10-Q 1 xene-20240331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-36687

 

XENON PHARMACEUTICALS INC.

(Exact name of Registrant as Specified in its Charter)

 

 

Canada

98-0661854

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

200-3650 Gilmore Way

Burnaby, British Columbia, Canada

V5G 4W8

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (604) 484-3300

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Shares, without par value

 

XENE

 

The Nasdaq Stock Market LLC

(The Nasdaq Global Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of May 6, 2024, the registrant had 75,468,883 common shares, without par value, outstanding.

 

 

 


 

XENON PHARMACEUTICALS INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2024

TABLE OF CONTENTS

 

Page

 

PART I. FINANCIAL INFORMATION

3

 

Item 1. Financial Statements

3

 

Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023

3

 

Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2024 and 2023

4

 

Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 2024 and 2023

5

 

Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023

6

 

Notes to Consolidated Financial Statements

7

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

12

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

19

 

Item 4. Controls and Procedures

20

 

PART II. OTHER INFORMATION

21

 

Item 1. Legal Proceedings

21

 

Item 1A. Risk Factors

21

 

Item 5. Other Information

59

 

Item 6. Exhibits

60

 

SIGNATURES

61

In this Quarterly Report on Form 10-Q, “we,” “our,” “us,” “Xenon,” and “the Company” refer to Xenon Pharmaceuticals Inc. and its subsidiary. “Xenon” and the Xenon logo are the property of Xenon Pharmaceuticals Inc. and are registered in the United States and used or registered in various other jurisdictions. This report contains references to our trademarks and to trademarks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this report may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

 

-1-


 

Risk Factors Summary

Our business is subject to numerous risks and uncertainties, including those highlighted in the section of this report captioned “Risk Factors.” The following is a summary of the principal risks we face:

We have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future.
We will need to raise additional funding, which may not be available on acceptable terms, if at all. Failure to obtain capital when needed may force us to delay, limit or terminate our product discovery and development programs or commercialization efforts or other operations.
Our business substantially depends upon the successful development of azetukalner (XEN1101). If we are unable to obtain regulatory approval for, and successfully commercialize, azetukalner, our business may be materially harmed.
Clinical trials may fail to demonstrate adequately the safety and efficacy of our, or our collaborators’, product candidates at any stage of clinical development. Terminating the development of any of our, or our collaborators’, product candidates could materially harm our business and the market price of our common shares.
We, or our collaborators, may find it difficult to enroll patients in our clinical trials which could delay or prevent the successful completion of clinical trials of our product candidates.
We, or our collaborators, may incur unexpected costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our, or our collaborators’, product candidates.
The regulatory approval processes of the FDA, EMA and regulators in other foreign jurisdictions are lengthy, time-consuming and inherently unpredictable. If we, or our collaborators, are unable to obtain regulatory approval for our product candidates in a timely manner, or at all, our business may be substantially harmed.
If we are unable to establish our own sales, marketing and distribution capabilities or enter into agreements for these purposes, we may not be successful in independently commercializing any future products.
Our prospects for successful development and commercialization of our partnered products and product candidates are dependent upon the research, development and marketing efforts of our collaborators.
Our reliance on third parties to manufacture our product candidates may increase the risk that we will not have sufficient quantities of our product candidates, raw materials, APIs or drug products when needed or at an acceptable cost.
We rely on third parties to conduct our pre-clinical studies and clinical trials. If these third parties do not successfully carry out their contractual duties, including to comply with applicable laws and regulations or meet expected deadlines, our business could be substantially harmed.
We could be unsuccessful in obtaining or maintaining adequate patent protection for one or more of our products, product candidates or future products.
We may not be able to protect our intellectual property rights throughout the world.
Our business and operations could suffer in the event of an actual or perceived information security incident such as a cybersecurity breach, system failure or other compromise of our systems and/or information, including information held by a third-party contractor or vendor.
The market price of our common shares may be volatile, and purchasers of our common shares could incur substantial losses.
Future sales and issuances of our common shares or securities convertible into or exchangeable for common shares would cause our shareholders to incur dilution and could cause the market price of our common shares to fall.

Our Risk Factors are not guarantees that no such conditions exist as of the date of this report and should not be interpreted as an affirmative statement that such risks or conditions have not materialized, in whole or in part.

 

 

-2-


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

XENON PHARMACEUTICALS INC.

Consolidated Balance Sheets

(Unaudited)

(Expressed in thousands of U.S. dollars except share amounts)

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

58,896

 

 

$

148,643

 

Marketable securities (note 6)

 

 

640,706

 

 

 

489,439

 

Accounts receivable

 

 

833

 

 

 

874

 

Prepaid expenses and other current assets

 

 

6,769

 

 

 

6,006

 

 

 

 

707,204

 

 

 

644,962

 

Marketable securities, long-term (note 6)

 

 

185,836

 

 

 

292,792

 

Operating lease right-of-use asset, net (note 7)

 

 

8,884

 

 

 

9,193

 

Property, plant and equipment, net

 

 

9,393

 

 

 

9,653

 

Deferred tax assets

 

 

400

 

 

 

802

 

Prepaid expenses, long-term

 

 

7,306

 

 

 

7,396

 

Total assets

 

$

919,023

 

 

$

964,798

 

 

 

 

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable and accrued expenses (note 8)

 

$

20,900

 

 

$

25,974

 

Operating lease liability (note 7)

 

 

1,323

 

 

 

1,299

 

 

 

 

22,223

 

 

 

27,273

 

Operating lease liability, long-term (note 7)

 

 

9,102

 

 

 

9,604

 

Total liabilities

 

$

31,325

 

 

$

36,877

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

Common shares, without par value; unlimited shares authorized; issued and
   outstanding:
75,459,681 (December 31, 2023 - 75,370,977) (note 9)

 

$

1,438,961

 

 

$

1,436,374

 

Additional paid-in capital

 

 

163,577

 

 

 

156,764

 

Accumulated deficit

 

 

(713,071

)

 

 

(665,140

)

Accumulated other comprehensive loss

 

 

(1,769

)

 

 

(77

)

Total shareholders' equity

 

$

887,698

 

 

$

927,921

 

Total liabilities and shareholders’ equity

 

$

919,023

 

 

$

964,798

 

 

 

 

 

 

 

 

Commitments and contingencies (note 10)

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

 

-3-


 

XENON PHARMACEUTICALS INC.

Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(Expressed in thousands of U.S. dollars except share and per share amounts)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

$

44,250

 

 

$

39,516

 

General and administrative

 

 

14,791

 

 

 

9,535

 

 

 

 

59,041

 

 

 

49,051

 

Loss from operations

 

 

(59,041

)

 

 

(49,051

)

Other income:

 

 

 

 

 

 

Interest income

 

 

11,355

 

 

 

5,423

 

Unrealized fair value gain on trading securities

 

 

 

 

 

1,878

 

Foreign exchange gain

 

 

167

 

 

 

313

 

 

 

 

11,522

 

 

 

7,614

 

Loss before income taxes

 

 

(47,519

)

 

 

(41,437

)

Income tax expense

 

 

(412

)

 

 

(290

)

Net loss

 

$

(47,931

)

 

$

(41,727

)

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

Unrealized gain (loss) on available-for-sale
   securities (note 6)

 

$

(1,692

)

 

$

1,180

 

Comprehensive loss

 

$

(49,623

)

 

$

(40,547

)

 

 

 

 

 

 

 

Net loss per common share (note 4):

 

 

 

 

 

 

Basic and diluted

 

$

(0.62

)

 

$

(0.63

)

Weighted-average common shares outstanding (note 4):

 

 

 

 

 

 

Basic and diluted

 

 

77,594,599

 

 

 

65,724,681

 

 

The accompanying notes are an integral part of these financial statements.

 

 

-4-


 

XENON PHARMACEUTICALS INC.

Consolidated Statements of Shareholders’ Equity

(Unaudited)

(Expressed in thousands of U.S. dollars except share amounts)

 

 

Common shares

 

 

Additional
paid-in
capital

 

 

Accumulated
deficit

 

 

Accumulated
other
comprehensive
loss

 

 

Total
shareholders'
equity

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of
   December 31, 2022

 

62,587,701

 

 

$

1,065,136

 

 

$

142,108

 

 

$

(482,747

)

 

$

(3,000

)

 

$

721,497

 

Net loss for the period

 

 

 

 

 

 

 

 

 

 

(41,727

)

 

 

 

 

 

(41,727

)

Conversion of pre-funded
   warrants to common shares
   (note 9b)

 

425,000

 

 

 

7,379

 

 

 

(7,379

)

 

 

 

 

 

 

 

 

 

Stock-based compensation
   expense

 

 

 

 

 

 

 

5,994

 

 

 

 

 

 

 

 

 

5,994

 

Issued pursuant to exercise of
   stock options

 

94,319

 

 

 

635

 

 

 

(635

)

 

 

 

 

 

 

 

 

 

Other comprehensive income
   (note 6)

 

 

 

 

 

 

 

 

 

 

 

 

 

1,180

 

 

 

1,180

 

Balance as of
   March 31, 2023

 

63,107,020

 

 

$

1,073,150

 

 

$

140,088

 

 

$

(524,474

)

 

$

(1,820

)

 

$

686,944

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of
   December 31, 2023

 

75,370,977

 

 

$

1,436,374

 

 

$

156,764

 

 

$

(665,140

)

 

$

(77

)

 

$

927,921

 

Net loss for the period

 

 

 

 

 

 

 

 

 

 

(47,931

)

 

 

 

 

 

(47,931

)

Stock-based compensation
   expense

 

 

 

 

 

 

 

9,400

 

 

 

 

 

 

 

 

 

9,400

 

Issued pursuant to exercise of
   stock options

 

88,704

 

 

 

2,587

 

 

 

(2,587

)

 

 

 

 

 

 

 

 

 

Other comprehensive loss
   (note 6)

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,692

)

 

 

(1,692

)

Balance as of
   March 31, 2024

 

75,459,681

 

 

$

1,438,961

 

 

$

163,577

 

 

$

(713,071

)

 

$

(1,769

)

 

$

887,698

 

 

 

The accompanying notes are an integral part of these financial statements.

-5-


 

XENON PHARMACEUTICALS INC.

Consolidated Statements of Cash Flows

(Unaudited)

(Expressed in thousands of U.S. dollars)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Operating activities:

 

 

 

 

 

 

Net loss

 

$

(47,931

)

 

$

(41,727

)

Items not involving cash:

 

 

 

 

 

 

Depreciation

 

 

599

 

 

 

354

 

Deferred income tax expense

 

 

403

 

 

 

288

 

Stock-based compensation

 

 

9,400

 

 

 

5,994

 

Unrealized foreign exchange (gain) loss

 

 

4

 

 

 

(5

)

Unrealized fair value gain on trading securities

 

 

 

 

 

(1,878

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

38

 

 

 

226

 

Prepaid expenses and other current assets

 

 

(673

)

 

 

2,931

 

Accounts payable and accrued expenses

 

 

(5,018

)

 

 

(594

)

Net cash used in operating activities

 

 

(43,178

)

 

 

(34,411

)

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(188

)

 

 

(2,206

)

Purchases of marketable securities

 

 

(176,848

)

 

 

(108,282

)

Proceeds from marketable securities

 

 

130,834

 

 

 

157,110

 

Net cash provided by (used in) investing activities

 

 

(46,202

)

 

 

46,622

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(367

)

 

 

59

 

Increase (decrease) in cash and cash equivalents

 

 

(89,747

)

 

 

12,270

 

Cash and cash equivalents, beginning of period

 

 

148,643

 

 

 

57,242

 

Cash and cash equivalents, end of period

 

$

58,896

 

 

$

69,512

 

 

 

 

 

 

 

 

Supplemental disclosure:

 

 

 

 

 

 

Cash paid for operating lease

 

$

411

 

 

$

406

 

Supplemental disclosures of non-cash transactions:

 

 

 

 

 

 

Fair value of stock options exercised on a cashless basis

 

 

2,587

 

 

 

635

 

Fair value of pre-funded warrants exercised

 

 

 

 

 

7,379

 

Increase in operating lease liability and accounts receivable related to
   lease incentives claimed in the period

 

 

 

 

 

1,482

 

 

The accompanying notes are an integral part of these financial statements.

-6-


 

XENON PHARMACEUTICALS INC

Notes to Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of U.S. dollars except share and per share amounts)

 

 

 

 

 

1.
Nature of the business:

Xenon Pharmaceuticals Inc. (the “Company”), incorporated in 1996 under the predecessor to the Business Corporations Act (British Columbia) and continued federally in 2000 under the Canada Business Corporations Act, is a neuroscience-focused biopharmaceutical company committed to improving the lives of people living with neurological and psychiatric disorders.

The Company has incurred significant operating losses since inception. As of March 31, 2024, the Company had an accumulated deficit of $713,071 and a net loss of $47,931 for the three months ended March 31, 2024. Management expects to continue to incur significant expenses in excess of revenue and to incur operating losses for the foreseeable future. To date, the Company has financed its operations primarily through the sale of equity securities, funding received from collaboration and license agreements, and debt financings.

Until such time as the Company can generate substantial product revenue, if ever, management expects to finance the Company’s cash needs through a combination of collaboration agreements, equity and debt financings. The continuation of research and development activities and the future commercialization of its products are dependent on the Company’s ability to successfully raise additional funds when needed. It is not possible to predict either the outcome of future research and development programs or the Company’s ability to continue to fund these programs in the future.

2.
Basis of presentation:

These unaudited interim consolidated financial statements are presented in U.S. dollars and include the accounts of the Company and its wholly-owned subsidiary, Xenon Pharmaceuticals USA Inc., a Delaware corporation. All intercompany transactions and balances have been eliminated on consolidation.

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, these consolidated financial statements do not include all of the information and footnotes required for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2023 included in the Company’s 2023 Annual Report on Form 10-K filed with the SEC and with the securities commissions in British Columbia, Alberta and Ontario on February 29, 2024.

These unaudited interim consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of results for the interim periods presented. The results of operations for the three months ended March 31, 2024 and 2023 are not necessarily indicative of results that can be expected for a full year. These unaudited interim consolidated financial statements follow the same significant accounting policies as those described in the notes to the audited consolidated financial statements of the Company included in the Company’s 2023 Annual Report on Form 10-K for the year ended December 31, 2023, with the exception of the policy described in note 3 below.

3.
Significant accounting policies:
(a)
Stock based compensation:

The Company grants performance share unit awards (“PSUs”) to certain employees and officers.

PSUs vest upon the achievement of certain predefined company-specific performance-based criteria. PSUs are measured at the closing market price of the Company’s common shares on the date of grant. Stock-based compensation expense for PSUs is amortized on a straight-line basis over the requisite service period of each separately vesting tranche of the award once it is probable that the performance condition will be achieved.

4.
Net income (loss) per common share:

The weighted average number of common shares used in the basic and diluted net income (loss) per common share calculations includes the weighted-average pre-funded warrants outstanding during the period as they are exercisable at any time for nominal cash consideration.

-7-


 

The treasury stock method is used to compute the dilutive effect of the Company’s stock options, performance share units and warrants. Under this method, the incremental number of common shares used in computing diluted net income (loss) per common share is the difference between the number of common shares assumed issued and purchased using assumed proceeds.

For the three months ended March 31, 2024 and 2023, diluted net loss per share attributable to common shareholders is the same as basic net loss per share attributable to common shareholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

5.
Fair value of financial instruments:

The fair value hierarchy consists of the following three levels:

Level 1 - Unadjusted quoted prices in active markets for identical instruments.
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Level 3 - Inputs are unobservable and reflect the Company’s assumptions as to what market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available.

The Company’s cash and cash equivalents and marketable securities are measured at fair value on a recurring basis. The level of the fair value hierarchy utilized to determine such fair values consisted of the following:

 

 

 

March 31, 2024

 

 

December 31, 2023

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and money market fund

 

$

58,896

 

 

$

 

 

$

 

 

$

58,896

 

 

$

148,643

 

 

$

 

 

$

 

 

$

148,643

 

Marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Guaranteed investment certificates

 

 

15,068

 

 

 

 

 

 

 

 

 

15,068

 

 

 

7,684

 

 

 

 

 

 

 

 

 

7,684

 

U.S. treasuries

 

 

283,764

 

 

 

 

 

 

 

 

 

283,764

 

 

 

252,982

 

 

 

 

 

 

 

 

 

252,982

 

U.S. government securities

 

 

 

 

 

63,036

 

 

 

 

 

 

63,036

 

 

 

 

 

 

97,912

 

 

 

 

 

 

97,912

 

Commercial paper

 

 

 

 

 

183,130

 

 

 

 

 

 

183,130

 

 

 

 

 

 

119,108

 

 

 

 

 

 

119,108

 

Corporate debt securities

 

 

 

 

 

281,544

 

 

 

 

 

 

281,544

 

 

 

 

 

 

304,545

 

 

 

 

 

 

304,545

 

Total

 

$

357,728

 

 

$

527,710

 

 

$

 

 

$

885,438

 

 

$

409,309

 

 

$

521,565

 

 

$

 

 

$

930,874

 

 

The fair values of the Company’s U.S. government securities, commercial paper and corporate debt securities are based on prices obtained from independent pricing sources. Securities with validated quotes from pricing services are reflected within Level 2, as they are primarily based on observable pricing for similar assets or other market observable inputs. Typical inputs used by these pricing services include, but are not limited to, reported trades, benchmark yields, issuer spreads, bids, offers or estimates of cash flow, prepayment spreads and default rates.

As of March 31, 2024 and December 31, 2023, the Company does not hold any securities classified as Level 3.

-8-


 

6.
Marketable securities

As of March 31, 2024, the Company had $826,542 of available-for-sale securities (December 31, 2023 – trading securities of $13,867 and available-for-sale-securities of $768,364). Amortized cost, unrealized gain (loss) recognized in accumulated other comprehensive income (loss) and fair value of available-for-sale securities consisted of the following:

 

 

 

March 31, 2024

 

 

December 31, 2023

 

 

 

Amortized
Cost

 

 

Unrealized
Gain (Loss)

 

 

Fair
Value

 

 

Amortized
Cost

 

 

Unrealized
Gain (Loss)

 

 

Fair
Value

 

Contractual maturity of 0 to 1 years:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Guaranteed investment certificates

 

$

15,151

 

 

$

(83

)

 

$

15,068

 

 

$

7,549

 

 

$

135

 

 

$

7,684

 

U.S. treasuries

 

 

235,677

 

 

 

(235

)

 

 

235,442

 

 

 

192,193

 

 

 

(249

)

 

 

191,944

 

U.S. government securities

 

 

63,258

 

 

 

(222

)

 

 

63,036

 

 

 

98,092

 

 

 

(180

)

 

 

97,912

 

Commercial paper

 

 

183,218

 

 

 

(88

)

 

 

183,130

 

 

 

119,041

 

 

 

67

 

 

 

119,108

 

Corporate debt securities

 

 

143,924

 

 

 

106

 

 

 

144,030

 

 

 

58,824

 

 

 

100

 

 

 

58,924

 

Contractual maturity of 1 to 3 years:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

 

48,507

 

 

 

(185

)

 

 

48,322

 

 

 

53,294

 

 

 

243

 

 

 

53,537

 

Corporate debt securities

 

 

137,586

 

 

 

(72

)

 

 

137,514

 

 

 

238,458

 

 

 

797

 

 

 

239,255

 

Total

 

$

827,321

 

 

$

(779

)

 

$

826,542

 

 

$

767,451

 

 

$

913

 

 

$

768,364

 

Allowance for credit losses or impairment on these marketable securities have not been recognized as these securities are high credit quality, investment grade securities that the Company does not intend to sell and will not be required to sell prior to their anticipated recovery, and the decline in fair value is primarily due to changes in interest rates.

7.
Leases:

The Company has an operating lease for research laboratories and office space in Burnaby, British Columbia which expires on June 30, 2032, and two renewal options for 5-years each which were not considered in the determination of the right-of-use asset and lease liability. The Company has an additional operating lease for office space in Needham, Massachusetts ("Needham Lease"), which commenced in October 2022. The Needham Lease is for a 62-month term and an option to terminate one year prior to the expiry date, which was not considered in the determination of the right-of-use asset and lease liability.

The cost components of the operating leases were as follows for the three months ended March 31, 2024 and 2023:

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Lease Cost

 

 

 

 

 

 

Operating lease expense

 

$

412

 

 

$

412

 

Variable lease expense(1)

 

 

208

 

 

 

197

 

Lease Term and Discount Rate

 

 

 

 

 

 

Weighted average remaining lease term (years)

 

 

7.09

 

 

 

7.98

 

Weighted average discount rate

 

 

3.87

%

 

 

3.92

%

 

(1)
Variable lease costs are payments that vary because of changes in facts or circumstances and include common area maintenance and property taxes related to the premises. Variable lease costs are excluded from the calculation of minimum lease payments.

 

Future minimum lease payments as of March 31, 2024 were as follows:

 

Year ending December 31:

 

2024

 

$

1,269

 

2025

 

 

1,747

 

2026

 

 

1,815

 

2027

 

 

1,802

 

2028

 

 

1,102

 

2029 and thereafter

 

 

4,193

 

Total future minimum lease payments

 

$

11,928

 

Less: imputed interest

 

 

(1,503

)

Present value of lease liabilities

 

$

10,425

 

 

-9-


 

8.
Accounts payable and accrued expenses:

Accounts payable and accrued expenses consisted of the following:

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Trade payables

 

$

6,430

 

 

$

8,598

 

Employee compensation, benefits, and related accruals

 

 

3,819

 

 

 

7,425

 

Consulting and contracted research

 

 

8,942

 

 

 

8,824

 

Professional fees

 

 

1,603

 

 

 

780

 

Other

 

 

106

 

 

 

347

 

Total

 

$

20,900

 

 

$

25,974

 

 

9.
Share capital:
(a)
Financing:

In August 2020, the Company entered into an “at-the-market” equity offering sales agreement, amended as of March 2022, with Jefferies LLC and Stifel, Nicolaus & Company, Incorporated pursuant to which the Company may sell common shares from time to time. In January 2021, the Company sold an aggregate of 733,000 common shares for proceeds of $10,693, net of commissions and transaction expenses pursuant to a prospectus supplement filed in August 2020 (“August 2020 ATM”). The Company may sell common shares having gross proceeds of up to $250,000, from time to time, pursuant to a new prospectus supplement filed in March 2022 (“March 2022 ATM”), replacing the August 2020 ATM. As of March 31, 2024, the Company has sold an aggregate of 855,685 common shares for proceeds of $29,508, net of commissions and transaction expenses under the March 2022 ATM.

(b)
Pre-funded warrants:

The following table summarizes the pre-funded warrants activity for the three months ended March 31, 2024 and 2023:

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Outstanding, beginning of period

 

 

2,173,081

 

 

 

3,103,864

 

Exercised

 

 

 

 

 

(425,003

)

Outstanding, end of period

 

 

2,173,081

 

 

 

2,678,861

 

Each pre-funded warrant is exercisable for the purchase of a common share at the holder's discretion at an exercise price of $0.0001, subject to certain post-exercise beneficial ownership limitations as provided under the terms of the pre-funded warrant.

In January 2023, the Company issued 425,000 common shares upon the exercise of 425,003 pre-funded warrants pursuant to a net exercise mechanism under the warrants. Pre-funded warrants to purchase 2,173,081 (March 31, 20232,678,861) common shares are not included in the number of issued and outstanding common shares as of March 31, 2024.

(c)
Stock-based compensation:

Stock Options

The following table presents stock option activity for the three months ended March 31, 2024 and 2023:

 

 

 

Three Months Ended March 31,

 

 

2024

 

Weighted Average
Exercise Price ($)

 

 

2023

 

Weighted Average
Exercise Price ($)

 

 

Outstanding, beginning of period

 

 

8,894,502

 

 

23.56

 

 

 

7,117,782

 

 

18.75

 

 

Granted

 

 

1,983,525

 

 

44.53

 

 

 

1,866,548

 

 

34.29

 

 

Exercised(1)

 

 

(180,424

)

 

23.42

 

 

 

(113,677

)

 

6.49

 

 

Forfeited, cancelled or expired

 

 

(18,911

)

 

30.87

 

 

 

(73,400

)

 

28.49

 

 

Outstanding, end of period

 

 

10,678,692

 

 

27.45

 

 

 

8,797,253

 

 

22.12

 

 

Exercisable, end of period

 

 

5,419,295

 

 

18.27

 

 

 

4,104,317

 

 

14.04

 

 

 

(1)
During the three months ended March 31, 2024, the Company issued 88,704 (202394,319) common shares for the cashless exercise of 180,424 (2023113,677) stock options.

-10-


 

The fair value of each stock option granted is estimated using the Black-Scholes option-pricing model with the following weighted-average assumptions:

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Average risk-free interest rate

 

 

4.05

%

 

 

3.87

%

Expected volatility

 

 

67

%

 

 

69

%

Average expected term (in years)

 

 

5.92

 

 

 

6.13

 

Expected dividend yield

 

 

0

%

 

 

0

%

Weighted average fair value of stock options granted

 

$

27.89

 

 

$

22.19

 

 

Performance Share Units

In March 2024, 192,000 PSUs were granted to officers and certain employees. The vesting conditions, vesting period and expiry of the PSUs are determined by the board of directors, subject to the terms of the Amended and Restated 2014 Equity Incentive Plan. PSUs vest upon the achievement of certain predefined company-specific performance-based criteria on or before December 31, 2027, subject to continued employment to each performance objective achievement date. No PSUs vested during the three months ended March 31, 2024.

 

10.
Commitments and contingencies:
(a)
Asset purchase agreement with 1st Order Pharmaceuticals, Inc. (“1st Order”):

In April 2017, the Company acquired azetukalner (XEN1101) from 1st Order pursuant to an asset purchase agreement. In August 2020, the Company and 1st Order amended the asset purchase agreement to amend certain definitions in the agreement and to modify the payment schedule for certain milestones. Through March 31, 2024, the Company has paid $2,000 based on progress against these milestones. Future potential payments to 1st Order include up to $6,000 in regulatory milestones. There are no royalty obligations to 1st Order.

(b)
Guarantees and indemnifications:

The Company has entered into license and research agreements with third parties that include indemnification provisions that are customary in the industry. These indemnification provisions generally require the Company to compensate the other party for certain damages and costs incurred as a result of third-party claims or damages arising from these transactions.

The maximum amount of potential future indemnification is unlimited; however, the Company currently holds commercial and product liability insurance. This insurance limits the Company’s exposure and may enable it to recover a portion of any future amounts paid. Historically, the Company has not made any indemnification payments under such agreements and the Company believes that the fair value of these indemnification obligations is minimal. Accordingly, the Company has not recognized any liabilities relating to these obligations for any period presented.

 

-11-


 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This section should be read in conjunction with our unaudited interim consolidated financial statements and related notes included in Part I, Item 1 of this report and our audited consolidated financial statements and related notes thereto and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2023 included in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on February 29, 2024 and with the securities commissions in British Columbia, Alberta and Ontario on February 29, 2024.

Forward-Looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and Canadian securities laws. The words or phrases “would be,” “will allow,” “intends to,” “may,” “believe,” “plan,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” or similar expressions, or the negative of such words or phrases, are intended to identify “forward-looking statements.” You should read these statements carefully because they discuss future expectations, contain projections of future results of operations or financial condition, or state other “forward-looking” information. These statements relate to our future plans, objectives, expectations, intentions and financial performance and the assumptions that underlie these statements. These forward-looking statements include, but are not limited to:

our ability to identify additional products or product candidates either from our internal research efforts or through acquiring or in-licensing other product candidates or technologies;
the initiation, timing, cost, progress and success of our research and development programs, pre-clinical studies, and clinical trials;
our ability to advance product candidates into, and successfully complete, clinical trials;
our ability to recruit sufficient numbers of patients for our current and future clinical trials;
our ability to obtain funding for our operations in sufficient amounts or on terms acceptable to us, including funding necessary to complete further development, approval and, if approved, commercialization of our product candidates;
our ability to independently develop and commercialize product candidates;
developments relating to our competitors and our industry, including the success of competing therapies that are or become available;
our pre-commercial, commercialization, marketing and manufacturing capabilities and strategy;
our ability to obtain and maintain intellectual property protection for our product candidates and the duration of such protection;
the therapeutic benefits, effectiveness and safety of our product candidates;
the timing of, and our and our collaborators’ ability to obtain and maintain, regulatory approvals for our product candidates;
the accuracy of our estimates of the size and characteristics of the markets that may be addressed by our products and product candidates and our ability to serve those markets, either alone or in partnership with others;
the rate and degree of market acceptance and clinical utility of any future products;
the pricing and reimbursement of our product candidates, if approved;
our expectations regarding federal, state and foreign regulatory requirements;
our ability to establish and maintain collaborations;
our expectations regarding market risk, including interest rate changes and foreign currency fluctuations;
our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
our ability to engage and retain the employees required to grow our business;
our future financial performance; and
the direct and indirect impact of pandemics, epidemics and other public health crises on our business and operations, including supply chain, manufacturing, research and development costs, clinical trial conduct, clinical trial data and employees.

-12-


 

These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in this report in Part II, Item 1A — “Risk Factors,” and elsewhere in this report. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. These statements, like all statements in this report, speak only as of their date, and we undertake no obligation to update or revise these statements in light of future developments, except as required by law. In this report, “we,” “our,” “us,” “Xenon,” and “the Company” refer to Xenon Pharmaceuticals Inc. and its subsidiary. Unless otherwise noted, all dollar amounts in this report are expressed in United States dollars.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and although we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted a thorough inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

Overview

We are a neuroscience-focused biopharmaceutical company committed to improving the lives of people living with neurological and psychiatric disorders. We are advancing a novel product pipeline to address areas of high unmet medical need, including epilepsy and depression.

Azetukalner (XEN1101) Clinical Development Programs

We announced that the United States Adopted Names Council and the World Health Organization International Nonproprietary Names expert committee have approved “azetukalner” as the nonproprietary, or generic, name for XEN1101. Azetukalner is a novel, potent Kv7 potassium channel opener being developed for the treatment of epilepsy, major depressive disorder, and potentially other neurological disorders.

Epilepsy (Focal Onset Seizures)

Our Phase 3 epilepsy program in focal onset seizures, or FOS, includes two identical Phase 3 clinical trials, X-TOLE2 and X-TOLE3, that are designed closely after the Phase 2b X-TOLE clinical trial. These multicenter, randomized, double-blind, placebo-controlled trials are evaluating the clinical efficacy, safety, and tolerability of 15 mg or 25 mg of azetukalner administered with food as adjunctive treatment in approximately 360 patients per study with FOS. We anticipate patient enrollment in X-TOLE2 will be completed in late 2024 to early 2025.

Epilepsy (Primary Generalized Tonic-Clonic Seizures)

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.

Epilepsy (Open-Label Extension)

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.

Major Depressive Disorder

In November 2023, we reported topline results from the Phase 2 proof-of-concept X-NOVA clinical trial, which evaluated the clinical efficacy, safety, and tolerability of 10 mg and 20 mg of XEN1101 in 168 patients with moderate to severe MDD. We anticipate presenting the X-NOVA topline data at the annual meeting of the American Society of Clinical Psychopharmacology taking place May 28-31, 2024 in Miami, FL.

Based on “end-of-Phase 2” interactions with the U.S. Food and Drug Administration, we continue to anticipate that the first of three Phase 3 clinical trials will be initiated in the second half of 2024.

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.

-13-


 

Other Pipeline Opportunities

We continue to leverage its extensive ion channel expertise and drug discovery capabilities to identify validated drug targets and develop new product candidates. The near-term focus is on developing Kv7 channel openers, Nav1.7 inhibitors and Nav1.1 openers, with the goal of advancing multiple candidates into IND-enabling studies in 2024 and 2025.

Partnered Program: NBI-921352

We have an ongoing collaboration with Neurocrine Biosciences to develop treatments for epilepsy. Neurocrine Biosciences has an exclusive license to XEN901, now known as NBI-921352, a selective Nav1.6 sodium channel inhibitor. A Phase 2 clinical trial is ongoing evaluating NBI-921352 in patients aged between 2 and 21 years with SCN8A developmental and epileptic encephalopathy.

We have funded our operations primarily through the sale of equity securities, funding received from our licensees and collaborators, and debt financing. 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.

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:

continue our research and pre-clinical and clinical development of our product candidates;
seek regulatory and marketing approvals for any of our product candidates that successfully complete clinical trials;
require the manufacture of larger quantities of our product candidates for clinical development and potential commercialization;
attract, hire and retain skilled personnel;
acquire or in-license other assets and technologies;
maintain, protect and expand our intellectual property portfolio; and
create additional infrastructure to support our operations and any future commercialization efforts.

Financial Operations Overview

Operating Expenses

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

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Research and development

 

$

44,250

 

 

$

39,516

 

General and administrative

 

 

14,791

 

 

 

9,535

 

Total operating expenses

 

$

59,041

 

 

$

49,051

 

 

Research and Development Expenses

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.

Research and development expenses consist of costs incurred in performing research and development activities, including:

personnel-related expenses, consisting of salaries, benefits and stock-based compensation for employees engaged in scientific research and development;
third-party expenses incurred in connection with the pre-clinical and clinical development of our product candidates, including under agreements with contract research organizations, or CROs;

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third-party expenses relating to formulation, process development and manufacture of drug substance and drug product for use in our pre-clinical testing and clinical trials;
third-party acquisition, license and collaboration fees;
laboratory consumables; and
certain indirect costs incurred in support of overall research and development activities, including facilities, depreciation and information technology costs.

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.

We expense all research and development costs as incurred. Payments we make for research and development services prior to the services being rendered are recorded as prepaid assets in our consolidated balance sheets and are expensed as the services are provided. Costs for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and third-party service providers.

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 trials, 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 trials.

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.

General and Administrative Expenses

General and administrative expenses consist primarily of personnel-related expenses, consisting of salaries, benefits and stock-based compensation for our employees engaged in executive, finance, legal, business development, commercial and administrative functions, insurance costs, professional fees for auditing, tax and legal services, costs related to maintenance and filing of intellectual property, costs incurred as we prepare for commercialization, and allocated facility-related and information technology costs not otherwise included in research and development expenses.

We expect that general and administrative expenses will increase in the future as we expand our operating activities to support our continued research activities and development of our product candidates, and as we prepare for commercialization. We will also continue to incur increased accounting, audit, legal, regulatory, compliance and director and officer insurance costs as well as investor and public relations expenses associated with operating as a public company.

Other Income (Expense)

Interest income. Interest income consists of income earned on our cash and investment balances. We anticipate that our interest income will continue to fluctuate depending on our cash and investment balances and interest rates.

Unrealized fair value gain (loss) on trading securities. Trading securities are recorded at fair value. Unrealized fair value gain (loss) on trading securities is related to changes in market pricing on the investments during the period.

Foreign exchange gain (loss). Net foreign exchange gain (loss) consists of gains and losses from the impact of foreign exchange fluctuations on our monetary assets and liabilities that are denominated in currencies other than the U.S. dollar (principally the Canadian dollar). We will continue to incur substantial expenses in Canadian dollars and will remain subject to risks associated with foreign currency fluctuations.

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Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in conformity with generally accepted accounting principles in the U.S., or U.S. GAAP. The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the revenue and expenses incurred during the reported periods. We base estimates on our historical experience, known trends and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Critical accounting policies and significant judgments and estimates are those that we consider the most important to the portrayal of our financial condition and results of operations because they require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies and significant estimates include those related to revenue recognition, research and development costs and stock-based compensation.

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.

Results of Operations

Comparison of three months ended March 31, 2024 and 2023

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):

 

 

 

Three Months Ended
 March 31,

 

 

Change
2024 vs. 2023

 

 

 

2024

 

 

2023

 

 

Increase/(Decrease)

 

Research and development expenses

 

 

44,250

 

 

 

39,516

 

 

 

4,734

 

General and administrative expenses

 

 

14,791

 

 

 

9,535

 

 

 

5,256

 

Other:

 

 

 

 

 

 

 

 

 

Interest income

 

 

11,355

 

 

 

5,423

 

 

 

5,932

 

Unrealized fair value gain on trading securities

 

 

 

 

 

1,878

 

 

 

(1,878

)

Foreign exchange gain

 

 

167

 

 

 

313

 

 

 

(146

)

Loss before income taxes

 

$

(47,519

)

 

$

(41,437

)

 

$

(6,082

)

Research and Development Expenses

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):

 

 

 

Three Months Ended
March 31,

 

 

Change
2024 vs. 2023

 

 

 

2024

 

 

2023

 

 

Increase/(Decrease)

 

Direct external costs:

 

 

 

 

 

 

 

 

 

Azetukalner

 

$

23,213

 

 

$

21,100

 

 

$

2,113

 

XEN496

 

 

 

 

 

2,523

 

 

 

(2,523

)

Pre-clinical, discovery and other programs

 

 

3,661

 

 

 

2,640

 

 

 

1,021

 

Indirect costs:

 

 

 

 

 

 

 

 

 

Personnel-related (including stock-based
compensation)

 

 

14,362

 

 

 

10,733

 

 

 

3,629

 

Facilities and other unallocated research and
development expenses

 

 

3,014

 

 

 

2,520

 

 

 

494

 

Research and development expenses

 

$

44,250

 

 

$

39,516

 

 

$

4,734

 

 

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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.

General and Administrative Expenses

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):

 

 

 

Three Months Ended
March 31,

 

 

Change
2024 vs. 2023

 

 

 

2024

 

 

2023

 

 

Increase/(Decrease)

 

Personnel-related (including stock-based compensation)

 

$

9,892

 

 

$

6,954

 

 

$

2,938

 

Professional and consulting fees

 

 

3,206

 

 

 

1,685

 

 

 

1,521

 

Other

 

 

1,693

 

 

 

896

 

 

 

797

 

General and administrative expenses

 

$

14,791

 

 

$

9,535

 

 

$

5,256

 

 

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.

Other Income

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):

 

 

 

Three Months Ended
March 31,

 

 

Change
2024 vs. 2023

 

 

 

2024

 

 

2023

 

 

Increase/(Decrease)

 

Interest income

 

$

11,355

 

 

$

5,423

 

 

$

5,932

 

Unrealized fair value gain on trading securities

 

 

 

 

 

1,878

 

 

 

(1,878

)

Foreign exchange gain

 

 

167

 

 

 

313