XENE – Quick note, Q2 Earnings and Epilepsy Long Term Value Creation

Follow up to my previous report “XENE – Epilepsy and Advocacy Under the New FDA” (Link) XENE released their Q2 earning report and hosted a conference call and webcast to discuss the 2Q 2018 financial results and provide corporate update.

Xenon pharmaceutical (XENE) story keep evolving, with plenty of cash runway through at least mid-2020, as of June 30, 2018 were $63.3 million, adding an additional net proceeds of approximately $14.7 million raised via ATM during July, to get a total of $78 million by July 30, 2018.

The management keep delivering from the fundamental side, after the positive results presented at EILAT (Madrid-Spain) conference on May this year, XENE selected for an Oral-Presentation at the 13th European Congress on Epileptology (Link) taking place in Vienna, Austria on August 26-30th, to present the results from the Phase 1B TMS study.

Despite the huge price run up this year, we feel XENE is still underappreciated small-cap company with two promising epilepsy drugs in the early development, but can evolve quickly using the FDA accelerated pathway to address an unmet need in a pediatric programs with both drugs, the XEN901 for the mutations in the SCN8A gene and Potiga/Ezogabine, or XEN1101 for the treatment of KCNQ2 epileptic encephalopathy also known as EIEE7. they will also be taking both XEN1101 and XEN901 into adults shortly, both drugs have best-in-class anti-epileptic agent potential, and will move into Phase II proof-of-concept trials by year end 2018 or early 2019.

Near term catalysts

  • To date, in the Phase I clinical trial, the XEN1101 has performed well in terms of PK, safety, tolerability and with regards to the pharmacodynamic TMS readouts. XENE plan to publish the complete XEN1101 Phase I clinical trial results at a scientific meeting (to be determined) in Q4 this year, and are looking to initiating a Phase II clinical trial evaluating XEN1101 as a treatment for adult focal seizures by year-end.
  • We believe based on the preclinical data, XEN901 has the potential to become best-in-class sodium channel inhibitor. XENE is still running the Phase I study and looking to complete it with results during Q4 2018. This will be followed by the initiation of Phase II clinical trial evaluating XEN901’s efficacy as a treatment for adult focal seizures, while also looking into rare pediatric forms of epilepsy like SCN8A epilepsy.

 
For the question during the conference call, asking Simon to give additional clarity on the plans for ezogabine (Potiga) after receiving the FDA ODD-Orphan Drug Designation, XENE’s CEO replied:

I think our plan is to give sort of more fulsome color once we have some of the boxes checked on our side. So, we have had some preliminary interaction with the FDA, so we’re very comfortable with that. At this point, we are not in a position to talk about the details of what a next step program would be for the product. We’ve got some work underway with KOLs and sites to determine sort of feasibility around some of the preliminary discussions we’ve had. We may or may not have to go back to the FDA. I think we’ll be in a very good position to update the street in the “very near term” on this. We’re encouraged, we obviously are pursuing this based on preliminary discussions that have been held, but certainly we have a number of boxes still to check, which I think we can do in the near term to determine the next steps.

So, we will wait for XENE update regarding the FDA meeting to discuss the best study pathway with either Ezogabine or XEN1101 in KCNQ2 population. If the FDA gave XENE the green light to XENE to step up and enter a pediatric pivotal study in KCNQ2 with Ezogabine or XEN1101, which can be used as a registration study and their pipeline would suddenly have a Phase-3 asset on it, along with 3 other Phase-2 assets, and frankly add a tremendous value to the Xenon’s valuation.

 

Disclosure: The author is long XENE

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