Xenon Pharmaceuticals Inc (XENE) Q3 2020 Earnings Call Transcript

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Xenon Prescription drugs Inc (NASDAQ:XENE)
Q3 2020 Earnings Name
Nov 6, 2020, four:30 p.m. ET

Ready Remarks:

Operator

Women and gents, thanks for standing by, and welcome to the Q3 2020 Xenon Prescription drugs Inc. Earnings Convention Name. [Operator Instructions]

I’d now like at hand the convention over to your speaker at the moment, Ms. Jodi Regts. Please go forward.

Jodi Regts — Investor Relations

Thanks. Good afternoon. Thanks for becoming a member of us on our name and webcast to debate our third quarter 2020 monetary and working outcomes. Becoming a member of me on at the moment’s name are Dr. Simon Pimstone, Xenon’s Chief Govt Officer; and Ian Mortimer, Xenon’s President and Chief Monetary Officer. Following this introduction, Simon will give an summary of Xenon’s scientific packages, after which Ian will present some high-level monetary commentary. After that, we’ll open up the decision to your questions. Please be suggested that in this name, we’ll make plenty of statements which can be ahead trying, together with statements concerning the anticipated affect and timing of the COVID-19 pandemic on our enterprise, analysis and scientific growth plans and time strains and outcomes of operations, the timing of and outcomes from scientific trials and preclinical growth actions, together with these associated to XEN496, XEN1101, XEN007 and different proprietary merchandise and people associated to NBI-921352, FX301 and different partnered product candidates; the potential efficacy, security profile, future growth plans, addressable market, regulatory success and business potential of our proprietary and partnered product candidates; the anticipated timing of investigational new drug or IND or IND-equivalent submissions and the initiation of future scientific trials for our proprietary merchandise and people associated to our different accomplice candidates; the efficacy of our scientific trial designs; our means to efficiently develop and obtain milestones in our proprietary growth packages; the timing and outcomes of our interactions with regulators; the potential to advance sure of our product candidates immediately into Part II or later-stage scientific trials; the timing and anticipated enrollment in our scientific trials; the progress and potential of our different ongoing growth packages; the potential receipt of milestone funds and royalties from our collaborators; our expectation of getting enough money to fund operations into 2023 and the timing of potential publication or presentation of future scientific knowledge. Ahead-looking statements are topic to quite a few dangers and uncertainties, lots of that are past our management, together with the dangers and uncertainties described sometimes in our SEC filings. Our outcomes could differ materially from these projected on at the moment’s name. We undertake no obligation to publicly replace any forward-looking statements. In the present day’s press launch summarizing the outcomes of Xenon’s third quarter of 2020 and the accompanying quarterly report on Type 10-Q will probably be made obtainable beneath the Traders part of our web site at www.xenon-pharma.com and filed with the SEC and on SEDAR.

Now I wish to flip the decision over to Simon.

Simon Pimstone — Chief Govt Officer and President

Thanks, Jodi, and good afternoon, and thanks, everybody, for becoming a member of us at the moment. I hope everyone seems to be staying properly. At Xenon, regardless of the continuing critical second wave of the worldwide COVID-19 pandemic, which is actually putting strain on everybody and specifically, in scientific recruitment, we proceed to progress advancing our proprietary neurology product candidates into mid- to late-stage scientific growth. We’ve made necessary changes to our enterprise with a view to reply and react to COVID’s affect on our enterprise. And with many elements exterior of our management, we have been intently assessing the potential impacts of this COVID-19 second wave to our scientific packages, and we’ll present some additional updates to program and money steerage at the moment. I will be beginning by offering a short standing report on every of our proprietary and partnered packages with a concentrate on XEN1101 and XEN496. First, XEN1101, which is a differentiated next-generation Kv7 potassium channel modulator at present in our Part IIb XTO scientific trial within the U.S., Canada and Europe. Briefly, this trial is a randomized, double-blind, placebo-controlled multicenter examine to guage the scientific efficacy, security and tolerability of XEN1101 administered as adjunctive remedy in roughly 300 grownup sufferers with focal epilepsy. The first finish level is the median p.c change in month-to-month focal seizure frequency from baseline in comparison with remedy interval of lively versus placebo. Throughout the XTO examine and as many different corporations are experiencing, that is an especially difficult surroundings by which to supply steerage as COVID-19 is leading to common modifications in clinic screening and in affected person views on committing to longer-term research that require monitoring and interplay with medical workers. Within the early levels of the COVID-19 pandemic, We skilled a major lower in affected person screening and randomization. In response, we applied a number of danger mitigation methods that resulted extra just lately in a optimistic uptick in affected person screening and randomization.

We expanded the XOL scientific trial to incorporate plenty of new websites in each present and new jurisdictions, and plenty of of those new websites have just lately initiated affected person screening. Whereas we’re happy to see extra optimistic tendencies in enrollment just lately, these charges are nonetheless wanting pre-COVID ranges, and we’re modeling that affected person enrollment will seemingly proceed at this lowered stage for the rest of the 12 months. Due to this fact, whereas we consider our presence in a number of jurisdictions with new websites opening will definitely assist to mitigate the dangers of delay introduced by COVID-19, we anticipate that affected person randomization will probably be accomplished within the first half of 2021. And with an Eight-week dosing interval and follow-up, we at the moment are guiding that prime line knowledge is anticipated within the third quarter of 2021. This steerage relies on the restoration in affected person enrollment charges now we have seen over the previous few months however with a extra cautious outlook for the approaching months till now we have higher visibility into the second wave of the pandemic and its ensuing impacts. You will need to emphasize that regardless of these attempting circumstances, we stay assured within the conduct of the examine and within the entity of the info as captured by digital diary. And we don’t consider COVID-19 could have any affect on the ultimate efficacy outcomes of the examine. To this point, dropout charges stay decrease than modeled, and we proceed to see wonderful continuation into the open-label portion of the examine. Though we’re laser-focused on the XOL examine, This 12 months, now we have accomplished further main market analysis and detailed work across the focal epilepsy market. And we stay very enthusiastic about XEN1101 within the position it may play in that focal epilepsy market. With its novel mechanism of motion, its PK traits and different probably useful pharmaceutical properties, we consider XEN1101 has the potential to be considerably differentiated within the market. We look ahead to sharing extra of our analysis with you over the approaching months.

Subsequent, I might like to show to XEN496, which is a Kv7 potassium channel modulator that incorporates the lively pharmaceutical ingredient, ezogabine, also referred to as retigabine, that now we have reformulated and are creating as a remedy for a uncommon pediatric neurodevelopmental dysfunction referred to as KCNQ2 developmental and epileptic encephalopathy, or KCNQ2-DEE, which is a extreme pediatric situation for which no medication has but been accredited. Over the previous quarter, now we have made appreciable progress towards our purpose to provoke a Part III scientific trial inspecting XEN496 in sufferers with KCNQ2-DEE. Along with a Quick Observe designation and orphan drug designation for XEN496 for the remedy of KCNQ2-DEE, we obtained a optimistic opinion from the EMEA, which recommends the granting of an orphan medicinal product designation in Europe for XEN496 for the remedy of KCNQ2-DEE. As well as, the FDA has accomplished its assessment of the scientific trial protocol. And based mostly on this, we anticipate to provoke our Part III EPIC scientific trial in pediatric sufferers with KCNQ2-DEE earlier than year-end. This EPIC examine is designed as a randomized, double-blind, placebo-controlled parallel group multicenter scientific trial to guage the efficacy, security and tolerability of XEN496 administered as adjunctive remedy in roughly 40 pediatric sufferers aged one month to lower than six years with KCNQ2-DEE. Eligible topics will probably be randomized on a 1:1 foundation to obtain both XEN496 or placebo for roughly 15 weeks, which incorporates the titration interval and a 12-week upkeep interval. The first finish level is the p.c change from baseline in month-to-month countable motor seizure frequency in the course of the blinded remedy interval as recorded by caregivers in a every day seizure diary. We proceed to work intently with the medical group, genetic testing corporations and affected person advocacy teams to determine potential sufferers for our EPIC examine. This marks an especially necessary milestone for Xenon with the primary of our proprietary product candidates now poised to enter a Part III scientific trial and we look ahead to initiating the trial earlier than year-end. Turning now to XEN007, with the lively ingredient flunarizine, which is a CNS-acting calcium channel modulator that modulates Cav2.1 and T-type calcium channels.

The physician-led Part II proof-of-concept examine is inspecting the potential scientific efficacy, security and tolerability of XEN007 as an adjunctive remedy in pediatric sufferers recognized with treatment-resistant childhood absence epilepsy or CAE. We proceed to work with our collaborators and anticipate that a presentation of interim knowledge collected from a small variety of sufferers initially enrolled is predicted to be introduced in a poster presentation at AES 2020, the Digital Annual Assembly of the American Epilepsy Society to be held in December 2020. Because of the affect of COVID-19 We now anticipate the highest line outcomes from a bigger knowledge set will probably be obtainable by the center of subsequent 12 months. Relying on the ultimate outcomes, CAE could signify a possible orphan indication for future growth of XEN007. Turning briefly to our partnered packages. We’ve an ongoing collaboration with Neurocrine Biosciences to develop remedies for epilepsy. Neurocrine has an unique license to XEN901, now often known as NBI-921352, a scientific stage selective Nav 1.6 sodium channel inhibitor with potential in SCN8A developmental and epileptic encephalopathy in any other case often known as SCN8A-DEE in addition to different types of epilepsy. We offered an replace final month indicating that the FDA had offered suggestions on the IND software submitted by Neurocrine in help of a Part II scientific trial in pediatric SCN8A-DEE sufferers. As a part of its assessment of the IND, the FDA is requesting further nonclinical knowledge to help dose justification on this pediatric examine. We’re supporting Neurocrine because it engages with the FDA to handle the suggestions obtained with the purpose of initiating a Part II scientific trial in 2021. In parallel with this interplay, Neurocrine is advancing scientific plans to develop NBI-921352 for the remedy of grownup focal epilepsy. Transferring now to our partnership with Flexion Therapeutics, who acquired the worldwide rights to develop and commercialize XEN402, an Nav 1.7 inhibitor often known as funapide. FX301 consists of XEN402 formulated for prolonged launch from a flexion proprietary thermosensitive hydrogel for administration as a peripheral nerve block for management of postoperative ache.

Flexion has made good progress and anticipates submitting an IND software within the first half of 2021 to help a proof-of-concept scientific trial in sufferers present process bunionectomy. Outcomes from that trial may probably be obtainable in late 2021, and we look ahead to holding you up to date on this partnered program. At this level, I wish to additionally take the chance to welcome Patrick Machado to Xenon’s Board of Administrators. Pat brings deep biotech expertise and an incredible monitor report of robust enterprise management having overseen finance, enterprise growth and authorized capabilities over greater than 20 years of a really spectacular profession. A lot of you could know Pat because the Co-Founder and CFO, CBO and later Board member of Medivation till its acquisition for roughly $14 billion by Pfizer in 2016. Extra just lately, Pat served on the Board of Principia Biopharma, which was just lately acquired by Sanofi. I consider Pat will add large worth to our Board as we proceed to advance a number of mid- to late-stage neurology-focused scientific growth packages. Earlier than turning the decision over to Ian, I will shut by saying that I stay excited and optimistic concerning the necessary milestone occasions forward for Xenon. I genuinely consider now we have one of the crucial promising epilepsy pipelines at present in growth. The scientific packages have been addressed at the moment, however Xenon additionally has an thrilling pipeline of nonclinical packages, which we anticipate to current in additional element sooner or later.

At this level, I will ask Ian to recap our monetary place and supply some closing commentary earlier than opening up the decision to your questions. Thanks. Ian?

Ian Mortimer — President and Chief Monetary Officer

Thanks, Simon, and thanks, everybody, for becoming a member of us at the moment. Whereas we acknowledge the impacts of the COVID-19 pandemic, we proceed to handle our enterprise prudently. And because of this, we’re in a really sound monetary place at the moment to help Xenon’s enterprise targets and to advance our scientific growth packages. As of September 30, 2020, money and money equivalents and marketable securities had been $190.9 million in comparison with $141.four million as of December 31, 2019. Based mostly on our present assumptions, which embrace totally supporting the deliberate scientific growth of XEN1101, XEN496 and XEN007, now we have up to date our money runway steerage to replicate that we anticipate having enough money to fund operations into 2023. And this excludes any income generated from present partnerships or potential new partnering preparations. As a reminder, our earlier money runway steerage was into 2022. And given our prudent stability sheet and expense administration, we’re extending this runway steerage a full 12 months at the moment into 2023. Due to this fact, we proceed to have a whole lot of flexibility as we handle our enterprise and proceed to advance our product candidates. The opposite particular particulars from this quarter’s monetary statements are lined in at the moment’s press launch and our 10-Q filings, so I will not repeat these particulars right here. However I’ll summarize our upcoming key milestone occasions. We anticipate to provoke the EPIC Part III scientific trial inspecting XEN496 efficacy and tolerability in KCNQ2-DEE by the tip of this 12 months. It is a vital achievement as we advance this precision medication product candidate into our first Part III scientific trial. We anticipate the affected person randomization inside our Part IIb XTO scientific trial, inspecting XEN1101 in grownup focal epilepsy will probably be accomplished within the first half of 2021, with prime line knowledge anticipated within the third quarter of 2021.

We additionally anticipate to supply an replace earlier than the tip of this 12 months with respect to an expanded scientific growth for XEN1101 in a non-epilepsy indication, and this will probably be pushed by robust scientific and mechanistic rationale. From our physician-led Part II open-label examine within the remedy of resistant childhood absence epilepsy with XEN007, we look ahead to presenting interim knowledge from a small knowledge set in a poster session at AES in a couple of weeks’ time, with prime line outcomes from a bigger knowledge set anticipated to be obtainable by the center of subsequent 12 months. We’ll proceed to work with Neurocrine to handle regulatory suggestions with the purpose of initiating a Part II scientific trial with NBI-921352 in 2021 with progress supporting a milestone fee for Xenon of as much as $25 million. And we anticipate that our accomplice Flexion will file an IND software within the first half of 2021 to help a proof-of-concept scientific trial with FX301 in sufferers present process bunionectomy with outcomes probably obtainable in late 2021. We’ve the chance to earn milestone funds of as much as $9 million via the initiation of a Part II proof-of-concept scientific trial, and now we have solely obtained $500,000 of those quantities to this point. So in abstract, importantly, we consider now we have the money runway to help the enterprise targets as we have outlined at the moment, and we proceed to make prudent enterprise and spending choices to handle via these unprecedented instances. So on behalf of the whole Xenon workforce, we look ahead to updating you on our progress over the approaching months.

And at the moment, operator, we are able to open the decision up for questions.

Questions and Solutions:

Operator

[Operator Instructions] Your first query comes from Andrew Tsai, Jefferies.

Andrew Tsai — Jefferies — Analyst

Thanks for taking my questions. My first one is on 496, congrats on the progress on that. So it seems that one other firm just lately reported some optimistic knowledge on one other uncommon epilepsy indication, CDKL5, and the placebo response was fairly low. So I used to be questioning if these outcomes had been baked into your sort of powering assumptions for 496. And individually, despite the fact that you are enrolling sufferers who’re pretty younger, I believe youthful than six within the examine, I am questioning how refractory these sufferers may be — principally, what I am attempting to get as is — if it is potential that your examine may probably see the same low sort of placebo response price?

Simon Pimstone — Chief Govt Officer and President

Sure, Andrew, it is Simon. I will take a stab and hand over to Ian. That is a wonderful query. You understand, in fact, it is encouraging to see that placebo clearly being a essential variable in these research in how we energy and the assumptions we in-built. It is necessary to notice, in fact, that there has not been a examine achieved earlier than in sufferers with KCNQ2 developmental epilepsy. So we are able to by no means ever draw a conclusion from one indication to a different and say that is how they behave. I believe it is also truthful to say that throughout the pediatric developmental epilepsy research, you have talked about one, in fact, [Indecipherable] Epidiolex in Dravet and another research which were printed, that placebo response price might be fairly variable. The truth is, in some circumstances, on placebo, youngsters have gotten worse over time. There was no enchancment. And in different circumstances, it is within the 10% to 20% vary. I believe generally, we’d assume that within the youthful affected person inhabitants, the placebo charges would seemingly be on the decrease facet. After all, you have acquired parental bias in that state of affairs because it pertains to placebo as a result of they’re those which can be truly amassing the info. It is not the child itself. However actually, from a behavioral standpoint, you already know, I believe a really younger affected person is much less prone to have a observable placebo response to a drug. So I believe as we take into consideration placebo charges, it is in all probability, to a point, additionally within the anticipation of fogeys drawing their conclusions. However look, I believe we’ve not designed the examine, Andrew, in a means that has a really — that has a definitive placebo price. These research are designed to hit a p-value based mostly on a sure differential between your placebo and lively arms and what that p.c seizure frequency discount is. And so it permits you to have a profitable trial. If a placebo price is zero, 5%, 10% and 15% in a dysfunction like this, in fact, your lively response price has to go up accordingly to — with the identical delta to satisfy your p-value. So a long-winded means of claiming it is encouraging to see in these research. However we do know there’s placebo variability, and we do not have an absolute quantity constructed into the examine design from a statistical standpoint. That placebo response price can float. However in fact, the upper it will get, the upper your lively response price needs to be relative to that placebo to your p-value to be met. So I believe we have given ourselves room. I believe it is the proper mannequin, that is the proper stats. However so much relies upon, on the finish of the day, what your placebo price seems like. We simply do not know.

Andrew Tsai — Jefferies — Analyst

Proper. Is sensible. Is it potential for me to ask a follow-up or ought to I…

Simon Pimstone — Chief Govt Officer and President

We’ll be blissful. When you’re on the road, go forward.

Andrew Tsai — Jefferies — Analyst

Okay. I imply I am simply pondering out loud right here for 1101. Sadly, COVID, in fact, has impacted the timing of the readout. However I am personally questioning if there’s some sort of silver lining to that as a result of if I had been to imagine first affected person was enrolled handled way back has moved on to the open-label part, by the point XL learn out in Q3 2021, may we get a glimpse of this long-term knowledge from the open-label extension part? I am asking solely as a result of because it pertains to the pigmentation impact potential of this one.

Simon Pimstone — Chief Govt Officer and President

Nice. Ian, do you need to sort out that one?

Ian Mortimer — President and Chief Monetary Officer

Certain. Sure. I imply it is a good level. We will certainly have extra sufferers with publicity to drug for longer intervals of time. That is completely correct. And we’re seeing — we have talked about a few instances on earlier calls simply on the excessive price, very, very excessive price of sufferers going from the double-blind portion into the open-label extension portion. So sure, we’ll proceed to have a big physique of information of sufferers on the examine. That is necessary for our security database in addition to we take into consideration the long run growth of the product. I imply particularly on the pigmentation, a few feedback. One, I believe we have been very clear with this, however it’s price stating that we do not consider that 1101 has any pigmentation danger simply based mostly on the chemistry. We have not seen it in any of our work preclinically. And — however I’ll point out that, that pigmentation danger that was seen with ezogabine was on longer-term dosing. However you elevate a great level. And the extra expertise and longer-term knowledge now we have with 1101, the higher.

Simon Pimstone — Chief Govt Officer and President

I’ve stated additionally, Andrew, earlier than, one of many observations with ezogabine, which, in fact, had a pigmentation danger was in about 1% to 2% of topics within the scientific research, they develop what’s often known as chromaturia, so it is pigmentation of the urine. And so once more, if there are a good variety of topics that now we have accomplished on OLE, we’ll have that knowledge set. So whereas Ian is completely appropriate, pigmentation of the pores and skin and that will take longer to set in, within the majority of sufferers, not all, some had been inside a 12 months, the urine was one other discovering that may very well be an early biomarker, so to talk. And naturally, we’re searching for that as a part of our security knowledge set.

Andrew Tsai — Jefferies — Analyst

Incredible. Okay. Thanks.

Simon Pimstone — Chief Govt Officer and President

Certain.

Operator

[Operator Instructions] Your subsequent query comes from Yatin Suneja, Guggenheim.

Eddie Hickman — Guggenheim — Analyst

Hello, that is Eddie on for Yatin. Thanks for taking the query. I used to be questioning in the event you may give us an replace on the EXCO examine. You beforehand stated that like over 90% of the sufferers are rolling over into the OLE and you’ve got seen blinded security knowledge and discontinuation charges which can be low. When you’ve got an replace on that, given any up to date enrollment. After which I’ve a follow-up.

Simon Pimstone — Chief Govt Officer and President

Sure. Eddie, Simon right here. Similar remark as earlier than. We’re seeing — as we have stated and we proceed to see in the identical tendencies, low dropout charges, low discontinuation charges within the examine and we’re within the very excessive rollover into OLE, 90s p.c vary and above, which we have had for some time and which continues. So we have not seen any affect of that — these tendencies via COVID.

Eddie Hickman — Guggenheim — Analyst

Obtained you. After which for the Neurocrine asset, given that you will have form of probably completely different timing on the IND, given there’s further research for the pediatric, are you able to give us a way of once you anticipate to report these funds given that there is — like when the timing of these INDs may very well be filed for each grownup and pediatric indications?

Ian Mortimer — President and Chief Monetary Officer

So we have guided with Neurocrine that we consider the molecule can get right into a Part II scientific trial in 2021. I believe based mostly on the interplay with the company on the pediatric facet, which we have been actually clear, we do not consider there’s any read-through to the grownup examine, however we’ll have suggestions and interplay with the company over the following couple of months. So we’ll have higher data and readability on steerage there. So — however we do consider we are able to get into Part II scientific growth in 2021. Because it pertains to the funds, so the milestone funds, it is as much as $25 million. If the grownup examine is first, then it might be a $10 million milestone fee. After which if pediatric follows, then there is a top-up to the $25 million, so an extra $15 million. If the pediatric examine begin — that IND is cleared first, then it is a $25 million fee with no secondary fee on the grownup IND. In order that’s the way in which it really works. I’ll remind you that there’s a mixture breakdown between fairness and money within the milestone funds. So these can be acknowledged as these occasions happen in 2021.

Eddie Hickman — Guggenheim — Analyst

Nice. Thanks.

Operator

Your subsequent query comes from Paul Matteis, Stifel.

Katie Schneeberger — Stifel — Analyst

Hello, that is Katie on for Paul. We simply had a fast follow-up from us on 1101. We had been questioning in the event you may present any additional particulars on the brand new danger mitigation methods you will have applied for the 1101 trial and the way this impacts your confidence within the continuation of the info. Thanks.

Simon Pimstone — Chief Govt Officer and President

Sure. Nice. I imply I believe that has plenty of parts. The one aspect is danger mitigation to make sure the examine conduct maintains its integrity. And the second aspect is danger mitigation methods to optimize screening, randomization successfully recruitment. So on the latter, that’s — we’re tackling this in numerous methods. After all, the first means is to make sure we have extra websites which can be open and extra websites which can be screening. So we have been extraordinarily lively during the last six months in initiating websites. That continues. And plenty of websites — new websites have opened, others are opening. New websites are screening already. And in order that work is beneath means. And new websites are being opened from a danger mitigation technique, not simply in a single geography however throughout completely different geographies as a result of you possibly can think about, with COVID, they’re very completely different responses nation to nation. You might need seen, for instance, within the north of Italy just lately, they’ve actually shut borders down and folks coming out and in. So now we have to anticipate all these waves coming and going over the following few months with a view to actually handle that danger. We’ve some websites in North America and a few throughout completely different European jurisdictions. We are also optimizing recruitment via advertising efforts, promoting efforts, working with referring physicians, these varieties of issues that one will usually do in a examine like this. direct-to-patient promoting via web sites, SEO. These are the sort of actions that now we have at all times achieved, however which we’re doubling down on now to drive so-called affected person visitors to the scientific websites. I do not assume there is a stone unturned and I simply — I have been myself concerned in calls with the CROs.

I believe the whole lot is being achieved in that regard. When it comes to the primary bucket, which is the integrity of the examine, we actually are specializing in how to make sure correct knowledge continues to be obtained on the proper timing and in the proper means. The e-diary, we truly — it seems, we’re extraordinarily lucky. This was our nuance within the examine. It is not been achieved in focal epilepsy. And so the first finish level is obtained electronically. That’s going properly. We’re getting — clearly, that knowledge will get loaded in actual time. And that is why I discussed in my notes I believe we really feel very, very assured on the integrity of that knowledge set, and that being our main finish level is completely key. We have additionally modified the examine in ways in which enable for extra house monitoring and residential visitations. So exterior of simply the everyday telehealth kind visits, there are nurse visits which can be in-built for parameters that should be measured, blood that must be taken. And naturally, most significantly, we have arrange supply programs to permit drug to be delivered, lively or placebo, a examine drug to be delivered to the affected person at their doorstep, avoiding them having to truly come into the clinic, which is often what’s achieved to choose up their examine drug each sure variety of weeks. So once more, I believe we have achieved completely the whole lot in our energy to make sure the continuing easy operation of the examine. And we’re not seeing, once more, in testomony to this, any materials modifications in dropout charges of the examine on account of how the examine is functioning because it pertains to COVID. So the examine is because it was pre-COVID in how sufferers are remaining within the examine. And so we’re snug within the conduct of the examine and the integrity of the info. So we be ok with the place the examine is, and vital emphasis has been positioned on that within the firm.

Katie Schneeberger — Stifel — Analyst

Okay. Nice. Thanks a lot.

Simon Pimstone — Chief Govt Officer and President

Pleasure.

Operator

And your subsequent query comes from Tim Lugo with William Blair.

Tim Lugo — William Blair — Analyst

Hiya. Thanks for taking my query. For EPIC, how lengthy are the baseline seizures going to be recorded? And given the pure historical past, how variable do you anticipate that baseline seizure price to be?

Simon Pimstone — Chief Govt Officer and President

Do you need to soar in, Ian, and I will observe?

Ian Mortimer — President and Chief Monetary Officer

Sure. Thanks, Tim. So the baseline interval is eight weeks after which there’s, with ezogabine, identical to when the drug was used as an grownup, pill, there is a titration interval. That may take as much as 24 days, after which there’s 12 weeks of upkeep. In order that’s how you need to take into consideration the examine after which there’d be a titration down, but additionally an open-label extension. When it comes to the variability, so sure, we’ll seemingly see appreciable variability by way of variety of seizures coming into the examine. It is one of many causes there’s two ways in which we’re stratifying randomization, so each by age. And I do know you and others have checked out knowledge and never stunning in among the youthful populations, not less than within the case stories, is that they’ve had a way more vital response once we have a look at that knowledge reduce by age. However we’re additionally stratifying by seizure frequency. So we’ll do the whole lot we are able to to get a stability between the lively and placebo.

Simon Pimstone — Chief Govt Officer and President

I believe the opposite level on — it is Simon — is simply there will probably be clearly screening so sufferers by way of the variability, should have sure or anticipated to have sure seizures anticipated to have sure seizure the baseline. After which as Ian stated, the baseline interval would be the goal evaluation of that. These dad and mom typically know their youngsters fairly properly. So we additionally assume the prescreening, so to talk, ought to translate fairly properly. Sure, there may be variability, however a whole lot of these sufferers are having every day seizures and definitely plenty of seizures every week. And customarily, in a youthful age group, that does not simply cease for months on finish. So there may be variability numerically, however I believe they cross a sure threshold, and there may be variability above that. However it’s much less seemingly that they are seizure free for 2 months after which have paroxysms of a number of seizures. So we’ll — we have put an extended sufficient baseline interval in for that very motive. And as Ian stated, stratifying by seizure quantity to accommodate variability that happens in that baseline interval.

Tim Lugo — William Blair — Analyst

Understood. And perhaps my one follow-up, what number of AEDs are being allowed, sort of concomitant therapies?

Simon Pimstone — Chief Govt Officer and President

I believe it is a number of. So we’re not precluding youngsters who’ve had — who’re on one, two, three, 4, they’re all in, however they should have been not less than one as a result of this can be a refractory inhabitants.

Tim Lugo — William Blair — Analyst

Okay. Thanks.

Simon Pimstone — Chief Govt Officer and President

Sure.

Operator

And your subsequent query comes from Laura Chico, Wedbush Securities.

Kenneth Herbert — Wedbush Securities — Analyst

Hello, that is Kenneth Herbert on for Laura Chico. Thanks for taking our query. So that you talked about Italy, however we’re additionally seeing Germany and France transferring towards lockdowns and it is rising COVID-19 circumstances. With this in thoughts, are you able to remind us the place the most recent European websites are based mostly inside toll examine?

Simon Pimstone — Chief Govt Officer and President

Sure. We have not disclosed the entire geographies. What I can say is we’re in, if I am not mistaken — new websites are in about 4 or 5 completely different nations. And so we predict we have mitigated that danger maximally. There’s solely a lot we are able to do. We’re not going to each European jurisdiction. However truly, it is 5 European nations the place new websites have or will probably be open quickly.

Ian Mortimer — President and Chief Monetary Officer

Sure. The one factor I add is about — in tough, tough phrases, it is about virtually a fair break up between websites between North America and Europe.

Simon Pimstone — Chief Govt Officer and President

And about a fair break up in randomization as properly up to now throughout Europe and the U.S. or North America.

Kenneth Herbert — Wedbush Securities — Analyst

Okay. Thanks. After which Ian, maybe a query for you. May you assist us perceive how we must always take into consideration the cadence of bills in 2021? You may beginning the XEN496 examine after which extol examine ought to be wind down. So how ought to we take into consideration the overall trajectory? Thanks.

Ian Mortimer — President and Chief Monetary Officer

Sure. Good query. So if I annualize our 2020 numbers, we get opex at about $60 million, and that is been fairly constant during the last short while. And as you talked about, that is — clearly, the XOL examine is up and working. And we have been ramping up spend extra just lately on EPIC and preparing with CRO and CMC and different prices to prepare for the 496 examine. So I do anticipate opex will go up in 2021 as EPIC’s totally working into Part III. And then you definately’re proper towards the tip of 2021, the extol prices will come down. I believe the — we’ll — and there will be a little bit of a niche between these Part II prices and Part III as we prepare for an finish of Part II assembly with the company after which prepare for Part III that will be initiated in 2022. So you possibly can anticipate from sort of our run price in 2020 that the prices in 2021 will go up as soon as we’re totally funding the 496 EPIC examine.

Kenneth Herbert — Wedbush Securities — Analyst

Okay. Thanks a lot.

Operator

And your final query comes from Marc Goodman, SVB Leerink.

Marc Goodman — SVB Leerink — Analyst

Speak concerning the knowledge that you will have on the upcoming AES on the interim knowledge on 007. Is that this going to be efficacy knowledge, security knowledge, each? What are we searching for?

Simon Pimstone — Chief Govt Officer and President

Sure. We’ll have — so let me simply say, we’ve not truly seen the ultimate abstracts as a result of it has been compiled by our tutorial collaborator, the establishment the place it is being run, Marc. So I’ve to be a bit cautious in that regard. It is a small knowledge set. It is the primary few sufferers that this investigator accomplished on when the summary was submitted. And it’ll in all probability be closely weighted towards efficacy, however I am certain they’re going to have security, tolerability knowledge in there as properly. So I believe you will get each. You actually will get efficacy. And I am assuming there will be tolerability and security knowledge as well as. I’ve not seen the ultimate draft, the replace as a result of it has been up to date for the reason that authentic skeleton summary was submitted, however I’ve not seen the ultimate go-to press summary but. It ought to be hitting us in days.

Marc Goodman — SVB Leerink — Analyst

And one different query — simply questioning your ideas on the launch of that product, clearly, within the area that you will be enjoying in quickly. So what are your ideas?

Simon Pimstone — Chief Govt Officer and President

Sure. Look, I imply we glance onerous on the drug. I believe this can be a drug that clearly has had an excellent impact in focal epilepsy. We — in all probability, the very best impact measurement seen of any of the medicine launched at the moment, attaining a few 50% plus or minus median seizure frequency discount, which is not less than 10% higher than the remainder of the pack. I believe the form of the plain problem with the drug is its dose titration requirement due to the costume danger, which is the idiosyncratic eosinophilic hypothetic syndrome. You understand, it takes six to eight weeks to titrate the drug to a gradual upkeep dose. That may be a business problem as a result of any refractory affected person, that’s a very long time to get to a gradual state, if that is required for the impact that is noticed. So you already know, assuming the efficacy knowledge was based mostly on the drug totally titrated, that is what we all know. 50% discount is seen at — after you have a affected person on lengthy sufficient. What that appears like over the couple of months in titration, onerous to know. I do not — haven’t seen that knowledge. And I believe it is all going to be right down to form of the aggressive panorama and what’s obtainable. That is not a really perfect attribute of an antiseizure medication. However in fact, if the drug works properly, there’s an excellent place for it. I can not communicate concerning the launch dynamics at this level, Marc. I believe it is perhaps a bit too early, however we’re watching that intently and see what uptake is like. Look, there’s nonetheless a refractory affected person inhabitants regardless of plenty of medicine on this area, and that is why we and others are nonetheless excited by focal epilepsy. We actually haven’t seen that drug as a think about our scientific trial from a aggressive perspective. In order that’s not less than an commentary, however we’ll proceed to look at the market intently. Ian, do you will have something so as to add?

Ian Mortimer — President and Chief Monetary Officer

No.

Simon Pimstone — Chief Govt Officer and President

Okay.

Operator

And your final query comes from Serge Belanger, Needham.

Kian — Needham — Analyst

Hey, thanks for the query. That is Kian [Phonetic] on for Serge. Simply two fast ones. I assume the primary one for 496 and EPIC, do you guys have any replace on the dimensions choice course of? Has that been accomplished? And I assume by way of the situation, is it going to be largely targeted on U.S. or a mix of U.S. and EU?

Ian Mortimer — President and Chief Monetary Officer

Sure. Good query. So we have spent the higher a part of this 12 months with our CRO doing sort of what you’ll anticipate by way of feasibility and web site choice. And so we have been working with websites, figuring out them, seeing the varieties of sufferers that they are seeing and if they’ve KCNQ2-DEE sufferers beneath their care. So we’re — we positively have recognized plenty of websites that will probably be within the trial. It will likely be — I’d — and that is by no means a accomplished goal. We’re at all times websites, however we do positively have an inventory of websites that will be the early ones that will probably be initiated and the early ones for affected person enrollment that can occur within the close to time period. When it comes to geography and placement, the primary websites to be initiated will probably be within the U.S., however they’re going to positively given the uncommon situation. There’ll positively be websites that we’ll be exterior of the U.S. We simply had a optimistic opinion on orphan drug designation out of Europe. That helps us by way of as we take into consideration each growth, however the business alternative in Europe as properly. So completely, we’ll be trying exterior of the U.S. to main investigators and KOLs, each in Europe and sure different components of the world as properly.

Simon Pimstone — Chief Govt Officer and President

I will simply add, you already know, by way of web site numbers, we do not have a hard and fast quantity at this level, however we in all probability are within the 30 plus or minus vary, and we’ll see the place we land. However as Ian stated, it’ll be a little bit of a transferring goal as numbers unfold. However we’re truly very inspired. There’s a whole lot of curiosity within the examine. It is the primary actual precision medication trial in toddler and pediatric epilepsy. There may be actually good anecdotal help and help from KOLs of the utility of this drug when it was used off label. These are six sick sufferers. And so there is definitely a whole lot of web site curiosity and no competitors basically by way of scientific trials for this affected person inhabitants as a result of it is a genetically outlined affected person subset and there are not any different trials ongoing. So we predict issues look good. We’ll in all probability have two to a few dozen websites on the finish of the day. And as Ian stated, in all probability we’ll be throughout North America and Europe.

Kian — Needham — Analyst

Nice. Thanks.

Simon Pimstone — Chief Govt Officer and President

Pleasure.

Operator

I am exhibiting no additional questions at the moment. I’ll now flip the decision again over to Jodi Regts.

Jodi Regts — Investor Relations

Thanks, everybody, for becoming a member of us at the moment. Operator, we’ll now finish the decision. [Operator Closing Remarks]

Length: 47 minutes