulatory submissions outside of the U.S. X-TOLE3 enrollment outside of Japan is expected to complete in 2026.

Previous wording

We continue to expand our portfolio of potent, selective ion channel modulators using our strong heritage in human genetics, deep understanding of ion channel biology, and expertise in novel chemistries. This includes clinical-stage candidates targeting Nav1.7 and Kv7, which are important novel targets for pain.

Current wording

We continue to expand our portfolio of potent, selective ion channel modulators using our strong heritage in human genetics, deep understanding of ion channel biology, and expertise in novel chemistries. This includes clinical-stage candidates targeting Nav1.7 and Kv7, which are important novel targets for non-opioid pain therapeutics.

Previous wording

The Phase 1 Single Ascending Dose (SAD)/Multiple Ascending Dose (MAD) study in healthy adult participants is ongoing for XEN1701 targeting Nav1.7. Study completion is expected in H2 2026 to support initiating a Phase 2 proof-of-concept study in acute pain.

Current wording

At the International Association for the Study of Pain (IASP) 2026 World Congress on Pain in October 2026, we presented positive data from our Phase 1 Single Ascending Dose (SAD)/Multiple Ascending Dose (MAD) study in healthy adult participants for XEN1701 targeting Nav1.7. XEN1701 achieved our target profile, including desired high levels of Nav1.7 receptor occupancy in both the peripheral and central nervous system, and was generally well-tolerated with no notable autonomic cardiovascular effects. Additionally, new preclinical data in cynomolgus monkeys demonstrated that a Nav1.7 inhibitor provided significant pain reductions in capsaicin-evoked heat pain. Based on the positive Phase 1 results, we expect to initiate a Phase 2 proof-of-concept (POC) study for XEN1701 in acute pain in H1 2027.

Previous wording

IND-enabling studies are ongoing for our oral small molecule Nav1.1 program. Pre-clinical data suggest that targeting Nav1.1 could potentially address the underlying cause and symptoms of Dravet syndrome.

Current wording

IND-enabling studies are ongoing for our oral small molecule Nav1.1 program. Preclinical data suggest that targeting Nav1.1 could potentially address the underlying cause and symptoms of Dravet syndrome.

Previous wording

We have funded our operations primarily through the sale of equity securities, funding received from our licensees and collaborators, and debt financing. For the six months ended June 30, 2026 and 2025, we recognized revenue of nil and $7.5 million, respectively, in connection with our agreement with Neurocrine Biosciences. To date, we have not had any products approved for sale and have not generated any revenue from product sales. We do not expect to generate revenue from product sales unless and until we successfully complete development and obtain regulatory approval for a product candidate, which we expect will take a number of years, if ever, and the outcome of which is subject to significant uncertainty.

Current wording

We have funded our operations primarily through the sale of equity securities, funding received from our licensees and collaborators, and debt financing. For the nine months ended September 30, 2026 and 2025, we recognized revenue of nil and $7.5 million, respectively, in connection with our agreement with Neurocrine Biosciences. To date, we have not had any products approved for sale and have not generated any revenue from product sales. We do not expect to generate revenue from product sales unless and until we successfully complete development and obtain regulatory approval for a product candidate, which we expect will take a number of years, if ever, and the outcome of which is subject to significant uncertainty.

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 $213.0 million and $149.8 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, we had an accumulated deficit of $1,458.4 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 $323.5 million and $240.6 million for the nine months ended September 30, 2026 and 2025, respectively. As of September 30, 2026, we had an accumulated deficit of $1,568.9 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

third-party expenses incurred in connection with the pre-clinical and clinical development of our product candidates, including under agreements with clinical research organizations;

Current wording

third-party expenses incurred in connection with the preclinical and clinical development of our product candidates, including under agreements with clinical research organizations;

Previous wording

third-party expenses relating to formulation, process development and manufacture of drug substance and drug product for use in our pre-clinical testing, clinical studies and potential commercial supply;

Current wording

third-party expenses relating to formulation, process development and manufacture of drug substance and drug product for use in our preclinical testing, clinical studies and potential commercial supply;

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 preclinical, 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.

Previous wording

We expect that our research and development expenses will increase substantially in the future as we continue to invest in research and development activities related to developing our product candidates, including investments in manufacturing, as our programs advance into later stages of development and we continue to conduct clinical studies, advance our internal drug discovery programs into pre-clinical development and continue our early-stage research. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size, scope and duration of later-stage clinical studies.

Current wording

We expect that our research and development expenses will increase substantially in the future as we continue to invest in research and development activities related to developing our product candidates, including investments in manufacturing, as our programs advance into later stages of development and we continue to conduct clinical studies, advance our internal drug discovery programs into preclinical development and continue our early-stage research. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size, scope and duration of later-stage clinical studies.

Previous wording

Clinical development timelines, likelihood of regulatory approval, and commercialization and associated costs are uncertain, difficult to estimate, and can vary significantly. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, and the successful development of our product candidates is highly uncertain. As a result, we cannot accurately estimate or know the nature, timing and costs that will be necessary to complete the pre-clinical and clinical development for any of our product candidates or when and to what extent we may generate revenue from the commercialization and sale of any of our product candidates or achieve profitability.

Current wording

Clinical development timelines, likelihood of regulatory approval, and commercialization and associated costs are uncertain, difficult to estimate, and can vary significantly. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, and the successful development of our product candidates is highly uncertain. As a result, we cannot accurately estimate or know the nature, timing and costs that will be necessary to complete the preclinical and clinical development for any of our product candidates or when and to what extent we may generate revenue from the commercialization and sale of any of our product candidates or achieve profitability.

Previous wording

There have been no material changes in our critical accounting policies and significant judgments and estimates during the six months ended June 30, 2026, 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 2025 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 26, 2026. 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 nine months ended September 30, 2026, 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 2025 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 26, 2026. 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

Comparison of three and six months ended June 30, 2026 and 2025

Current wording

Comparison of three and nine months ended September 30, 2026 and 2025

Previous wording

We did not recognize any revenue during the six months ended June 30, 2026. Collaboration revenue of $7.5 million recognized during the six months ended June 30, 2025 was related to a milestone payment in connection with the Neurocrine Collaboration.

Current wording

We did not recognize any revenue during the nine months ended September 30, 2026. Collaboration revenue of $7.5 million recognized during the nine months ended September 30, 2025 was related to a milestone payment in connection with the Neurocrine Collaboration.

Previous wording

Direct external costs related to azetukalner increased by $12.4 million and $27.9 million for the three months and six months ended June 30, 2026, respectively, primarily due to our ongoing Phase 3 clinical studies in the MDD and BPD programs, as well as manufacturing activities to support our planned NDA submission. Pain programs costs increased by $4.7 million and $8.0 million for the three months and six months ended June 30, 2026, respectively, primarily due to our ongoing Phase 1 clinical studies of XEN1701 and XEN1120, as well as manufacturing activities to support the clinical studies. Personnel-related costs increased by $5.7 million and $14.3 million for the three months and six months ended June 30, 2026, respectively, due to higher headcount supporting our late-stage product candidate development and an increase in stock-based compensation.

Current wording

Direct external costs related to azetukalner increased by $11.8 million and $39.8 million for the three and nine months ended September 30, 2026, respectively, primarily due to our Phase 3 clinical studies in the MDD and BPD programs and manufacturing activities to support potential commercialization and launch readiness of azetukalner. Pain program costs increased by $1.1 million for the three months ended September 30, 2026, primarily due to enrollment in our ongoing XEN1720 Phase 1 clinical study, and by $9.1 million for the nine months ended September 30, 2026, primarily due to our Phase 1 clinical studies of XEN1701, XEN1120 and XEN1720, as well as manufacturing activities to support the clinical studies. Preclinical, discovery and other program costs decreased by $2.3 million for the nine months ended September 30, 2026, primarily due to lower spending on preclinical development programs. Personnel-related costs increased by $5.7 million and $20.0 million for the three and nine months ended September 30, 2026, respectively, due to higher headcount supporting our late-stage product candidate and pain programs, and an increase in stock-based compensation.

Previous wording

Personnel-related costs increased by $2.7 million and $5.2 million for the three months and six months ended June 30, 2026, respectively, primarily due to higher headcount to support our expanding research and development activities and future potential commercialization as well as an increase in stock-based compensation expense. Professional and consulting fees increased by $1.6 million and $3.4 million for the three months and six months ended June 30, 2026, respectively, due to an increase in pre-commercial expenses and higher expenses related to maintenance and filing of intellectual property.

Current wording

Personnel-related costs increased by $2.9 million and $8.1 million for the three and nine months ended September 30, 2026, respectively, primarily due to higher headcount to support our expanding research and development activities and future potential commercialization as well as an increase in stock-based compensation expense. Professional and consulting fees increased by $2.8 million and $6.2 million for the three and nine months ended September 30, 2026, respectively, due to an increase in pre-commercial expenses and higher expenses related to maintenance and filing of intellectual property.

Previous wording

Interest income increased by $4.9 million and $3.8 million for the three and six months ended June 30, 2026, respectively, due to a higher average balance of cash and cash equivalents and marketable securities, partially offset by lower average market yields on investments. The foreign exchange gain decreased by $2.0 million and $1.5 million for the three and six months ended June 30, 2026, respectively, due to fluctuations in the value of the Canadian dollar, partially offset by a lower balance of cash and cash equivalents and marketable securities denominated in Canadian dollars.

Current wording

Interest income increased by $5.4 million and $9.2 million for the three and nine months ended September 30, 2026, respectively, due to a higher average balance of cash and cash equivalents and marketable securities, partially offset by lower average market yields on investments. Foreign exchange gain decreased by $1.5 million for the nine months ended September 30, 2026, due to fluctuations in the value of the Canadian dollar, partially offset by a lower balance of cash and cash equivalents and marketable securities denominated in Canadian dollars.

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 June 30, 2026, we have raised aggregate net cash proceeds of approximately $2.3 billion primarily from the issuance of equity securities. As of June 30, 2026, we had cash and cash equivalents and marketable securities of $1,245.1 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 September 30, 2026, we have raised aggregate net cash proceeds of approximately $2.3 billion primarily from the issuance of equity securities. As of September 30, 2026, we had cash and cash equivalents and marketable securities of $1,153.5 million.

Previous wording

We have incurred significant operating losses since inception. As of June 30, 2026, we had an accumulated deficit of $1,458.4 million. We expect to incur operating losses that may fluctuate significantly from quarter to quarter and year to year over the next several years. In addition, we expect to continue to incur significant expenses in excess of our revenue for the foreseeable future as we prepare for the potential commercial launch of azetukalner; invest significantly to further develop azetukalner for our current and future indications; advance additional product candidates into pre-clinical and clinical development; seek regulatory and marketing approvals for any of our product candidates that successfully complete clinical studies; manufacture larger quantities of our product candidates of clinical development and potential commercialization; hire additional commercial, clinical, scientific, management and administrative personnel; 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 September 30, 2026, we had an accumulated deficit of $1,568.9 million. We expect to incur operating losses that may fluctuate significantly from quarter to quarter and year to year over the next several years. In addition, we expect to continue to incur significant expenses in excess of our revenue for the foreseeable future as we prepare for the potential commercial launch of azetukalner; invest significantly to further develop azetukalner for our current and future indications; advance additional product candidates into preclinical and clinical development; seek regulatory and marketing approvals for any of our product candidates that successfully complete clinical studies; manufacture larger quantities of our product candidates for clinical development and potential commercialization; hire additional commercial, clinical, scientific, management and administrative personnel; 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

Based on our research and development plans and our timing expectations related to the progress of our programs, we expect that our existing cash and cash equivalents and marketable securities as of the date of this report, will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months. However, our estimates and assumptions may prove to be wrong, and we cannot guarantee that our existing capital resources will be sufficient to conduct and complete all of our anticipated research and development efforts and future commercialization efforts. Additionally, the process of testing drug candidates in clinical studies is costly, and the timing of progress in these studies remains uncertain. Further, inflation may affect our use of capital resources by increasing our cost of labor and research and development expenses. Our long-term funding requirements will consist of operational, capital, and manufacturing expenditures, including those contractual commitments described below. Because of the inherent risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of capital outflows and operating expenditures associated with our long-term anticipated pre-clinical studies and clinical studies.

Current wording

Based on our research and development plans and our timing expectations related to the progress of our programs, we expect that our existing cash and cash equivalents and marketable securities as of the date of this report, will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months. However, our estimates and assumptions may prove to be wrong, and we cannot guarantee that our existing capital resources will be sufficient to conduct and complete all of our anticipated research and development efforts and future commercialization efforts. Additionally, the process of testing drug candidates in clinical studies is costly, and the timing of progress in these studies remains uncertain. Further, inflation may affect our use of capital resources by increasing our cost of labor and research and development expenses. Our long-term funding requirements will consist of operational, capital, and manufacturing expenditures, including those contractual commitments described below. Because of the inherent risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of capital outflows and operating expenditures associated with our long-term anticipated preclinical studies and clinical studies.

Previous wording

The following table shows a summary of our cash flows for the six months ended June 30, 2026 and 2025 (in thousands):

Current wording

The following table shows a summary of our cash flows for the nine months ended September 30, 2026 and 2025 (in thousands):

Previous wording

For the six months ended June 30, 2026, net cash used in operating activities totaled $184.3 million, compared to $125.9 million for the same period in 2025. The increase in cash used in operating activities was primarily driven by higher research and development and general and administrative expenses, no revenue recognized in the six months ended June 30, 2026, lower cash received from interest income, and changes in operating assets and liabilities.

Current wording

For the nine months ended September 30, 2026, net cash used in operating activities totaled $274.6 million, compared to $197.6 million for the same period in 2025. The increase in cash used in operating activities was primarily driven by higher research and development and general and administrative expenses, no revenue recognized in the nine months ended September 30, 2026, lower cash received from interest income, partially offset by changes in operating assets and liabilities.

Previous wording

For the six months ended June 30, 2026, net cash used in investing activities totaled $738.5 million, compared to net cash provided of $116.8 million for the same period in 2025. The change was driven primarily by an increase in the purchase of marketable securities, net of redemptions.

Current wording

For the nine months ended September 30, 2026, net cash used in investing activities totaled $685.3 million, compared to net cash provided of $155.3 million for the same period in 2025. The change was driven primarily by an increase in the purchase of marketable securities, net of redemptions.

Previous wording

For the six months ended June 30, 2026, net cash provided by financing activities was $843.0 million, compared to $1.2 million for the same period in 2025. The increase was primarily related to $837.5 million net proceeds from offerings, as well as an increase in proceeds from stock option exercises.

Current wording

For the nine months ended September 30, 2026, net cash provided by financing activities was $843.3 million, compared to $3.6 million for the same period in 2025. The increase was primarily related to $837.5 million net proceeds from offerings, as well as an increase in proceeds from stock option exercises.