Xenon Pharmaceuticals' Q3 2025 Earnings Call Contradictions Emerge on X-TOLE2 Study Size, Top Line Data, NDA Filing, Enrollment Timing, and Bipolar Depression Study Design

Guidance:

• Top-line X-TOLE2 readout expected in early 2026.
• Intend to file an NDA for azetukalner if X-TOLE2 is positive and are actively preparing the dossier.
• Anticipate having sufficient cash to fund operations into 2027 (cash, cash equivalents and marketable securities $555.3M as of Sept 30, 2025).
• Planning for a potential 2027 launch contingent on positive readout and regulatory timing.
• Expect to advance Phase III psychiatry programs and move Phase I pain programs toward Phase II next year.

Business Commentary:

* Pharmaceutical Research and Development Milestones: - Xenon Pharmaceuticals successfully completed the randomization of 380 patients in its Phase III X-TOLE2 study of azetukalner, exceeding the initial target of 360 patients. - The progress is strategic, as the study is designed and powered to randomize approximately 360 patients, and the excess randomized patients will enhance the study's power across critical endpoints.

• Financial Performance and Cash Position:
• The company maintained a strong cash position with $555.3 million in cash, cash equivalents, and marketable securities as of September 30, 2025.

• Despite the decrease from the previous year-end figure, the company anticipates having sufficient cash to fund operations into 2027.

• Clinical Trial Progress:

• Xenon Pharmaceuticals has made significant progress in its clinical development programs, with completed randomization in its Phase III X-TOLE2 trial and ongoing studies in epilepsy and neuropsychiatric conditions.

• The advancements are attributed to the company's focus on leveraging mechanistic insights and partnering with experienced clinical sites to maximize study success.

• Nav1.1 Program Advancement:

• Preclinical data suggests that targeting Nav1.1 could address the underlying causes and symptoms of Dravet syndrome, with promising results in animal models showing improvements in seizure control and motor function.
• This progress is attributed to the company's deep expertise in potassium and sodium channel therapeutics and the strategic focus on pain and neuropsychiatric indications.

Sentiment Analysis:

Overall Tone: Positive

• Management expressed optimism and high confidence: “We are optimistic for a positive outcome,” emphasized X-TOLE2 as critical for an NDA and noted “considerable momentum” across programs; CFO said they anticipate sufficient cash to fund operations into 2027.

Q&A:

• Question from Paul Matteis (Stifel): Can you set the stage for the top-line data release — how much will be disclosed on efficacy and safety? Once you have those data, if positive, what would be rate limiting to filing?
  Response: Top-line will report key efficacy endpoints and overall safety/tolerability similar to X-TOLE; X-TOLE2 efficacy is the critical path for an NDA and much of the NDA text is already in progress.

• Question from Tessa Romero (JPMorgan): Where did screen failure rate land for X-TOLE2 and were reasons as expected? And how far behind will X-NOVA2 results be vs X-TOLE2 — might it read out in 2026?
  Response: Combined screen/baseline failure rate tracked as expected (mainly insufficient seizures and typical inclusion/exclusion reasons); X-NOVA2 will likely take ~2–2.5 years from start and is not guaranteed to read out in 2026.

• Question from Johoon Kim (RBC): How much efficacy are doctors willing to trade for tolerability/ease of use and what learnings from the cenobamate launch matter?
  Response: Commercial uptake depends on overall profile (tolerability, no titration, minimal DDIs) not just efficacy; cenobamate had high efficacy but challenging titration/DDIs, underscoring AZK's differentiated advantages.

• Question from Charles Moore (Robert W. Baird): On X-CEED, why include both bipolar I and II given depressive predominance in II, and why use MADRS rather than HAM-D like in MDD trials?
  Response: BPD I vs II are stratified due to differences (mania vs hypomania); MADRS was chosen for bipolar depression because it is the accepted precedent in bipolar trials, whereas HAM-D was used in MDD based on lower variability observed previously.

• Question from Dina Ramadane (BofA Securities): Why enroll 380 vs planned 360 in X-TOLE2 and does that affect power? Any color on Phase I XEN1120/XEN1701 SAD/MAD studies — timing and what defines success?
  Response: Late enrollment bolus increased randomized patients from 360 to 380, slightly increasing already high power (99% for 25 mg); Phase I studies should wrap early next year and success = acceptable safety/tolerability plus sufficient exposure/target engagement to advance to Phase II.

• Question from Unknown Analyst (Evercore, on for Cory): Competitors had early Phase II readouts — if sustained, how would that change AZK positioning? And how should we think about operating costs into 2026 given launch planning and additional Phase IIIs?
  Response: More innovation is positive; cross-trial comparisons are hard and competitors are behind in placebo-controlled data — Xenon is confident in AZK's profile; OpEx will rise modestly in 2026 for prep, with larger commercialization spend (sales force) expected in 2027.

• Question from Unknown Analyst (Leerink, on for Marc): Will X-TOLE2 assess HAM-A or MADRS for comorbid depression and what proportion of patients have comorbid depression? Also, can you provide more selectivity detail for Nav1.7 vs other channels?
  Response: Psychiatric comorbidities are being captured as exploratory patient-reported outcomes using the Beck Depression Inventory and GAD-7 across Phase III; not powered and baseline proportions not disclosed; Nav1.7 candidates are described as highly selective over other sodium isoforms, with additional preclinical details withheld for competitive reasons.

• Question from Joseph Thome (TD Cowen): Expectation for change in cenobamate use in Phase III vs Phase II and will that affect placebo/active response or AE discontinuations? And why no interim in MDD studies — will that change for a third Phase III?
  Response: Cenobamate use likely higher in Phase III than Phase II; preclinical combo data show additive efficacy without expected tolerability penalties; no interim in MDD because prior proof-of-concept data supported assumptions, whereas the BPD program includes an interim due to greater uncertainty.

• Question from Brian Balchin (Jefferies): For the BPD interim, what scenarios are possible and associated placebo-adjusted targets? And if X-TOLE2 failed, how far behind is X-TOLE3; could you still file NDA in 2026?
  Response: Interim is binary — assess conditional power and, if needed, increase sample size from 400 up to 470 to reach >80% power to detect a ~2-point MADRS difference; X-TOLE3 lags because sites/resources were prioritized for X-TOLE2, so a failed X-TOLE2 would likely delay any NDA plans and require accelerating X-TOLE3, making a 2026 NDA filing unlikely.

Contradiction Point 1

X-TOLE2 Study Size and Randomization

It involves the size of the X-TOLE2 study and the number of patients randomized, which directly impacts the statistical power of the study and its ability to demonstrate efficacy.

Why did you enroll 380 patients in X-TOLE2 instead of the initially planned 360? - Dina Ramadane(BofA Securities, Research Division)

2025Q3: Randomization ended with 380 patients due to a surplus in the final recruitment phase. - Ian Mortimer(CEO)

Will the X-TOLE2 study size be larger than the originally planned 360? - Brian Abrahams(RBC Capital Markets)

2025Q2: The study is designed for 360 subjects, but the final number may vary due to screen and baseline failures. - Ian Mortimer(CEO)

Contradiction Point 2

Top Line Data Release and NDA Filing Timeline

It involves the timeline for releasing top-line data from the X-TOLE2 study and the subsequent NDA filing, which are critical milestones for the company's product development and regulatory approval process.

Can you provide context for the top line data release? - Paul Matteis(Stifel, Nicolaus & Company, Incorporated, Research Division)

2025Q3: Expect top line data to be similar to previous releases, with information on key efficacy end points, safety, and tolerability. - Ian Mortimer(CEO)

How soon do you expect to file after top line FOS data? - Jo Yi Chudy(Stifel)

2025Q2: We believe we'll be able to file the NDA at the end of the second half of this year, so approximately 6 months from today. - Ian Mortimer(CEO)

Contradiction Point 3

X-TOLE2 Enrollment and Timeline

It involves discrepancies in the reported enrollment numbers and timelines for the X-TOLE2 trial, which are critical for understanding the company's clinical development progress.

Why was the patient enrollment in X-TOLE2 increased to 380 from the initially planned 360? - Dina Ramadane (BofA Securities)

2025Q3: Randomization ended with 380 patients due to a surplus in the final recruitment phase. - Ian Mortimer(President and CEO)

How many patients remain to be recruited for XTOLE-2? - Tessa Romero (JPMorgan)

2025Q1: We're getting close to the end of recruitment in the next couple of months. The way we think about randomized patients is we will end up with in the low 360s. - Ian Mortimer(President and CEO)

Contradiction Point 4

Phase III Enrollment and Data Timing

It reflects differing expectations regarding the timeline for completing enrollment in a critical Phase III trial and the potential release of top-line data.

Can you outline the top-line data release? How much efficacy and safety information will be disclosed? What might limit the filing after positive results? - Paul Matteis(Stifel, Nicolaus & Company, Incorporated, Research Division)

2025Q3: We expect top line data to be similar to previous releases, with information on key efficacy end points, safety, and tolerability. - Ian Mortimer(CEO)

Regarding the first Phase III in epilepsy, can you provide updates on how close you are to full enrollment? Is the data still expected in Q3, or is a Q4 timeline more likely? - Paul Matteis(Stifel)

2024Q4: We're comfortable with the guidance that we have right now, which is Phase III epilepsy data in the second half of the year. - Ian Mortimer(CEO)

Contradiction Point 5

Bipolar Depression Study Design and Enrollment

It involves differing expectations regarding the enrollment of patients and the study design for a bipolar depression trial, which are crucial for the success and timelines of key clinical programs.

What was the final screen failure rate for X-TOLE2? Were screen-outs due to expected reasons based on prior experience? How far behind will X-NOVA2 results be compared to X-TOLE2, and is a 2026 timeline feasible? - Tessa Romero(JPMorgan Chase & Co, Research Division)

2025Q3: We think bipolar depression is the stronger scientific rationale, mechanistic rationale, some of the genetic data that's in the literature as well. - Ian Mortimer(CEO)

Can you confirm enrollment in X-TOLE2 is not yet complete? Can you provide details on the Phase III design for bipolar depression including patient population and endpoints? - Caroline Pocher(JPMorgan)

2024Q4: Specifically on bipolar depression, more details to come. We're committed to this being a registration program, so a Phase III study in bipolar depression. - Ian Mortimer(CEO)