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Item 1. Business

2024-02-29 compared with 2023-03-01 · 412 added, 408 removed, 348 unchanged (70% of the section changed)

We are a clinical stage biopharmaceutical company committed to delivering innovative therapeutics to improve the lives of patients with neurological disorders.

We are advancing a novel product pipeline of neurology-focused therapies to address areas of high unmet medical need, with a focus on epilepsy.

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.

In addition to our proprietary product candidates, we also have partnered programs with academic and industry collaborators, including Neurocrine Biosciences, Inc., or Neurocrine Biosciences.

Our goal is to build a fully-integrated and profitable biopharmaceutical company that discovers, develops, and commercializes innovative therapeutics to improve the health of patients with epilepsy and other neurological disorders.

Our goal is to build a fully-integrated and profitable biopharmaceutical company that discovers, develops, and commercializes innovative therapeutics to treat a range of neuroscience diseases.

Key components of our strategy include:

Leveraging our discovery capabilities –

which were founded upon our understanding of the genetics of channelopathies combined with proprietary biology and medicinal chemistry assets and know-how –

to identify product candidates for development, drug targets and/or new indications for our existing product candidates;

• Leveraging our discovery capabilities – which were founded upon our understanding of the genetics of channelopathies combined with proprietary biology and medicinal chemistry assets and know-how – to identify product candidates for development, drug targets and/or new indications for our existing product candidates;

• Advancing selected proprietary product candidates through clinical development;

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Our Product Candidates

Overview of XEN1101, A Kv7 Potassium Channel Opener

XEN1101 is a differentiated Kv7 potassium channel opener being developed for the treatment of epilepsy and other neurological disorders, including major depressive disorder, or MDD.

The Kv7 potassium channel mechanism has been clinically validated with ezogabine, an earlier generation Kv7 opener that was approved by the U.S.

Food and Drug Administration, or FDA, as an adjunctive treatment for adults with focal seizures with or without secondary generalization.

XEN1101’s unique composition is chemically designed to improve upon potency, selectivity and pharmacokinetics, or PK, of ezogabine, and we believe XEN1101 does not have ezogabine’s composition-specific tissue pigmentation effects.

XEN1101 for Focal Onset Seizures (FOS)

In October 2021, we announced positive results from our Phase 2b X-TOLE clinical trial, which evaluated the clinical efficacy, safety and tolerability of XEN1101 administered as an adjunctive treatment for adult patients with focal epilepsy.

The topline data showed all primary and secondary seizure reduction endpoints were statistically significant across all dose groups, including the primary endpoint of median percent change, or MPC, from baseline in monthly seizure frequency and in the key secondary endpoint of patients with at least a 50% reduction in monthly focal seizure frequency from baseline, with p-values of <0.001 for both the 20 mg and 25 mg dose groups.

For a more detailed description of XEN1101 clinical results, see “

Summary of XEN1101 Clinical Results ”

Following the positive results of our Phase 2b X-TOLE clinical trial, we had an End-of-Phase 2 meeting with the FDA and initiated our XEN1101 Phase 3 development program, which includes two identical Phase 3 clinical trials to be run in parallel, called 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 will evaluate the clinical efficacy, safety, and tolerability of XEN1101 administered as adjunctive treatment in approximately 360 patients per study with focal onset seizures, or FOS.

The primary efficacy endpoint is the MPC in monthly seizure frequency from baseline through the double-blind period, or DBP, of XEN1101 compared to placebo.

XEN1101 for Primary Generalized Tonic Clonic Seizures (PGTCS)

We have initiated a Phase 3 clinical trial, called X-ACKT, 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 study will evaluate the clinical efficacy, safety, and tolerability of XEN1101 administered as adjunctive treatment in approximately 160 patients with PGTCS.

XEN1101 is a novel, potent Kv7 potassium channel opener being developed for the treatment of epilepsy, major depressive disorder, or MDD, and potentially other neurological disorders.

XEN1101 for Epilepsy (Focal Onset Seizures)

Our XEN1101 Phase 3 epilepsy program includes two identical Phase 3 clinical trials, called 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 XEN1101 administered with food as adjunctive treatment in approximately 360 patients per study with focal onset seizures, or FOS.

The primary efficacy endpoint is the median percent change, or MPC, in monthly seizure frequency from baseline through the double-blind period, or DBP, of XEN1101 compared to placebo.

Xenon anticipates patient enrollment in X-TOLE2 will be completed in late 2024 to early 2025.

XEN1101 for 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 study is evaluating the clinical efficacy, safety, and tolerability of 25 mg of XEN1101 administered with food as adjunctive treatment in approximately 160 patients with PGTCS.

The primary efficacy endpoint is the MPC in monthly PGTCS frequency from baseline through the DBP of XEN1101 compared to placebo.

XEN1101 for Epilepsy (Open-Label Extension)

Upon completion of the DBP 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 continues to generate important long-term data for XEN1101.

XEN1101 for Major Depressive Disorder (MDD)

Based on promising pre-clinical data with XEN1101 and published clinical data generated using ezogabine, we are evaluating the clinical efficacy, safety and tolerability of XEN1101 administered as monotherapy in approximately 150 patients with MDD in a Phase 2 clinical trial called X-NOVA.

Designed as a randomized, double-blind, placebo-controlled, multicenter clinical study, the primary objective is to assess the efficacy of XEN1101 compared to placebo on improvement of depressive symptoms in subjects diagnosed with moderate to severe MDD, using the Montgomery-Åsberg Depression Rating Scale, or MADRS, score change through week six.

Topline results from the X-NOVA study are anticipated in the third quarter of 2023.

We are also 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 XEN1101 for the treatment of MDD in approximately 60 subjects.

The primary objective of the study is to investigate the effect of XEN1101 on the brain reward circuit as measured by the change in bilateral ventral striatum activity as assessed by functional MRI, or fMRI.

The secondary objectives are to test the effect of XEN1101 compared to placebo on clinical measures of depression and anhedonia using the MADRS and Snaith-Hamilton Pleasure Scale, or SHAPS, respectively.

Summary of XEN1101 Clinical Results

Phase 1 studies conducted in healthy subjects suggested that XEN1101 was generally safe and well tolerated in the doses examined, and its PK profile supported a once-daily dosing schedule.

We completed a Phase 1 clinical trial that evaluated the safety, tolerability and PK of both single ascending doses, or SAD, and multiple ascending doses, or MAD, of XEN1101 in healthy subjects.

In addition, the ongoing X-TOLE Phase 2b OLE, which has been extended from five years to seven years, continues to generate important long-term data for XEN1101.

Summary of XEN1101 Clinical Results in Epilepsy

Phase 1 studies conducted in healthy subjects suggested that XEN1101 was generally well tolerated in the doses examined, and its pharmacokinetic profile supported a once-daily dosing schedule with food and without the need for titration, which has been utilized in all Phase 2 and Phase 3 trials.

We completed a Phase 1 clinical trial that evaluated the safety, tolerability and pharmacokinetic profile of both single ascending doses, or SAD, and multiple ascending doses, or MAD, of XEN1101 in healthy subjects.

The XEN1101 Phase 1 results include data from six SAD cohorts ranging in dose from 5 to 30 mg (n=34, placebo=8), including a crossover food effect cohort (n=10) with a single 20 mg dose.

MAD results included three cohorts ranging in once daily doses from 15 to 25 mg (n=18, placebo=6) including two cohorts of 15 mg evaluated in a fasted and fed state over 7 and 10 days, respectively, and one cohort of 25 mg evaluated in a fed state over 10 days.

The PK profile of XEN1101 supports a once-per-day dosing schedule without the need for titration.

The majority of adverse events, or AEs, were mild or moderate, resolved spontaneously and were consistent with anti-seizure medications, or ASMs.

There were no serious adverse events, deaths, or clinically significant delayed ventricular repolarization or laboratory findings.

Phase 1 results suggest that XEN1101 is generally safe and well tolerated in the doses examined (single doses of up to 30 mg and multiple doses of up to 25 mg once daily).

Data from a Phase 1b transcranial magnetic stimulation, or TMS, study –

which was designed to assess XEN1101’s ability and potency to modulate cortical excitability –

demonstrated activity in the target CNS tissue and helped inform dose selection for our Phase 2b clinical trial.

Phase 1 results suggest that XEN1101 is generally well tolerated in the doses examined (single doses of up to 30 mg and multiple doses of up to 25 mg once daily).

Data from a Phase 1b transcranial magnetic stimulation, or TMS, study – which was designed to assess XEN1101’s ability and potency to modulate cortical excitability – demonstrated activity in the target CNS tissue and helped inform dose selection for our Phase 2b clinical trial.

This Phase 1b double-blind, placebo-controlled, randomized cross-over TMS study included 20 healthy male subjects.

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XEN1101 reduced corticospinal excitability, as demonstrated by a concentration dependent elevation in resting motor threshold, or RMT, the key TMS-EMG measure.

RMT increased in proportion to XEN1101 plasma concentration showing a mean ±

standard error of mean increase of 4.9 ±

0.7% (p<0.01) at 6 hours.

Active motor threshold, or AMT, also increased in proportion to plasma concentration of XEN1101 with an increase of 2.0 ±

0.4% at 6 hours.

RMT increased in proportion to XEN1101 plasma concentration showing a mean ± standard error of mean increase of 4.9 ± 0.7% (p<0.01) at 6 hours.

Active motor threshold, or AMT, also increased in proportion to plasma concentration of XEN1101 with an increase of 2.0 ± 0.4% at 6 hours.

In addition, XEN1101 statistically significantly modulated TMS-evoked electroencephalogram, or EEG, potentials, or TEPs, in a pattern consistent with reductions in cortical excitability.

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Phase 2b X-TOLE Clinical Trial:

In October 2021, we announced topline results from the Phase 2b X-TOLE clinical trial, which was designed as a randomized, double-blind, placebo-controlled, multicenter study to evaluate the clinical efficacy, safety, and tolerability of XEN1101 administered as once-daily adjunctive treatment in adult patients with focal epilepsy.

In October 2021, we announced topline results from the Phase 2b X-TOLE clinical trial, which was designed as a randomized, double-blind, placebo-controlled, multicenter study to evaluate the clinical efficacy, safety, and tolerability of 10 mg, 20 mg, or 25 mg of XEN1101 administered as once-daily adjunctive treatment with food in adult patients with focal epilepsy.

The study included a total of 325 randomized and treated subjects in the safety population and 323 subjects in the modified intent-to-treat population for the efficacy analyses.

Subjects had an average age of 40.8 ±

13.3 years, and 8.9%, 40.3%, or 50.8% of the subjects were on and continued taking one, two, or three stable background ASMs throughout the study, respectively, and failed a median of 6 previous ASMs prior to study entry.

Subjects had an average age of 40.8 ± 13.3 years, and 8.9%, 40.6%, or 50.5% of the subjects were on and continued taking one, two, or three stable background ASMs throughout the study, respectively, and failed a median of 6 previous ASMs prior to study entry.

The median baseline seizure frequency across the study groups was approximately 13.5 seizures per month.

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placebo, and p=0.035 for 10 mg vs.

A prespecified secondary endpoint of the study was a responder analysis, which compared the proportion of study subjects treated with XEN1101 who achieved a ≥50% reduction in monthly focal seizures versus placebo.

The percentage of subjects who achieved a ≥50% reduction in monthly focal seizures was 54.5% in the XEN1101 25 mg group, 43.1% in the XEN1101 20 mg group, and 28.3% in the XEN1101 10 mg group compared to 14.9% in the placebo group.

Statistical significance was achieved for all dose groups compared to placebo with 2-sided p-values of p<0.001 for 25 mg vs.

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Patients with 100% reduction in monthly focal seizure frequency from baseline

Additional sub-analyses were performed in patients with different baseline characteristics given that X-TOLE included a “difficult-to-treat”

patient population as defined by the number of prior failed ASMs, concomitant ASMs on study, and baseline seizure burden.

Additional sub-analyses were performed in patients with different baseline characteristics given that X-TOLE included a difficult-to-treat patient population as defined by the number of prior failed ASMs, concomitant ASMs on study, and baseline seizure burden.

The table below outlines a sub-group analyses of median percent reduction in seizures within the 25 mg dose group, showing that there was a significant increase in seizure reduction in patients with less disease severity at baseline:

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Median reduction from baseline in monthly focal seizures frequency

Overall in X-TOLE (N=112)

Overall in X-TOLE

52.8% (N=112)

18.2% (n=114)

Prior failed ASMs > 6

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Baseline seizures < 8.5 per month

In addition, an analysis of seizure reduction across seizure subtypes showed a median percent reduction in monthly focal seizure frequency of 86.9% in ‘type 4’

focal seizures that lead to generalized tonic clonic seizures in the 25 mg dose group.

In addition, an analysis of seizure reduction across seizure subtypes showed a median percent reduction in monthly focal seizure frequency of 86.9% (n=23) in ‘type 4’ focal seizures that lead to generalized tonic clonic seizures in the 25 mg dose group.

A time-to-event analysis analyzing the time to reach the baseline monthly focal seizure count during the double-blind period showed a marked dose-dependent decrease in the rate of seizure recurrence when comparing XEN1101 to placebo.

These marked reductions in seizures were associated with statistically significant improvements in overall status, as assessed by physicians using the Clinical Global Impression of Change, or CGI-C, and by subject self-reporting using the Patient Global Impression of Change, or PGI-C, scales in the XEN1101 25 mg group, which are shown in the table below with 2-sided p-values:

XEN1101 25 mg

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eye disorders;

and infections –

with the majority related to the central nervous system, mild or moderate in severity, and occurring early in the treatment period.

and infections – with the majority related to the central nervous system, mild or moderate in severity, and occurring early in the treatment period.

Across all XEN1101 dose groups (n=211), the most common TEAEs were dizziness (n=52, 24.6%), somnolence (n=33, 15.6%), fatigue (n=23, 10.9%), and headache (n=21, 10.0%).

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Weight changes were modest with mean (SD) changes of 0.2 kg (2.4) in the placebo group, 0.6 kg (2.3) in the 10 mg group, 1.6 kg (2.2) in the 20 mg group and 1.9 kg (2.9) in the 25 mg group.

Additional Sub-Analyses of X-TOLE Data and Interim Open Label Extension (OLE) Data:

In 2022, we presented additional sub-group analyses of data from the XEN1101 Phase 2b X-TOLE clinical trial and interim data from the X-TOLE OLE.

Additional sub analyses of the X-TOLE data suggest that the rapid onset of efficacy for XEN1101 was associated with starting at an effective, therapeutic and well-tolerated dose.

There was a statistically significant reduction in median seizure frequency within 1 week for all doses compared with placebo.

Additional Post Hoc Sub-Analyses of X-TOLE Data and Interim Open Label Extension (OLE) Data:

In 2022 and 2023, we presented additional sub-group analyses of data from the XEN1101 Phase 2b X-TOLE clinical trial and interim data from the ongoing X-TOLE OLE.

Additional sub-analyses of the X-TOLE data suggest that the rapid onset of efficacy for XEN1101 was associated with starting at an effective, therapeutic dose.

There was a statistically significant reduction in median seizure frequency within one week for all doses compared with placebo.

Rapid onset of efficacy of XEN1101 was seen at week 1, with a dose-dependent reduction from baseline in median weekly seizure frequency of 39.1% (p<0.01, n=46), 41.5% (p=0.04, n=50) and 55.4% (p<0.001, n=110) in the 10 mg, 20 mg, and 25 mg groups, respectively, compared to placebo (20.2%, n=114).

Analysis of the interim OLE data shows XEN1101 continues to be generally well-tolerated, yielding long-term efficacy at the 20 mg once-daily dose, with patients experiencing continued seizure reduction during the OLE and extended periods of seizure freedom.

During the OLE, there was a sustained monthly reduction in seizure frequency (80%–90% seizure reduction at 12 to 18 months in OLE as measured by MPC) from the DBP baseline, as of the analysis cutoff date of September 22, 2022.

Seizure freedom for ≥6-month and ≥12-month consecutive durations was achieved in 17.5% and 10.5% of patients, respectively.

XEN1101 continues to be generally well-tolerated in the OLE with AEs consistent with prior results and other ASMs.

At the end of the first year in the OLE, patients recorded a mean (SD) weight gain of 1.1 (5.9) kg.

To date, two AEs of urinary retention occurred in the OLE possibly related to study drug, and both patients continued in the study without requiring intervention.

Although not seen to date, we continue to monitor for the emergence of the tissue discoloration that was associated with long-term exposure to ezogabine.

Based on the potential to continue to provide significant benefit to patients, we extended the X-TOLE OLE from three to five years.

Intellectual Property Related to XEN1101

We have a comprehensive strategy in place to protect and expand the intellectual property portfolio that covers XEN1101.

Importantly, two additional U.S.

patents were granted in 2021 covering claims related to:

(1) distinct crystalline forms of XEN1101 drug substance and pharmaceutical compositions containing the same as compositions-of-matter, along with methods for their preparation and use;

and (2) methods of enhancing the bioavailability of XEN1101 by administration with or close to a meal.

patents are expected to expire in 2040 and 2039, respectively, absent any extensions of patent term.

For a more detailed description of our intellectual property portfolio covering our product pipeline, see “—Intellectual Property”

Analyses of the interim OLE data show XEN1101 continues to be generally well-tolerated, yielding long-term efficacy at the 20 mg once-daily dose, with 60% retention at 24 months in the OLE, as of the analysis cutoff date of September 5, 2023.

During OLE study months 18 to 30, there was a sustained monthly reduction in seizure frequency (78%–95% median percent change) from double-blind period baseline, and higher reductions were observed for patients who were receiving one to two ASMs at baseline compared to those receiving three ASMs.

Seizure freedom for ≥3-month, ≥6-month, and ≥12-month consecutive durations was achieved in 37.5%, 22.2%, and 14.9% of all patients enrolled in the OLE (n=275), respectively.

Seizure freedom for ≥3-month, ≥6-month, and ≥12-month consecutive durations was achieved in 56.4%, 34.5% and 23.6% of those patients with at least 24 months of treatment in the OLE (n=165), respectively.

At 24 months in the OLE, clinically important improvements in the Quality of Life in Epilepsy Inventory-31 (QOLIE-31) subscales of Seizure Worry, Social Functioning, and Medication Effects were seen across all patients (n=162), with even greater improvements in the seizure-free group (n=39).

In addition, quality-of-life improvements, as measured by the QOLIE-31, originally reported at year one were maintained or improved at year two of the X-TOLE OLE.

No new safety signals were identified, and the clinical data analyzed to date indicates that XEN1101 continues to be generally well-tolerated in the OLE with AEs consistent with prior results and AEs seen with other anti-seizure medications.

Based on the potential to continue to provide significant benefit to patients, we have extended the X-TOLE OLE from five to seven years.

About Epilepsy and Seizure Types

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Early treatment typically begins with monotherapy followed by increasing use of polypharmacy to manage patients with residual seizure burden.

Despite the availability of multiple treatment options, approximately 50% of patients are considered inadequately managed with initial lines of therapy warranting additional treatment options.

Despite the availability of multiple treatment options, up to 50% of patients are considered inadequately managed with initial lines of therapy warranting additional treatment options.

For poorly managed patients, physicians increasingly turn to complementary mechanisms used as adjunctive therapy to control seizures.

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Based on our market research, we believe XEN1101 could offer a compelling value proposition to address FOS and PGTCS, if approved.

Overview of XEN496, a Kv7 Potassium Channel Opener

XEN496, a Kv7 potassium channel opener, is a proprietary, pediatric formulation of the active ingredient ezogabine being developed for the treatment of KCNQ2 developmental and epileptic encephalopathy, or KCNQ2-DEE.

The Kv7 potassium channel mechanism has been clinically validated with ezogabine, an earlier generation Kv7 opener that was approved by the FDA as an adjunctive treatment for adults with focal seizures with or without secondary generalization.

Published case reports where physicians have used ezogabine in infants and young children with KCNQ2-DEE suggest that XEN496 may be efficacious in this often hard-to-treat pediatric patient population.

We have received Fast Track designation and orphan drug designation, or ODD, for XEN496 for the treatment of seizures associated with KCNQ2-DEE from the FDA, as well as an orphan medicinal product designation from the European Commission.

The FDA previously indicated that it is acceptable to study XEN496 in infants and children up to four years old, and that a single, small pivotal trial may be considered adequate in order to demonstrate XEN496’s efficacy in KCNQ2-DEE, provided the study shows evidence of a clinically meaningful benefit in patients with the intended indication.

Clinical Development of XEN496

We have developed XEN496 as a proprietary, pediatric-specific, immediate-release formulation of ezogabine.

To support the Phase 3 clinical trial of XEN496 in patients with KCNQ2-DEE, we completed a PK study testing our pediatric formulation in 24 healthy adult volunteers.

The PK profile observed for XEN496 was comparable to historical PK data for immediate-release ezogabine tablets, with XEN496 showing similar absorption and elimination curves.

We have an ongoing Phase 3 randomized, double-blind, placebo-controlled, parallel group, multicenter clinical trial, called the EPIK study, evaluating the efficacy, safety, and tolerability of XEN496 administered as adjunctive treatment in approximately 40 pediatric patients aged one month to less than 6 years with KCNQ2-DEE.

The primary endpoint is the percent change from baseline in monthly countable motor seizure frequency during the blinded treatment period, as recorded by caregivers in a daily seizure diary.

Patients may be considered for an open-label extension if they meet all requirements.

We anticipate that the EPIK study will be completed in 2024.

About KCNQ2-DEE

KCNQ2 developmental and epileptic encephalopathy, or KCNQ2-DEE, otherwise known as EIEE7, is a rare, severe neurodevelopmental disorder with a significant seizure burden and profound developmental impairment.

KCNQ2-DEE is uniquely characterized by multiple, daily, refractory seizures presenting within the first week of life with a prominent tonic component and autonomic signs.

Seizures are often accompanied by clonic jerking or complex motor behavior.

The EEG at onset of the disease shows a burst suppression pattern later evolving into multifocal epileptiform activity.

The infants usually develop a severe to profound intellectual disability with axial hypotonia that can be accompanied by limb spasticity.

The seizure activity typically decreases with age with some patients becoming seizure free or experiencing more minor seizure burden by 3 to 5 years of age;

however, a survey of patient caregivers indicates that a significant proportion of patients have ongoing seizures beyond this age range.

The intellectual disability and other co-morbidities are not reversed or improved with age and patients generally require life-long care.

Patients are often non-verbal, and some children may also have autistic features.

Seizure-related bradycardia and oxygen desaturation with cyanosis have been observed and are thought to contribute to the significant risk of sudden unexpected death in epilepsy, or SUDEP, in these children.

An epidemiology study from Europe examining the incidence and phenotypes of childhood-onset genetic epilepsies reports the incidence of KCNQ2-DEE as approximately 1 per 17,000 live births.

XEN1101 for Major Depressive Disorder (MDD)

In November 2023, we reported topline results from the randomized, double-blind, placebo-controlled, 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 taken once daily with food in 168 patients with moderate to severe major depressive disorder, or MDD.

The primary objective was to assess the efficacy of XEN1101 compared to placebo on improvement of depressive symptoms in subjects diagnosed with moderate to severe MDD, using the Montgomery-Åsberg Depression Rating Scale, or MADRS, score change through week 6.

We anticipate participating in an “end-of-Phase 2” meeting with the U.S.

Food and Drug Administration, or FDA, in April 2024 to support the initiation of our late-stage XEN1101 clinical program in MDD, which will include three Phase 3 clinical trials, with the first Phase 3 study expected to begin in the second half of 2024.

We are also evaluating other potential indications for the future development of XEN1101.

Summary of X-NOVA Efficacy Data in the DBP:

The primary endpoint of the study was a change in MADRS at week 6.

The mean reduction was 13.90 in the placebo group, 15.61 in the XEN1101 10 mg group and 16.94 in the XEN1101 20 mg group.

A clear dose response and a clinically meaningful, but not statistically significant, 3.04 difference between placebo and the XEN1101 20 mg group (p=0.135) was observed.

Statistical significance was achieved on the pre-specified endpoint of the Hamilton Depression Rating Scale, or HAM-D17, at week 6 with a mean reduction of 10.18 in the placebo group and 13.26 in the XEN1101 20 mg group (p=0.042).

Statistical significance was achieved on the key secondary endpoint of a change in the Snaith-Hamilton Pleasure Scale, or SHAPS, measuring anhedonia at week 6 with a reduction of 5.30 in the placebo group and 7.77 in the XEN1101 20 mg group (p=0.046).

Statistical significance was achieved in MADRS at week 1 with a mean reduction of 4.88 in the placebo group and 7.54 in the XEN1101 20 mg group (p=0.047) demonstrating early onset of efficacy.

Statistical significance was achieved in reporting of at least minimally improved symptoms of depression as assessed by physicians using the Clinical Global Impression of Improvement, or CGI-I, (p=0.004) in the XEN1101 20 mg group compared to placebo.

Summary of X-NOVA Safety and Tolerability Data in the DBP:

XEN1101 was well tolerated with similar rates of adverse events reported across all treatment arms.

The most commonly reported TEAEs in the XEN1101 20 mg group included dizziness (17.9%), somnolence (10.7%), headache (8.9%) and disturbance in attention (8.9%), as compared to the placebo group which reported dizziness (7.3%), somnolence (1.8%), headache (12.7%) and disturbance in attention (0%).

Rates of discontinuation were similar across all treatment arms and rates of discontinuation due to TEAEs were low with three patients in the XEN1101 20 mg group (5.4%), as compared to two patients in the placebo group (3.6%).

No serious adverse events, or SAEs, were reported in the two XEN1101 treatment groups and there were two patients (3.6%) in the placebo group who experienced a treatment-emergent SAE.

XEN1101 was not associated with notable weight gain, and patients did not report notable sexual dysfunction.

Investigator-Led Phase 2 Proof-of-Concept Study of XEN1101 in MDD

The secondary objectives are to test the effect of XEN1101 compared to placebo on clinical measures of depression and anhedonia using the MADRS and SHAPS, respectively.

About Major Depressive Disorder (MDD)

MDD is a common, chronic neurological disorder characterized by low mood, inability to feel pleasure, feelings of guilt and worthlessness, low energy, and other emotional and physical symptoms that last for two weeks or more, and which impairs social, occupational, educational, or other important functioning.

MDD is highly prevalent and difficult to treat.

According to the National Institutes of Health, an estimated 7.8% of U.S.

adults (21.0 million) experience MDD each year, and of them approximately two-thirds had severe impairment associated with their depression.

Results of the Sequenced Treatment Alternatives to Relieve Depression, or STAR*D trial, funded by the National Institute of Mental Health, indicate that nearly two-thirds of diagnosed and treated patients do not experience adequate treatment response with first-line therapy, and that the majority of these initial failures also fail second-line treatment, highlighting the need for new anti-depressant medications with novel mechanisms of action.

Intellectual Property Related to XEN1101

We have a comprehensive strategy in place to protect and expand the intellectual property portfolio that covers XEN1101.

Importantly, two U.S.

patents were issued in 2021 with claims covering:

(1) distinct crystalline forms of XEN1101 drug substance and related pharmaceutical compositions, along with methods for their preparation and use;

and (2) various methods of orally administering XEN1101 with or close to a meal.

patents are expected to expire in 2040 and 2039, respectively, absent any extensions of patent term.

For a more detailed description of our intellectual property portfolio covering our pipeline of product candidates, see “—Intellectual Property” below.

New Pipeline Opportunities

Given our expertise in drug discovery, our efforts are concentrated on the identification of ion channel targets where we believe novel openers might represent significant therapeutic advances, with a particular focus on epilepsy and other CNS-related indications.

Given our expertise in drug discovery, our efforts are concentrated on the identification of ion channel targets where we believe novel modulators might represent significant therapeutic advances.

Expansion of our pipeline may come from our internal research efforts and through the acquisition or in-licensing of other external product candidates.

The near-term focus is on internal development candidates targeting Kv7, Nav1.1 and Nav1.7.

Additional updates will be provided as these pre-clinical drug candidates advance into clinical development.

Our Partnered Programs

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Pursuant to the terms of the agreement, we have the potential to receive certain clinical, regulatory, and commercial milestone payments, as well as future sales royalties.

For a more detailed description of the terms of this agreement with Neurocrine Biosciences, see “—Collaborations, Commercial and License Agreements”

NBI-921352 is a potent, highly selective Nav1.6 sodium channel inhibitor being developed to treat pediatric patients with SCN8A developmental and epileptic encephalopathy, or SCN8A-DEE, and other potential indications, including adult focal epilepsy.

For a more detailed description of the terms of this agreement with Neurocrine Biosciences, see “—Collaborations, Commercial and License Agreements” below.

NBI-921352 is being developed to treat pediatric patients with SCN8A developmental and epileptic encephalopathy, or SCN8A-DEE.

A Phase 2 clinical trial is underway evaluating NBI-921352 in pediatric patients (aged between 2 and 21 years) with SCN8A-DEE.

Neurocrine Biosciences has received orphan drug and rare pediatric disease designations from the FDA for NBI-921352 in SCN8A-DEE.

Prior to our license and collaboration agreement with Neurocrine Biosciences, we completed a Phase 1 clinical trial in healthy adult subjects, and subsequently developed a pediatric-specific, granule formulation.

Neurocrine Biosciences is currently conducting a Phase 2 clinical trial evaluating NBI-921352 in adult patients with focal-onset seizures, with data expected in the second half of 2023.

In addition, a Phase 2 clinical trial is underway evaluating NBI-921352 in pediatric patients (aged between 2 and 21 years) with SCN8A-DEE.

In November 2023, Neurocrine Biosciences reported that a Phase 2 clinical trial evaluating NBI-921352 in adult patients with FOS failed to demonstrate meaningful reduction in seizure frequency and that no further development with NBI-921352 in FOS is planned at this time.

Collaborations, Commercial and License Agreements

License and Collaboration Agreement with Neurocrine Biosciences, Inc.

On December 2, 2019, we entered into a license and collaboration agreement, or the Collaboration Agreement, with Neurocrine Biosciences to establish a collaboration under which the parties will identify, research and develop sodium channel inhibitors, including our clinical candidate XEN901, now known as NBI-921352, and preclinical candidates XEN393, XPC’535 and XPC’391, which compounds Neurocrine Biosciences will have the exclusive right to further develop and commercialize under the terms and conditions set forth in the Collaboration Agreement.

Under the terms of the Collaboration Agreement we granted to Neurocrine Biosciences an exclusive, royalty-bearing, sublicensable license to certain of our intellectual property rights for the research, development and commercialization of (i) NBI-921352;

(ii) XEN393, XPC’535 and XPC’391, collectively referred to as the development track candidates, or the DTCs;

and (iii) certain research compounds that bind to and inhibit voltage-gated sodium channels Nav1.2 and Nav1.6 as their primary mechanism of action, collectively, the Research Compounds and, together with NBI-921352 and the DTCs, the Compounds, on a worldwide basis for the treatment, cure, diagnosis, prediction or prevention of any human disease or disorder, state, condition and/or malady, subject to certain exceptions set forth in the Collaboration Agreement.

In December 2019, as amended in January 2021 and February 2022, we entered into a license and collaboration agreement, or the Collaboration Agreement, with Neurocrine Biosciences to establish a collaboration under which the parties will identify, research and develop sodium channel inhibitors, including our clinical candidate XEN901, now known as NBI-921352, and certain preclinical candidates (“DTCs”) and research compounds which Neurocrine Biosciences will have the exclusive right to further develop and commercialize under the terms and conditions set forth in the Collaboration Agreement.

Neurocrine Biosciences has an exclusive, royalty-bearing, sublicensable license to certain of our intellectual property rights for the research, development and commercialization of these compounds on a worldwide basis for the treatment, cure, diagnosis, prediction or prevention of any human disease or disorder, state, condition and/or malady, subject to certain exceptions set forth in the Collaboration Agreement.

We also granted to Neurocrine Biosciences a non-exclusive, non-royalty-bearing, sublicensable license to certain of our intellectual property rights for the screening of compounds for identification as a Select Nav Inhibitor (as defined below) and for the research of certain compounds otherwise expressly excluded from the Collaboration Agreement, or the Excluded Compounds.

Exclusivity .

During the Research Term (as defined below) and for one year thereafter, other than in accordance with the terms of the Collaboration Agreement, neither Neurocrine Biosciences nor any of its respective affiliates is permitted to directly or indirectly research, develop, manufacture or commercialize any small-molecule Select Nav Inhibitor (as defined below).

During the term of the Collaboration Agreement, other than the Excluded Compounds and otherwise in accordance with the terms of the Collaboration Agreement, neither we nor any of our respective affiliates is permitted to directly or indirectly research, develop, manufacture or commercialize a compound that, as its primary mechanism of action, binds to and inhibits voltage-gated sodium channels Nav1.2 and Nav1.6, such compound referred to as a Select Nav Inhibitor.

The parties have established a joint steering committee, or JSC, composed of an equal number of representatives from each entity, which will coordinate and oversee the Collaboration Programs (as defined below).

The JSC will disband upon the completion or earlier termination of both of the Collaboration Programs.

Decisions of the JSC will be made by unanimous vote, provided that in the event of a disagreement on any matter, following a specified dispute resolution procedure, Neurocrine Biosciences will have the right to decide such matter, subject to certain exceptions.

Collaboration Programs.

We are collaborating with Neurocrine Biosciences on the conduct of two collaboration programs:

(i) a joint research collaboration to discover, identify and preclinically develop Research Compounds, or the Research Program, and (ii) a collaborative development program for NBI-921352 and two DTCs selected by the JSC, or the Initial Development Program and, together with the Research Program, referred to as the Collaboration Programs.

The Research Program included the preclinical development of our existing non-clinical Research Compounds and the discovery of new back-up and follow-on Research Compounds to NBI-921352 and the two DTCs selected by the JSC as clinical development candidates for subsequent development and commercialization by Neurocrine Biosciences.

During the term of the Research Program, the parties conducted related activities in accordance with an agreed research plan and budget.

Each party was solely responsible for all costs such party incurred to conduct its activities under the research plan, provided that Neurocrine Biosciences reimbursed us for certain full-time employees and out-of-pocket expenses incurred by us in accordance with the research budget.

The Research Program was completed in June 2022.

The Initial Development Program includes:

(i) completion of any preclinical and clinical studies that were ongoing as the date of the Collaboration Agreement of any NBI-921352 product and the two DTC products selected by the JSC;

(ii) a pharmacokinetic, drug-drug interaction and food effect Phase 1 clinical trial of a NBI-921352 product to examine the adequacy of a new pediatric formulation;

and (iii) all preclinical studies of two DTC products containing the two DTCs selected by the JSC.

The parties will use their commercially reasonable efforts to conduct the development activities under the Initial Development Program pursuant to specific development plans.

Each party is solely responsible for all costs such party incurs to conduct its activities under these development plans, provided that, with respect to NBI-921352 development activities, Neurocrine Biosciences reimburses us for certain full-time employees and out-of-pocket expenses incurred by us, and with respect to certain development activities related to the two JSC-selected DTCs, the JSC may determine that Neurocrine Biosciences shall make such reimbursements.

Development, Regulatory and Manufacturing.

Except for the activities set forth in the plans for the Collaboration Programs, Neurocrine Biosciences is solely responsible, at its sole cost and expense, for all development and manufacturing of the Compounds and any pharmaceutical product that contains a Compound, subject to the Co-Funding Option (as defined below).

For the first indication that meets or exceeds a specified prevalence threshold, or a Major Indication, for which Neurocrine Biosciences intends to conduct a Phase 3 clinical trial of a NBI-921352 product or the first clinical trial of a DTC product following a successful Phase 2 clinical trial for such DTC product, Neurocrine Biosciences will prepare a development plan including an estimated budget and provide such plan to us.

We will have the right to elect to co-fund the development of one product in a Major Indication under such development plan and to receive a mid-single digit percentage increase in royalties owed on the net sales as calculated pursuant to the terms of the Collaboration Agreement, or Net Sales, of such products in the U.S., or the Co-Funding Option.

During the term of the Collaboration Agreement, other than the Excluded Compounds and otherwise in accordance with the terms of the Collaboration Agreement, neither we nor any of our respective affiliates are permitted to directly or indirectly research, develop, manufacture or commercialize a compound that, as its primary mechanism of action, binds to and inhibits voltage-gated sodium channels Nav1.2 and Nav1.6, such compound referred to as a Select Nav Inhibitor.

Each party is solely responsible for all costs such party incurs to conduct its activities under the development and research plans, provided that, with respect to NBI-921352 development and research activities, Neurocrine Biosciences reimburses us for certain full-time employees and out-of-pocket expenses incurred by us, and with respect to certain development activities related to certain DTCs, Neurocrine Biosciences may make agreed-upon reimbursements.

Except for the activities set forth in the development plans, Neurocrine Biosciences is solely responsible, at its sole cost and expense, for all development and manufacturing of the compounds and any pharmaceutical product that contains a compound, subject to the Co-Funding Option (as defined below).

We will have the right to elect to co-fund the development of one product in the first indication that meets or exceeds a specified prevalence threshold, or a Major Indication, under such development plan and to receive a mid-single digit percentage increase in royalties owed on the net sales as calculated pursuant to the terms of the Collaboration Agreement, or Net Sales, of such products in the U.S., or the Co-Funding Option.

If we exercise the Co-Funding Option, the parties will share equally all reasonable and documented costs and expenses that Neurocrine Biosciences incurs in connection with the development of such product in the applicable indication, except costs and expenses that are solely related to the development of such product for regulatory approval outside the U.S.

We have not exercised this option as of December 31, 2023.

Neurocrine Biosciences will be the regulatory sponsor and is solely responsible for all regulatory activities (except for those delegated to us) under the Collaboration Agreement, including submitting one or more INDs for an NBI-921352 product.

If the FDA grants a Rare Pediatric Disease Priority Review Voucher in connection with the approval of a New Drug Application for a NBI-921352 product, Neurocrine Biosciences may, at its option, (i) sell it to a third-party and share a specified portion of the proceeds with us;

(ii) use it for a product Neurocrine Biosciences is developing outside the Collaboration Agreement and pay us a specified portion of the voucher’s intrinsic value (as calculated pursuant to the terms of the Collaboration Agreement);

or (iii) use the voucher for a pharmaceutical product that contains a Compound, in which case no payments would be due to us.

If the FDA grants Neurocrine Biosciences a voucher in connection with any other product, Neurocrine Biosciences will retain all rights to such voucher without any payment or other obligations to us.

Commercialization.

Neurocrine Biosciences has the exclusive right to conduct, and will be solely responsible for all aspects of, the commercialization of any pharmaceutical product that contains a Compound.

Financial Terms.

Neurocrine Biosciences paid us an upfront payment of $50.0 million, which included a $30.0 million payment in cash.

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Based on the regulatory approval of a clinical trial application in Europe for NBI-921352 for focal-onset seizures in adults, in September 2021 we received an aggregate milestone payment of $10.0 million in the form of $4.5 million in cash and a $5.5 million in equity investment.

In January 2022, we received an aggregate milestone payment of $15.0 million in the form of a $6.75 million payment in cash and a $8.25 million equity investment, based on the FDA’s acceptance of a protocol amendment to expand the study population of a clinical trial in pediatric patients with SCN8A-DEE.

The Collaboration Agreement also provides for potential aggregate development and regulatory milestone payments from Neurocrine Biosciences to us of up to $325.0 million for a NBI-921352 product and up to $247.5 million for each other Compound up to a maximum of three other Compounds.

Sales-based milestones of up to $150.0 million for each Compound, including a NBI-921352 product, will be paid from Neurocrine Biosciences to us upon the achievement of certain Net Sales targets, up to a maximum of four Compounds.

Neurocrine Biosciences has further agreed to pay us royalties based on future Net Sales of any pharmaceutical product that contains a Compound.

Such royalty percentages, for Net Sales in and outside the U.S., range from (i) for a NBI-921352 product, a low double-digit percentage to a mid-teen percentage and a high-single digit percentage to low double-digit percentage, respectively;

(ii) for each DTC product, a high-single digit percentage to a low double-digit percentage and a mid-single digit percentage to a high-single digit percentage, respectively;

and (iii) for each Research Compound product, a mid-single digit percentage to a high-single digit percentage and a tiered mid-single digit percentage, respectively.

Neurocrine Biosciences’

obligations to pay royalties with respect to a product and country will expire upon the latest of:

(i) the expiration of the last to expire valid claim in (a) the parties’

joint patent rights filed during the Research Term or a specified period of time thereafter or (b) our patent rights as specified in the Collaboration Agreement, in each case that cover such product;

Neurocrine Biosciences’ obligations to pay royalties with respect to a product and country will expire upon the latest of:

(i) the expiration of the last to expire valid claim in (a) the parties’ joint patent rights filed during the Research Term or a specified period of time thereafter or (b) our patent rights as specified in the Collaboration Agreement, in each case that cover such product;

(ii) ten years from the first commercial sale of the product in such country;

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Royalty payments are subject to reduction in specified circumstances, including expiration of patent rights or if average Net Sales decrease by a certain percentage after the introduction of a generic product.

Term and Termination .

Unless earlier terminated, the term of the Collaboration Agreement will continue on a product-by-product and country-by-country basis until the expiration of the Royalty Term for such product in such country.

Upon the expiration of the Royalty Term for a particular product and country, the exclusive license granted by us to Neurocrine Biosciences with respect to such product and country will become fully-paid, royalty free, perpetual and irrevocable.

Neurocrine Biosciences may terminate the Collaboration Agreement in its entirety or on a product-by-product or country-by-country basis, for any or no reason, by providing at least 90 days’

written notice, provided that such unilateral termination will not be effective (i) with respect to a NBI-921352 product until Neurocrine Biosciences has used its commercially reasonable efforts to complete one Phase 2 clinical trial for a NBI-921352 product;

Neurocrine Biosciences may terminate the Collaboration Agreement in its entirety or on a product-by-product or country-by-country basis, for any or no reason, by providing at least 90 days’ written notice, provided that such unilateral termination will not be effective (i) with respect to a NBI-921352 product until Neurocrine Biosciences has used its commercially reasonable efforts to complete one Phase 2 clinical trial for a NBI-921352 product;

(ii) with respect to a DTC product until Neurocrine Biosciences has used its commercially reasonable efforts to complete one Phase 1 clinical trial for a DTC product;

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Such license will be royalty-free with respect to any terminated product for which a Phase 2 clinical trial was not completed prior to the effective date of termination, and otherwise will be royalty-bearing ranging from a low-single digit percentage to a high-single digit percentage depending on the stage of development of the applicable product at the effective date of termination.

The Collaboration Agreement includes certain other customary terms and conditions, including mutual representations and warranties, indemnification and confidentiality provisions.

In January 2021, we entered into an amendment with Neurocrine Biosciences pursuant to which we revised certain IND acceptance criteria relating to NBI-921352 for the potential treatment of SCN8A-DEE.

In February 2022, we entered into a second amendment with Neurocrine Biosciences pursuant to which the restrictions imposed on Neurocrine Biosciences prohibiting it from developing, seeking regulatory approval for, marketing or promoting certain early compounds (as the term is defined in the Collaboration Agreement) in the pain field (as the term is defined in the Collaboration Agreement) were removed.

Share Purchase Agreements

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The purchase price represented a 20% premium to the closing price of our common shares on November 29, 2019.

In September 2021, pursuant to the Collaboration Agreement, as amended in January 2021, we entered into a SPA with Neurocrine Biosciences pursuant to which we issued and sold 275,337 of our Shares to Neurocrine Biosciences in a private placement for an aggregate purchase price of $5.5 million, or $19.9755 per share.

The purchase price represented a 15% premium to our 30-day volume-weighted average price immediately prior to the public announcement.

In January 2022, pursuant to the Collaboration Agreement, as amended in January 2021, we entered into a SPA with Neurocrine Biosciences pursuant to which we issued and sold 258,986 of our Shares to Neurocrine in a private placement for an aggregate purchase price of $8.25 million, or $31.855 per share.

The purchase price represents a 15% premium to our 30-day volume-weighted average price immediately prior to the public announcement.

The SPAs contain certain other customary terms and conditions, including mutual representations, warranties, and covenants.

We entered into additional SPAs in September 2021 and January 2022 with Neurocrine Biosciences pursuant to which we issued and sold 275,337 and 258,986, respectively, of our Shares to Neurocrine Biosciences in private placements for aggregate purchase prices of $5.5 million ($19.9755 per share) and $8.25 million ($31.855 per share), respectively.

The purchase price represented a 15% premium to our 30-day volume-weighted average price immediately prior to the public announcements.

Asset Purchase Agreement with 1st Order Pharmaceuticals, Inc.

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As part of our business strategy, we strive to protect the proprietary technologies that we believe are important to our business, including pursuing and maintaining patent protection intended to cover our product candidates and their methods of use and processes for their manufacture, as well as other inventions that are important to our business.

We plan to continue to expand our intellectual property estate by filing patent applications directed to compositions, methods of use, treatment and patient selection, formulations and manufacturing processes created or identified from our ongoing development of our product candidates.

We generally file applications in the U.S., Canada, the European Union, or EU, and other commercially significant foreign jurisdictions.

We also rely on trade secrets, internal know-how, technological innovations and agreements with third parties to develop, maintain and protect our competitive position.

Our ability to be competitive will depend on the success of this strategy.

As of December 31, 2022, we owned, co-owned or licensed 30 issued U.S.

patents and approximately 18 pending U.S.

patent applications, including provisional and non-provisional filings.

We also owned, co-owned or licensed approximately 363 pending and granted counterpart applications worldwide, including 11 country-specific validations of three European patents.

As of December 31, 2022, we owned four issued U.S.

patents and six pending U.S.

non-provisional patent applications related to XEN1101, and methods of making and using XEN1101 and certain related compounds.

Upon issuance, the patents are expected to expire between 2028 and 2042 (absent any extensions of term).

In addition, we have approximately 15 foreign issued patents (exclusive of European patent national validations), two pending PCT international applications, and approximately 129 pending applications in various foreign jurisdictions relating to XEN1101 and certain related compounds.

As of December 31, 2022, we have filed one U.S.

provisional patent application directed to certain of our potassium channel modulators (exclusive of XEN1101), as well as methods of making and using the same.

Any patents issuing from this application are expected to expire in 2043 (absent any extension in term).

As of December 31, 2022, we have filed one U.S.

non-provisional patent application and approximately 32 pending applications in various jurisdictions directed to XEN496 (i.e., our pediatric formulation of ezogabine), a genus of related formulations, and methods of making and using the same.

Any patents issuing from this application are expected to expire in 2040 (absent any extensions of term).

As of December 31, 2022, we owned four issued U.S.

patents, one pending U.S.

non-provisional patent application, and one U.S.

provisional patent application directed to NBI-921352 (formerly known as XEN901) and methods of making and using this and certain related compounds.

As of December 31, 2023, we owned, co-owned or licensed 16 U.S.

issued patents and 56 patents in foreign jurisdictions (exclusive of European patent national validations), and over 370 pending patent applications.

With regard to XEN1101, as of December 31, 2023, we owned 4 U.S.

issued patents, 29 issued patents in foreign jurisdictions (exclusive of European patent national validations) and over 200 pending patent applications.

The issued patents, along with any patents issuing from these applications, are expected to expire between 2028 and 2044 (absent any extensions of term).

In addition, we owned approximately nine foreign issued patents (exclusive of European patent national validations), two pending PCT international applications, and we have approximately 17 pending corresponding applications in various foreign jurisdictions relating to NBI-921352 and certain related compounds.

Pursuant to our collaboration with Neurocrine Biosciences, Neurocrine Biosciences will oversee the prosecution, maintenance and other matters relating to the patent portfolio for NBI-921352 and the other selective Nav1.6 inhibitors and dual Nav1.2/1.6 inhibitors.

As of December 31, 2022, we owned five issued U.S.

patents, and two U.S.

non-provisional patent applications directed to certain of our selective inhibitors of Nav1.6 and/or Nav1.2 (exclusive of NBI-921352), as well as methods of making and using the same.

With regard to NBI-921352 (formerly known as XEN901), as of December 31, 2023, we owned or co-owned 4 U.S.

issued patents, 12 issued patents in foreign jurisdictions (exclusive of European patent national validations), and over 18 pending patent applications.

The issued patents, along with any patents issuing from these applications, are expected to expire between 2037 and 2044 (absent any extensions of term).

In addition, we owned approximately seven foreign issued patents and approximately 97 pending corresponding applications in various foreign jurisdictions (exclusive of European patent national validations) relating to our selective inhibitors of Nav1.6 and/or Nav1.2 (exclusive of NBI-921352), as well as methods of making and using the same.

As of December 31, 2022, we co-owned one issued U.S.

patent directed to Nav1.7 inhibitors, as well as methods of making and using the same.

The issued patent is expected to expire in 2036 (absent any extensions of term).

With regard to our selective inhibitors of Nav1.6 and/or Nav1.2 (exclusive of NBI-921352), as of December 31, 2023, we owned 6 U.S.

issued patents, 15 issued patents in foreign jurisdictions (exclusive of European patent national validations), and over 90 pending patent applications.

The issued patents, along with any patents issuing from these applications, are expected to expire between 2037 and 2039 (absent any extensions of term).

Pursuant to our collaboration with Neurocrine Biosciences, Neurocrine Biosciences controls the prosecution, maintenance and other matters relating to the patent portfolio for NBI-921352 and the other selective Nav1.6 inhibitors and dual Nav1.2/1.6 inhibitors, although we have a right to comment.

With regard to our development programs, including targets related to Kv7 (exclusive of XEN1101), Nav1.1 and Nav1.7, as of December 31, 2023, we owned 1 U.S.

issued patent and over 20 pending patent applications.

The issued patents, along with any patents issuing from these applications, are expected to expire between 2036 and 2044 (absent any extensions of term).

The biotechnology and pharmaceutical industries are highly competitive and are characterized by rapidly advancing technologies and a strong emphasis on proprietary products.

While we believe that our technology, development experience, scientific knowledge and drug discovery approach provide us with certain advantages, we face potential competition in our discovery and product development efforts from many different approaches and sources, including pharmaceutical and biotechnology companies, academic institutions and governmental agencies and public and private research institutions.

While we believe that our technology, development experience, scientific knowledge and drug discovery approach provide us with certain advantages, we face potential competition in our discovery and product candidate development efforts from many different approaches and sources, including pharmaceutical and biotechnology companies, academic institutions and governmental agencies and public and private research institutions.

Any product candidates or products that we, or our collaborators, successfully develop and commercialize will compete with existing products and new products that may become available in the future.

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Our product candidates that are in clinical development may compete with various therapies and drugs, both in the marketplace and currently under development.

ASMs for the Treatment of Epilepsy

If one or more of our proprietary or partnered products were approved for the treatment of epilepsy, we anticipate that they could potentially compete with other ASMs or one another.

Currently prescribed ASMs, among others, include phenytoin, levetiracetam, brivaracetam, carbamazepine, cenobamate, clobazam, lamotrigine, valproate, oxcarbazepine, topiramate, lacosamide, ethosuximide, perampanel, cannabidiol, eslicarbazepine acetate, gabapentin and fenfluramine.

The FDA has not yet approved any drug products specifically for KCNQ2-DEE or for SCN8A-DEE.

There are other ASMs in clinical development that could potentially compete with our products, including products in development from Angelini Pharma, Biohaven Ltd, Cerevel Therapeutics Holdings, Inc., Eliem Therapeutics, Inc., Eisai Co., Ltd., Epygenix Therapeutics, Inc., Janssen Pharmaceuticals, Inc., Jazz Pharmaceuticals plc, Longboard Pharmaceuticals Inc., Marinus Pharmaceuticals, Inc., Neurocrine Biosciences, Praxis Precision Medicines, Inc., QurAlis Corporation, SK Life Science Inc., Stoke Therapeutics Inc., Takeda Pharmaceutical Company Ltd., and UCB, Inc.

If one or more of our proprietary or partnered product candidates were approved for the treatment of epilepsy, we anticipate that they could potentially compete with other ASMs or one another.

These currently commonly prescribed ASMs, among others, include brivaracetam, carbamazepine, cenobamate, clobazam, eslicarbazepine acetate, ethosuximide, gabapentin, lacosamide, lamotrigine, levetiracetam, oxcarbazepine, perampanel, phenytoin, topiramate, and valproate.

There are other ASMs in development that could potentially compete with our products, including product candidates in development from Biohaven Ltd., Cerevel Therapeutics Holdings, Inc., Equilibre Biopharmaceuticals Corp., Johnson & Johnson Innovative Medicine, Neurona Therapeutics Inc., Praxis Precision Medicines, Inc., Rapport Therapeutics, Inc., SK Life Science Inc., Supernus Pharmaceuticals, Inc., and Zhimeng Biopharma, Inc.

If one or more of our proprietary product candidates were approved for the treatment of MDD, we anticipate that they could potentially compete with other anti-depressant medications, or ADs.

Patients with MDD are typically treated with a variety of ADs, which include selective serotonin reuptake inhibitors, or SSRIs, benzodiazepines, serotonin / norepinephrine reuptake inhibitors, or SNRIs, norepinephrine and dopamine reuptake inhibitors, or NDRIs, N-methyl-D-aspartate, or NMDA, receptor agonists and atypical antipsychotics.

Currently prescribed antidepressants include benzodiazepines, brexpiprazole, bupropion, bupropion/dextromethorphan, cariprazine, citalopram, duloxetine, escitalopram, esketamine, fluoxetine, ketamine, sertraline, trazodone, tricyclic agents, venlafaxine, vilazodone and vortioxetine.

We are aware of several companies developing product candidates for the treatment of MDD including AbbVie Inc., Biohaven Ltd., Intra-Cellular Therapies, Inc., Johnson & Johnson Innovative Medicine, Neumora Therapeutics, Inc., Relmada Therapeutics, Inc., Sage Therapeutics, Inc.

and Sumitomo Pharma America, Inc.

Government Regulation

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The FD&C Act and corresponding regulations govern, among other things, the testing, manufacturing, safety, efficacy, labeling, packaging, storage, record keeping, distribution, import, export, reporting, advertising and other promotional practices involving drugs.

FDA approval of an IND application must be obtained before clinical testing of drugs is initiated, and each clinical study protocol for such product candidates is reviewed by the FDA and IRB prior to initiation in the U.S.

FDA approval of an investigational new drug application, or IND, must be obtained before clinical testing of drugs is initiated, and each clinical study protocol for such product candidates is reviewed by the FDA and an institutional review board, or IRB, prior to initiation in the U.S.

FDA approval also must be obtained before marketing of drugs in the U.S.

The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, provincial, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources, and we may not be able to obtain the required regulatory approvals.

Failure to comply with the applicable U.S.

regulatory requirements at any time during the product development process, approval process or after approval may subject an applicant and/or sponsor to a variety of administrative or judicial sanctions.

These sanctions could include, among other actions, FDA’s refusal to approve pending applications, withdrawal of an approval, imposition of a clinical hold, issuance of warning or untitled letters and other types of enforcement-related letters, product recalls, product seizures, relabeling or repackaging, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement of profits, or civil or criminal investigations and penalties brought by FDA and the Department of Justice or other governmental entities.

Drug Development Process

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generally involves the following:

completion of nonclinical laboratory tests and animal studies according to GLPs and applicable requirements for the humane use of laboratory animals or other applicable regulations;

• completion of nonclinical laboratory tests and animal studies according to good laboratory practices, or GLPs, and applicable requirements for the humane use of laboratory animals and other applicable regulations;

• submission to the FDA of an application for an IND, which must become effective before human clinical studies may begin;

performance of adequate and well-controlled human clinical studies according to the FDA’s regulations commonly referred to as good clinical practices, or GCPs, and any additional requirements for the protection of human research subjects and their health information, to establish the safety and efficacy of the proposed product for its intended use;

submission to the FDA of an NDA for drug products for marketing approval that includes substantial evidence of safety and efficacy based on large scale phase 3 clinical studies;

satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the product is produced to assess compliance with good manufacturing practices, or GMP, to assure that the facilities, methods and controls are adequate to consistently manufacture the product pursuant to regulatory requirements;

potential FDA audit of the nonclinical and clinical study sites that generated the data in support of the NDA;

FDA review and approval of the NDA.

• performance of adequate and well-controlled human clinical studies according to the FDA’s regulations commonly referred to as good clinical practices, or GCPs, and any additional requirements for the protection of human research subjects and their health information, to establish the safety and efficacy of the proposed product for its intended use;

• submission to the FDA of an NDA for drug products for marketing approval that includes substantial evidence of safety and efficacy, which is usually based on large-scale Phase 3 clinical studies;

• satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities where the product is produced to assess compliance with good manufacturing practices, or GMP, to assure that the facilities, methods and controls are adequate to consistently manufacture the product pursuant to regulatory requirements;

• potential FDA inspection of the nonclinical and clinical study sites that generated the data in support of the NDA;

• payment of applicable user fees and FDA review and approval of the NDA.

The data required to support an NDA is generated in two distinct development stages:

pre-clinical and clinical.

For new chemical entities, the pre-clinical development stage generally involves synthesizing the active component, developing the formulation and determining the manufacturing process, evaluating purity and stability, as well as carrying out non-human toxicology, pharmacology and drug metabolism studies in the laboratory, which support subsequent clinical testing.

The conduct of the pre-clinical tests must comply with federal regulations, including GLPs and the U.S.

Department of Agriculture’s Animal Welfare Act.

The sponsor must submit the results of the pre-clinical tests, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND.

An IND is a request for authorization from the FDA to administer an investigational drug product to humans.

The central focus of an IND submission is on the general investigational plan and the protocol(s) for human trials.

The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA raises concerns or questions regarding the proposed clinical trials and places the IND on clinical hold within that 30-day time period.

In such a case, the IND sponsor and the FDA must resolve any outstanding concerns or questions before the clinical trial can begin.

Some long-term pre-clinical testing, such as animal tests of reproductive AEs and carcinogenicity, may continue after the IND is submitted.

The FDA may also impose clinical holds on a drug candidate at any time before or during clinical trials due to safety concerns or non-compliance.

Accordingly, submission of an IND does not guarantee the FDA will allow clinical trials to begin, or that, once begun, issues will not arise that could cause the trial to be suspended or terminated.

If the FDA accepts the IND, the drug can then be studied in human clinical trials to determine if the drug is safe and effective.

The clinical stage of development involves the administration of the drug product to human subjects, including patients, under the supervision of qualified investigators in accordance with GCPs, which establish standards for conducting, recording data from, and reporting the results of clinical trials, and also include the requirement that all research subjects provide their informed consent in writing for their participation in any clinical trial.

Human clinical studies are typically conducted in three sequential phases that may overlap or be combined:

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These clinical studies are used to gain additional experience from the treatment of patients in the intended therapeutic indication, particularly for long-term safety follow-up.

In certain instances, the FDA may mandate the performance of Phase 4 clinical trials as a condition of approval of an NDA.

During all phases of clinical development, regulatory agencies require extensive monitoring and auditing of all clinical activities, clinical data and clinical study investigators.

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The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other requirements, the sponsor must develop methods for ensuring the quality, identity, strength and purity of the final drug.

Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the drug candidate does not undergo unacceptable deterioration over its labeled shelf life.

Further, as a result of the COVID-19 pandemic, we may be required to develop and implement additional clinical trial policies and procedures designed to help protect subjects from the COVID-19 virus.

For example, the FDA has issued guidance on conducting clinical trials during the pandemic, which describes a number of considerations for sponsors of clinical trials impacted by the pandemic, including certain reporting requirements, and additional guidance on the good manufacturing practice considerations for responding to COVID-19 infection and other topics.

We may be required to make further adjustments to our clinical trials or business operations based on current or future guidance and regulatory requirements as a result of the COVID-19 pandemic.

Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the drug does not undergo unacceptable deterioration over its labeled shelf life.

Further, due to disasters and public health emergencies, we may be required to develop and implement additional clinical trial policies and procedures designed to help protect subjects.

For example, the FDA has issued guidance on conducting clinical trials during major disruptions due to disasters and public health emergencies, which describes a number of considerations for sponsors of clinical trials impacted by these events, to ensure the safety of trial participants, maintaining GCP compliance, and minimizing risks to trial integrity.

We may be required to make further adjustments to our clinical trials or business operations based on current or future guidance and regulatory requirements as a result of major disruptions due to disasters and public health emergencies.

Review and Approval Processes

After the completion of clinical studies of a drug, FDA approval of an NDA must be obtained before commercial marketing of the drug.

After the completion of clinical studies of a drug, FDA approval of an NDA must be obtained before commercial marketing of the drug can begin.

The NDA must include results of product development, laboratory and animal studies, human studies, information on the manufacture and composition of the product, proposed labeling and other relevant information.

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Data obtained from clinical studies are not always conclusive and the FDA may interpret data differently than we interpret the same data.

If the agency decides not to approve the marketing application, the FDA will issue a Complete Response letter that usually describes all of the specific deficiencies in the application identified by the FDA.

The deficiencies identified may be minor, for example, requiring labeling changes, or major, for example, requiring additional clinical studies.

If the agency decides not to approve the marketing application, the FDA will issue a complete response letter, which typically describes all of the specific deficiencies in the application identified by the FDA.

The deficiencies identified may be minor (e.g., requiring labeling changes) or major(e.g., requiring additional clinical studies).

Additionally, the complete response letter may include recommended actions that the applicant might take to place the application in a condition for approval.

If a complete response letter is issued, the applicant may either resubmit the NDA, addressing all of the deficiencies identified in the letter, or withdraw the application.

If a product receives regulatory approval, the approval will be limited to the specific diseases and dosages studied in clinical trials or the indications for use may otherwise be limited, which could restrict the commercial value of the product.

If a product receives regulatory approval, the approval will be limited to the specific diseases and dosages studied in clinical trials, and the indications for use may otherwise be limited, which could restrict the commercial value of the product.

Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling.

The FDA may impose restrictions and conditions on product distribution, prescribing or dispensing pursuant to a REMS request, or otherwise limit the scope of any approval.

Drug approvals may be withdrawn for non-compliance with regulatory standards or if problems occur following initial marketing.

One of the performance goals agreed to by the FDA under the PDUFA is to complete its review of 90% of standard new molecular entity, or NME, NDAs within ten months from the filing date and 90% of priority NME NDAs within six months from the filing date, whereupon a review decision is to be made.

The FDA does not always meet its PDUFA goal dates, and its review goals are subject to change from time to time.

The review process and the PDUFA goal date may be extended by three months if the FDA requests or the application sponsor otherwise provides additional information or clarification regarding information already provided in the submission within the last three months before the PDUFA goal date.

Fast Track Designation

The FDA has various programs, including Fast Track, which are intended to expedite the process for the development and review of drugs.

Even if a drug qualifies for one or more of these programs, the FDA may later decide that the drug no longer meets the conditions for qualification.

Generally, drugs that are eligible for these programs are those for serious or life-threatening conditions, those with the potential to address unmet medical needs, and those that offer meaningful benefits over existing treatments.

For example, Fast Track is a process designed to expedite the FDA’s review of drugs that treat serious or life-threatening diseases or conditions and fill unmet medical needs.

Under the Fast Track process, drugs that offer major advances in treatment or provide a treatment where no adequate therapy exists, may also receive priority review by the FDA, or review within six months of the filing of an NDA compared to a traditional review time of ten months.

Although Fast Track and priority review do not affect the standards for approval of a drug, and may not result in a faster approval, if approval is granted, for Fast Track designated drugs, the FDA will also attempt to facilitate early and frequent meetings with a sponsor of a Fast Track designated drug, to expedite such drug’s review and development.

Orphan Drug Designation

Under the Orphan Drug Act, the FDA may grant orphan designation to a drug intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the U.S., or more than 200,000 individuals in the U.S.

and for which there is no reasonable expectation that the cost of developing and making a drug available in the U.S.

for this type of disease or condition will be recovered from sales of the product.

We have received orphan drug designation from the FDA for XEN496 (active ingredient ezogabine), a drug we are evaluating in a Phase 3 clinical trial for the treatment of KCNQ2-DEE.

Orphan product designation must be requested before submitting an NDA.

After the FDA grants orphan product designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA.

Orphan product designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.

Orphan drug products may also be eligible for RPD designation if greater than 50% of patients living with the disease are under age 19 and the condition affects fewer than 200,000 individuals in the U.S.

A priority review voucher will be given to the sponsor of a product with an RPD designation at the time of product approval that is transferable to another company.

If a product that has orphan designation subsequently receives the first FDA approval for such drug for the disease or condition for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications to market the same drug for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity.

Competitors, however, may receive approval of different products for the same indication for which the orphan product has exclusivity or obtain approval for the same product but for a different indication for which the orphan product has exclusivity.

Orphan product exclusivity also could block the approval of one of our products for seven years if a competitor obtains approval of the same product for the same orphan indication as defined by the FDA, or if our product candidate is determined to be contained within the competitor’s product for the same orphan indication or disease.

If a drug designated as an orphan product receives marketing approval for an indication broader than what is designated, it may not be entitled to orphan product exclusivity.

Orphan drug status in the EU has similar, but not identical, benefits, including up to ten years of exclusivity.

In Catalyst Pharms., Inc.

Becerra , 14 F.4th 1299 (11th Cir.

2021), the court disagreed with the FDA’s longstanding position that the orphan drug exclusivity only applies to the approved use or indication within an eligible disease, and not to all uses or indications within the entire disease or condition.

In particular, the circuit court held that the orphan-drug exclusivity for Catalyst’s drug blocked the FDA’s approval of another drug for all uses or indications within the same orphan-designated disease, or Lambert-Eaton myasthenic syndrome (LEMS), even though Catalyst’s drug was approved at that time only for use in the treatment of LEMS in adults.

Accordingly, the court ordered the FDA to set aside the approval of a drug indicated for LEMS in children.

This decision created uncertainty in the application of the orphan drug exclusivity.

On January 24, 2023, the FDA published a notice in the Federal Register to clarify that while the agency complies with the court’s order in Catalyst, the FDA intends to continue to apply its longstanding interpretation of the regulations to matters outside of the scope of the Catalyst order –

that is, the agency will continue tying the scope of orphan-drug exclusivity to the uses or indications for which a drug is approved, which permits other sponsors to obtain approval of a drug for new uses or indications within the same orphan designated disease or condition that have not yet been approved.

It is unclear how future litigation, legislation, agency decisions, and administrative actions will impact the scope of the orphan drug exclusivity.

The review process and the PDUFA goal date may be extended by three months if, within the last three months before the PDUFA goal date, the FDA requests (or the application sponsor otherwise provides) a substantial amount of new data or new information not previously submitted to, or reviewed by, the FDA (e.g., a major new clinical safety or efficacy study report, a proposed REMS), or a new analysis or major reanalysis of studies previously submitted to the pending application.

Post-Approval Requirements

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We will rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of any products that we may commercialize.

Manufacturers of our products are required to comply with applicable requirements in the GMP regulations, including quality control and quality assurance and maintenance of records and documentation.

Manufacturers of our products will be required to comply with applicable requirements in the GMP regulations, including quality control and quality assurance and maintenance of records and documentation.

Other post-approval requirements applicable to drug manufacturers, include reporting of GMP deviations that may affect the safety, efficacy or quality of a distributed product, record-keeping requirements, reporting of adverse effects, reporting updated safety and efficacy information, and complying with electronic record and signature requirements.

We also must comply with the FDA’s advertising and promotion requirements, such as those related to direct-to-consumer advertising, the prohibition on promoting products for uses or in patient populations that are not described in or are otherwise inconsistent with the product’s approved labeling (known as “off-label use”), and industry-sponsored scientific and educational activities.

Discovery of previously unknown problems or the failure to comply with the applicable regulatory requirements may result in restrictions on the marketing of a product or withdrawal of the product from the market as well as possible civil or criminal sanctions.

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FDA sanctions could include refusal to approve pending applications, withdrawal of an approval, clinical hold, warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, mandated corrective advertising or communications with doctors, debarment, restitution, disgorgement of profits, or civil or criminal penalties.

Any agency or judicial enforcement action could have a material adverse effect on us.

An agency or judicial enforcement action could have a material adverse effect on us.

Drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with GMPs and other laws.

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In addition, changes to the manufacturing process or facility generally require prior FDA approval before being implemented and other types of changes to the approved product, such as adding new indications and additional labeling claims, are also subject to further FDA review and approval.

Fast Track Designation, Priority Review, Breakthrough Therapy Designation and Accelerated Approval

The FDA has various programs, including fast track designation, priority review, breakthrough therapy designation and accelerated approval, which are intended to expedite or simplify the process for the development and FDA review of drugs.

Even if a drug qualifies for one or more of these programs, the FDA may later decide that the drug no longer meets the conditions for qualification.

Generally, drugs that are eligible for these programs are those for serious or life-threatening conditions, those with the potential to address unmet medical needs and those that offer meaningful benefits over existing treatments.

While these pathways can reduce the time it takes for the FDA to review an NDA, they do not guarantee that a product will receive FDA approval.

To be eligible for a fast track designation, the FDA must determine, based on the request of a sponsor, that a drug is intended to treat a serious or life threatening disease or condition for which there is no effective treatment and demonstrates the potential to address an unmet medical need for the disease or condition.

Under the fast track program, the sponsor of a drug candidate may request the FDA to designate the product for a specific indication as a fast track product concurrent with or after the filing of the IND for the drug candidate.

The FDA must make a fast track designation determination within 60 days after receipt of the sponsor’s request.

In addition to other benefits, such as the ability to use surrogate endpoints and have greater interactions with the FDA, the FDA may initiate review of sections of a fast track product’s NDA before the application is complete.

This rolling review is available if the applicant provides, and the FDA approves, a schedule for the submission of the remaining information and the applicant pays applicable user fees.

However, the FDA’s time period goal for reviewing a fast track application does not begin until the last section of the NDA is submitted.

A fast track drug also may be eligible for accelerated approval and priority review.

In addition, the fast track designation may be withdrawn by the FDA if it believes that the designation is no longer supported by data emerging in the clinical trial process.

The FDA may give a priority review designation to drugs that offer major advances in treatment, or provide a treatment where no adequate therapy exists.

A priority review means that the goal for the FDA to review an application is six months, rather than the standard review of ten months under current PDUFA guidelines.

These six- and ten-month review periods are measured from the “filing” date rather than the receipt date for NDAs for new molecular entities, which typically adds approximately two months to the timeline for review and decision from the date of submission.

Most products that are eligible for fast track designation are also likely to be considered appropriate to receive a priority review.

Under the provisions of the new Food and Drug Administration Safety and Innovation Act, or FDASIA, enacted by Congress in 2012, a sponsor can request designation of a drug candidate as a “breakthrough therapy,” typically by the end of the drug’s Phase II trials.

A breakthrough therapy is defined as a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

Drugs designated as breakthrough therapies are also eligible for accelerated approval.

For breakthrough therapies, the FDA may take certain actions, such as intensive and early guidance on the drug development program, that are intended to expedite the development and review of an application for approval.

FDASIA also codified and expanded on FDA’s accelerated approval regulations, under which FDA may approve a drug for a serious or life threatening illness that provides meaningful therapeutic benefit over existing treatments based on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on an intermediate clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit.

A surrogate endpoint is a marker that does not itself measure clinical benefit but is believed to predict clinical benefit.

This determination takes into account the severity, rarity or prevalence of the disease or condition and the availability or lack of alternative treatments.

As a condition of approval, the FDA may require a sponsor of a drug receiving accelerated approval to perform Phase IV or post marketing studies to verify and describe the predicted effect on irreversible morbidity or mortality or other clinical endpoint, and the drug may be subject to accelerated withdrawal procedures.

All promotional materials for drug candidates approved under accelerated regulations are subject to prior review by the FDA.

Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for the FDA review or approval will not be shortened.

Furthermore, fast track designation, priority review, accelerated approval and breakthrough therapy designation, do not change the standards for approval and may not ultimately expedite the development or approval process.

Orphan Drug Designation

and for which there is no reasonable expectation that the cost of developing and making a drug available in the U.S.

for this type of disease or condition will be recovered from sales of the product.

Orphan drug designation must be requested before submitting an NDA.

After the FDA grants orphan drug designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA.

Orphan drug designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.

Orphan drug products may also be eligible for rare pediatric disease, or RPD, designation if greater than 50% of patients living with the disease are under age 19 and the condition affects fewer than 200,000 individuals in the U.S.

A priority review voucher will be given to the sponsor of a product with an RPD designation at the time of product approval that can be redeemed to receive a priority review of a subsequent marketing application for a different product.

Such vouchers are transferable to another company.

If a product candidate that has orphan designation subsequently receives the first FDA approval for such drug for the disease or condition for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications to market the same drug for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity.

Competitors, however, may receive approval of different products for the same indication for which the orphan drug has exclusivity or obtain approval for the same product but for a different indication for which the orphan drug has exclusivity.

Orphan drug exclusivity also could block the approval of one of our product candidates for seven years if a competitor obtains approval of the same product for the same orphan indication as defined by the FDA, or if our product candidate is determined to be contained within the competitor’s product for the same orphan indication or disease.

If a product candidate designated as an orphan drug receives marketing approval for an indication broader than what is designated, it may not be entitled to orphan drug exclusivity.

Orphan drug status in the EU has similar, but not identical, benefits, including up to ten years of exclusivity.

In Catalyst Pharms., Inc.

Becerra , 14 F.4th 1299 (11th Cir.

In particular, the circuit court held that the orphan drug exclusivity for Catalyst’s drug blocked the FDA’s approval of another drug for all uses or indications within the same orphan-designated disease, Lambert-Eaton myasthenic syndrome (LEMS), even though Catalyst’s drug was approved at that time only for use in the treatment of LEMS in adults.

Accordingly, the court ordered the FDA to set aside the approval of a drug indicated for LEMS in children.

This decision created uncertainty in the application of orphan drug exclusivity.

On January 24, 2023, the FDA published a notice in the Federal Register to clarify that while the agency complied with the court’s order in Catalyst, the FDA intends to continue to apply its longstanding interpretation of the regulations to matters outside of the scope of the Catalyst order – that is, the agency will continue tying the scope of orphan drug exclusivity to the uses or indications for which a drug is approved, which permits other sponsors to obtain approval of a drug for new uses or indications within the same orphan-designated disease or condition that have not yet been approved.

It is unclear how future litigation, legislation, agency decisions and administrative actions will impact the scope of orphan drug exclusivity.

Controlled Substance Regulation

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The time required to obtain marketing approval and controlled substance classification in other countries may differ from and be longer than that required to obtain FDA approval and DEA classification in the U.S.

Patent Term Restoration and Marketing Exclusivity

Patent Term Extension and Marketing Exclusivity

Depending upon the timing, duration and specifics of the FDA approval of the use of our product candidates, some of our U.S.

patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Amendments.

The Hatch-Waxman Amendments permit a patent restoration term of up to five years as compensation for patent term lost during product development and the FDA regulatory review process.

However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date.

Only one patent applicable to an approved product is eligible for the extension and the application for the extension must be submitted prior to the expiration of the patent.

Patent and Trademark Office, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration.

Under the Hatch-Waxman Amendments, a drug product containing a new chemical entity as its active ingredient is entitled to five years of market exclusivity, and a product whose active ingredient was previously FDA approved, and for which the sponsor is required to generate new clinical data is entitled to three years of market exclusivity.

A drug can also obtain pediatric market exclusivity in the U.S.

and, if granted, adds six months to existing exclusivity periods and patent terms.

This six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the timely, voluntary, and as-agreed upon completion of a pediatric study in accordance with an FDA-issued “Written Request”

for such a study.

patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Act.

The Hatch-Waxman Act permits a patent term extension of up to five years as compensation for patent term lost during product development and the FDA regulatory review process.

Patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date.

Only one patent applicable to an approved product is eligible for extension and the application for the patent term extension must be submitted within 60 days of receipt of FDA approval.

Patent and Trademark Office, in consultation with the FDA, reviews and approves the application for any patent term extension.

Under the Hatch-Waxman Act, a drug product containing a new chemical entity as its active ingredient is entitled to five years of market exclusivity.

A drug product is a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is defined as the molecule or ion responsible for the activity of the drug substance, excluding those appended portions of the molecule that cause the drug to be an ester, salt, or other noncovalent derivative.

During this exclusivity period, the FDA may not approve an abbreviated new drug application, or ANDA, or a 505(b)(2) NDA submitted by another company that contains the previously approved active moiety.

However, an ANDA or 505(b)(2) NDA may be submitted after four years if it contains a certification of patent invalidity or non-infringement.

A drug product whose active ingredient was previously FDA-approved, and for which the sponsor is required to generate new clinical investigations such as to support new indications, dosages, strengths or dosage forms, is entitled to three years of market exclusivity.

This three-year exclusivity covers only the conditions of use associated with the new clinical investigations and, as a general matter, does not prohibit the FDA from approving ANDAs or 505(b)(2) NDAs for generic versions of the original unmodified drug product, although the approval of such an application may not be effective until, at the earliest, after the full five years of market exclusivity has expired.

A drug product can also obtain pediatric market exclusivity in the U.S.

and, if granted, adds six months to existing marketing exclusivities and any Orange Book-listed patent term(s).

This six-month exclusivity, which runs from the end of other exclusivity periods and/or patent term(s), may be granted based on the timely, voluntary, and as-agreed upon completion of a pediatric study in accordance with an FDA-issued “Written Request” for such a study, even if the data do not show that the drug product was effective in the pediatric population studied.

Additional Regulation

In addition to the foregoing, provincial, state and federal U.S.

and Canadian laws regarding environmental protection and hazardous substances affect our business.

These and other laws govern our use, handling and disposal of various biological, chemical and radioactive substances used in, and wastes generated by, our operations.

If our operations result in contamination of the environment or expose individuals to hazardous substances, we could be liable for damages and governmental fines.

We believe that we are in material compliance with applicable environmental laws and that continued compliance therewith will not have a material adverse effect on our business.

We cannot predict, however, how changes in these laws may affect our future operations.

Manufacturing, sales, promotion and other activities following drug approval are also subject to regulation by numerous regulatory authorities in addition to the FDA, including, in the United States, the Centers for Medicare & Medicaid Services, other divisions of the Department of Health and Human Services, the Drug Enforcement Administration for controlled substances, the Consumer Product Safety Commission, the Federal Trade Commission, the Occupational Safety & Health Administration, the Environmental Protection Agency and state and local governments.

In the United States, the activities of pharmaceutical manufacturers are subject to federal and state laws designed to prevent “fraud and abuse” in the healthcare industry.

The laws generally limit financial interactions between manufacturers and health care providers or other participants in the healthcare industry and/or require disclosure to the government and public of such interactions.

Many of these laws and regulations contain ambiguous requirements or require administrative guidance for implementation.

Pharmaceutical manufacturers are also required to provide discounts or rebates under government healthcare programs or to certain government and private purchasers in order to obtain coverage under federal healthcare programs such as Medicaid.

Participation in such programs may require tracking and reporting of certain drug prices.

Manufacturers are subject to fines and other penalties if such prices are not reported accurately.

The handling of any controlled substances must comply with the U.S.

Controlled Substances Act and Controlled Substances Import and Export Act.

Drugs must meet applicable child-resistant packaging requirements under the U.S.

Poison Prevention Packaging Act.

Manufacturing, sales, promotion and other activities are also potentially subject to federal and state consumer protection and unfair competition laws.

The failure to comply with regulatory requirements subjects manufacturers to possible legal or regulatory action.

Depending on the circumstances, failure to meet applicable regulatory requirements can result in criminal prosecution, fines or other penalties, injunctions, recall or seizure of drugs, total or partial suspension of production, denial or withdrawal of product approvals, exclusion from participation in government healthcare programs or refusal to allow a firm to enter into supply contracts, including government contracts.

In addition, even if a firm complies with FDA and other requirements, new information regarding the safety or efficacy of a product could lead the FDA to modify or withdraw product approval.

Prohibitions or restrictions on sales or withdrawal of future products marketed by us could materially affect our business in an adverse way.

Changes in regulations, statutes or the interpretation of existing regulations could impact our business in the future by requiring, for example:

(i) changes to our manufacturing arrangements;

(ii) additions or modifications to product labeling;

(iii) the recall or discontinuation of our products;

or (iv) additional record-keeping requirements.

If any such changes were to be imposed, they could adversely affect the operation of our business.

Global Anti-Corruption Laws

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Generally, before a new drug can be marketed, considerable data demonstrating its quality, safety and efficacy must be obtained, organized into a format specific for each regulatory authority, submitted for review and approved by the regulatory authority.

Whether or not we obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in foreign countries prior to the commencement of clinical studies or marketing of the product in those countries.

Whether or not we obtain FDA approval for a product candidate, we must obtain the requisite approvals from regulatory authorities in foreign countries prior to the commencement of clinical studies or marketing of the product candidate in those countries.

Certain countries outside of the U.S.

have a similar process that requires the submission of a clinical study application much like the IND prior to the commencement of human clinical studies.

In the EU, for example, a CTA must be submitted to each country’s national health authority and an independent ethics committee, much like the FDA and the IRB, respectively.

Once the CTA is approved in accordance with a country’s requirements, clinical study development may proceed.

Similar requirements regarding a CTA and ethics approval exist in Canada.

The requirements and process governing the conduct of clinical studies, product licensing, coverage, pricing and reimbursement vary from country to country.

The requirements and processes governing the conduct of clinical studies, product licensing, coverage, pricing and reimbursement vary from country to country.

In all cases, the clinical studies are conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

The EU clinical trials legislation currently is undergoing a transition process mainly aimed at harmonizing and streamlining clinical-trial authorization, simplifying adverse-event reporting procedures, improving the supervision of clinical trials and increasing their transparency.

The Clinical Trials Regulation EU No 536/2014, which replaced the Clinical Trials Directive, entered into application on January 31, 2022, is intended to simplify the current rules for clinical trial authorization and standards of performance.

For instance, there will be a streamlined application procedure via a single-entry point, a European Union portal and database.

The Clinical Trials Regulation EU No 536/2014, or the CTR, which replaced the Clinical Trials Directive, entered into application on January 31, 2022, harmonizes the procedures for the submission, assessment and monitoring of clinical drug trials in the EU, thus simplifying the current rules for clinical trial authorization and standards of performance.

The CTR requires a clinical trial sponsor to obtain approval from the national competent authority (NCA) of each European Union member state in which the clinical trial is to be conducted.

Furthermore, the sponsor can only start a clinical trial at a specific study site after the local research ethics committee, or REC, has issued a favorable opinion.

Subject to the transition arrangement referenced below, a sponsor submits a single application for a clinical trial authorization, or CTA, through a centralized EU clinical trials portal called the Clinical Trials Information System, or CTIS.

One NCA (the reporting EU member state selected by the sponsor) takes the lead in validating and evaluating the application, as well as consulting and coordinating with the other concerned member states in which the clinical trial is to be conducted.

If an application is rejected, it may be amended and resubmitted through CTIS.

A concerned member state may in limited circumstances declare an “opt-out” from an approval and prevent the clinical trial from being conducted in that member state.

The CTR foresees a three-year transition period.

As of January 31, 2023, all new CTA applications had to be submitted via CTIS and be made pursuant to the CTR.

From and after January 31, 2025, any trials approved under the Clinical Trial Directive (now replaced by the CTR) which are still ongoing will need to comply with the CTR and be recorded in CTIS.

In the UK, clinical trials of medicinal products for human use are primarily governed by the Medicines for Human Use (Clinical Trials) Regulations 2004 (as amended).

Similar to the EU, before a clinical trial can be initiated in the UK, a CTA must be obtained from the Medicines and Healthcare products Regulatory Agency, or MHRA, as well as a positive opinion from a REC.

To obtain regulatory approval of an investigational drug under EU regulatory systems, we must submit a marketing authorization application, or MAA.

There are two types of marketing authorizations:

• The centralized MA is issued by the European Commission through the centralized procedure, based on the opinion of the Committee for Medicinal Products for Human Use, or the CHMP, of the EMA, and is valid throughout the entire territory of the EEA.

The centralized procedure is mandatory for certain types of products, such as biotechnology medicinal products, orphan medicinal products, advanced-therapy medicinal products (gene-therapy, somatic cell-therapy or tissue-engineered medicines) and medicinal products containing a new active substance indicated for the treatment of human immunodeficiency virus, acquired immunodeficiency syndrome, cancer, neurodegenerative disorders, diabetes, auto-immune and other immune dysfunctions and viral diseases.

The centralized procedure is optional for products containing a new active substance not yet authorized in the EEA, or for products that constitute a significant therapeutic, scientific or technical innovation or which are in the interest of public health in the EU.

Under the centralized procedure, the maximum timeframe for the evaluation of a MA application by the EMA is 210 days, excluding clock stops, when additional written or oral information is to be provided by the applicant in response to questions asked by the CHMP.

Clock stops may extend the timeframe of evaluation of a MA application considerably beyond 210 days.

Where the CHMP gives a positive opinion, the EMA provides the opinion together with supporting documentation to the European Commission, who makes the final decision to grant a MA, which is ordinarily issued within 67 days of receipt of the EMA’s recommendation.

Accelerated assessment might be granted by the CHMP in exceptional cases, when a medicinal product is expected to be of a major public health interest, particularly from the point of view of therapeutic innovation.

The timeframe for the evaluation of a MA application under the accelerated assessment procedure is 150 days, excluding clock stops, but it is possible that the CHMP may revert to the standard time limit for the centralized procedure if it determines that the application is no longer appropriate to conduct an accelerated assessment.

• National MAs, which are issued by the NCAs of the EEA member states and only cover their respective territory, are available for products not falling within the mandatory scope of the centralized procedure.

Where a product has already been authorized for marketing in a member state of the EEA, this national MA can be progressively recognized in other EEA member states through the mutual recognition procedure.

If the product has not received a national MA in any EEA member state at the time of application, it can be approved simultaneously in various EEA member states through the decentralized procedure.

Under the decentralized procedure, an identical dossier is submitted to the NCAs of each of the EEA member states in which the MA is sought, one of which is selected by the applicant as the Reference Member State (the RMS).

The competent authority of the RMS prepares a draft assessment report, a draft summary of the product characteristics (SmPC), and a draft of the labeling and package leaflet, which are sent to the other EEA member states, referred to as the Concerned Member States, for their approval.

If the Concerned Member States raise no objections, based on a potential serious risk to public health, to the assessment, SmPC, labeling, or packaging proposed by the RMS, the product is subsequently granted a national MA in all EEA member states to which an application was submitted .

In relation to the UK, until the end of 2024, under the Northern Ireland Protocol which is contained in the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, centralized MAs continue to provide a valid basis for commercializing medicinal products in Northern Ireland.

However, centralized MAs no longer provide a valid basis for the commercialization of medicinal products in Great Britain.

Pursuant to the Windsor Framework (which is a political declaration by the European Commission and the UK Government to correct the post-Brexit restrictions of movements of goods including medicines), from January 1, 2025, all new medicinal products for the UK market will be authorized by the MHRA which will grant on behalf of the UK Licensing Authority a single UK-wide MA for all medicinal products intended for sale in the UK, enabling medicinal products to be sold in a single pack and under a single authorization throughout the UK, including Northern Ireland, but the UK packaging must carry a clearly legible ‘UK only’ to be allowed onto the UK market.

Since leaving the EU, the MHRA has introduced changes to national licensing procedures, including procedures to prioritize access to new medicines that will benefit patients, an accelerated assessment procedure, and new routes of evaluation for novel products and biotechnological products.

There is no wholesale recognition of EU pharmaceutical legislation between the jurisdictions, and EU MAs do not automatically provide a valid basis for the commercialization of medicinal products in Great Britain, From January 1, 2024, companies are able to request the MHRA to recognize MAs granted by acceptable Reference Regulators in foreign jurisdictions (including the EU) under a new International Recognition Procedure, or IRP.

IRP allows the MHRA to take into account the expertise and decision-making of trusted regulatory authorities to conduct targeted assessments of IRP applications while retaining the authority to reject applications if the evidence provided is considered insufficiently robust.

The application used to file the NDA in the U.S.

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Reimbursement approval for the drug by regulatory authorities is also required before a drug may be commercialized.

The EU also provides opportunities for market exclusivity.

For example, in the EU, upon receiving marketing authorization, new chemical entities generally receive eight years of data exclusivity and an additional two years of market exclusivity.

If granted, data exclusivity prevents regulatory authorities in the EU from referencing the innovator’s data to assess a generic application.

During the additional two-year period of market exclusivity, a generic marketing authorization can be submitted, and the innovator’s data may be referenced, but no generic product can be marketed until the expiration of the market exclusivity.

However, there is no guarantee that a product will be considered by the EU’s regulatory authorities to be a new chemical entity, and products may not qualify for data exclusivity.

Products receiving orphan designation in the EU can receive ten years of market exclusivity, during which time no similar medicinal product for the same indication may be placed on the market.

An orphan product can also obtain an additional two years of market exclusivity in the EU for pediatric studies.

The EU also provides opportunities for data and market exclusivity.

For example, in the EU, upon receiving marketing authorization, innovative medicinal products (including both small molecules and biological medicinal products) approved on the basis of a complete independent data package consisting of quality, preclinical testing results, and clinical trial data receive eight years of data exclusivity upon grant of an MA, and an additional two years of marketing exclusivity.

If granted, data exclusivity prevents generic or biosimilar applicants from cross-referencing the innovator’s preclinical and clinical trial data contained in the dossier of the reference medicinal product when applying for a generic or biosimilar MA until the data exclusivity period has expired.

Even if a generic and a biosimilar product is approved, it can be marketed only until the expiration of the full ten-year exclusivity period.

The overall ten-year period can be extended to a maximum of 11 years if, during the first eight years of those ten years, the MA holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are determined to bring a significant clinical benefit in comparison with currently approved therapies.

The UK domestic law follows the same formula of regulatory data and marketing exclusivity.

However, there is no guarantee that a product will be considered by the EU’s regulatory authorities to be a new chemical entity or new active substance, and products may not qualify for data exclusivity.

Products receiving orphan designation in the EU can receive ten years of market exclusivity, provided that the orphan designation is maintained at the time of grant of the marketing authorization.

During the ten-year orphan market exclusivity period, no application for a similar medicinal product for the same indication may be accepted by any regulatory authority in the EU for approval.

An orphan product can also obtain an additional two years of market exclusivity in the EU for completing pediatric studies in compliance with an agreed Pediatric Investigation Plan even though the data do not lead to approval of a pediatric indication.

No extension to any supplementary protection certificate can be granted on the basis of pediatric studies for orphan indications.

The criteria for designating an “orphan medicinal product”

in the EU are similar in principle to those in the U.S.

The criteria for designating an “orphan medicinal product” in the EU are similar in principle but not identical to those in the U.S.

Under Article 3 of Regulation (EC) 141/2000, a medicinal product may be designated as orphan if (1) it is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition;

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and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the EU, or if such a method exists, the product will be of significant benefit to those affected by the condition, as defined in Regulation (EC) 847/2000.

Orphan medicinal products are eligible for financial incentives such as reduction of fees or fee waivers and are, upon grant of a marketing authorization, entitled to ten years of market exclusivity for the approved therapeutic indication.

The application for orphan drug designation must be submitted before the application for marketing authorization.

The criteria for orphan designation must be re-assessed and confirmed at the time when a marketing authorization is granted in order to benefit from a period of 10 years orphan market exclusivity.

The MHRA conducts an equivalent assessment, against the criteria specific to the UK.

In the EEA, orphan drug designation must be requested before submitting an application for MA.

The EMA’s Committee for Orphan Medicinal Products (COMP) is required to re-assess the granted orphan designation at the time of MA grant to ensure that it continues to meet the criteria for the designation to be maintained.

Otherwise, the orphan designation can be revoked.

In contrast, the MHRA does not grant orphan designations during the development of the medicinal product.

Instead, the MHRA will decide whether the criteria are satisfied at the point of grant of an MA.

In the EEA and the UK, orphan medicinal products are eligible for financial incentives such as reduction of fees or fee waivers and are, upon grant of a marketing authorization, entitled to ten years of market exclusivity for the approved therapeutic indication.

The applicant will receive a fee reduction for the marketing authorization application if the orphan drug designation has been granted, but not if the designation is still pending at the time the marketing authorization is submitted.

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The 10-year market exclusivity may be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for orphan designation, for example, if the product is sufficiently profitable not to justify maintenance of market exclusivity.

Additionally, marketing authorization may be granted to a similar product for the same indication at any time if:

Additionally, marketing authorization may be granted to a similar medicinal product for the same therapeutic indication at any time if:

• the second applicant can establish that its product, although similar, is safer, more effective or otherwise clinically superior;

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• the applicant cannot supply enough orphan medicinal product.

A “similar medicinal product” is defined as a medicinal product containing a similar active substance or substances as contained in an authorized orphan medicinal product, and which is intended for the same therapeutic indication.

In the EEA, companies developing a new medicinal product must agree upon a pediatric investigation plan ("PIP"), with the EMA’s Pediatric Committee (the "PDCO"), and must conduct pediatric clinical trials in accordance with that PIP, unless a waiver applies.

The PIP sets out the timing and measures proposed to generate data to support a pediatric indication of the drug for which MA is being sought.

The PDCO can grant a deferral of the obligation to implement some or all of the measures of the PIP until there are sufficient data to demonstrate the efficacy and safety of the product in adults.

Further, the obligation to provide pediatric clinical trial data can be waived by the PDCO when this data is not needed or appropriate because the product is likely to be ineffective or unsafe in children, the disease or condition for which the product is intended occurs only in adult populations, or when the product does not represent a significant therapeutic benefit over existing treatments for pediatric patients.

Products that are granted a MA with the results of the pediatric clinical trials conducted in accordance with the PIP (even where such results are negative) are eligible for six months’ supplementary protection certificate extension (if any is in effect at the time of approval).

In the case of orphan medicinal products, a two-year extension of the orphan market exclusivity may be available.

This pediatric reward is subject to specific conditions and is not automatically available when data in compliance with the PIP are developed and submitted.

According to local law requirements, the UK MHRA adopts a similar approach to the EEA to facilitate the development of medicinal products for the pediatric population.

For other countries outside of the EU, such as Canada and countries in Eastern Europe, Latin America or Asia, the requirements governing the conduct of clinical studies, product and establishment licensing, coverage, data protection, pricing and reimbursement vary from country to country.

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and markets in other countries, sales of any products for which we receive regulatory approval for commercial sale will depend, in part, on the availability of coverage and adequate reimbursement from third-party payers.

Third-party payers include government programs such as Medicare or Medicaid, managed care plans, private health insurers, and other organizations.

These third-party payers may deny coverage or reimbursement for a product or therapy in whole or in part if they determine that the product or therapy was not medically appropriate or necessary.

Third-party payers may attempt to control costs by limiting coverage to specific drug products on an approved list, or formulary, which might not include all of the FDA-approved drug products for a particular indication, and by limiting the amount of reimbursement for particular procedures or drug treatments.

Third-party payers include government programs such as Medicare or Medicaid, and private payers such as private health insurance and managed care plans, and other organizations.

These third-party payers may deny or limit coverage or reimbursement for a product.

Within the U.S., coverage and reimbursement for drug products can differ significantly from payer to payer.

One third-party payer’s decision to cover a particular drug product or service does not ensure that other payers will also provide coverage for the product or will provide coverage at an adequate reimbursement rate.

Third-party payers may attempt to control costs by limiting coverage (e.g., to specific drug products on an approved list, or formulary, which might not include all of the FDA-approved drug products for a particular indication), by controlling utilization (e.g., requiring pre-approval or prior authorization for new or innovative drug therapies before they will provide coverage for specific patients) and by limiting the amount of reimbursement for drugs.

The cost of pharmaceuticals continues to generate substantial governmental and third-party payer interest.

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Our product candidates may not be considered medically necessary or cost-effective.

A payer’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved.

Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development.

Some third-party payers also require pre-approval or prior authorization of coverage for new or innovative drug therapies before they will reimburse healthcare providers who prescribe such therapies or patients who use such prescription drugs.

While we cannot predict whether any proposed cost-containment measures will be adopted or otherwise implemented in the future, these requirements or any announcement or adoption of such proposals could have a material adverse effect on our ability to obtain adequate prices for our product candidates and to operate profitably.

While we cannot predict what cost-containment measures will be adopted or otherwise implemented in the future, new measures or any announcement of proposed measures could have a material adverse effect on our ability to obtain adequate prices for our product candidates and to operate profitably.

In international markets, reimbursement and healthcare payment systems vary significantly by country, and many countries have instituted price ceilings on specific products and therapies.

There can be no assurance that our products will be considered medically reasonable and necessary for a specific indication, that our products will be considered cost-effective by third-party payers, that coverage or an adequate level of reimbursement will be available or that the third-party payers’

reimbursement policies will not adversely affect our ability to sell our products profitably.

In addition, in many foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed.

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In particular, there have been and continue to be a number of initiatives at the U.S.

federal and state levels that seek to reduce healthcare costs.

In the U.S., the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, or the Medicare Modernization Act, changed the way Medicare covers and pays for pharmaceutical products.

The Medicare Modernization Act expanded Medicare coverage for drug purchases by the elderly by establishing Medicare Part D and introduced a new reimbursement methodology based on average sales prices for physician administered drugs under Medicare Part B.

In addition, this legislation provided authority for limiting the number of drugs that will be covered in any therapeutic class under the new Medicare Part D program.

Cost reduction initiatives and other provisions of this legislation could decrease the coverage and reimbursement rate that our customers receive for any of our approved products.

While the Medicare Modernization Act applies only to drug benefits for Medicare beneficiaries, private payers often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates.

Therefore, any reduction in reimbursement that results from the Medicare Modernization Act may result in a similar reduction in payments from private payers.

Enacted in March 2010, the Patient Protection and Affordable Care Act, as amended, or PPACA, is a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against healthcare fraud and abuse, add new transparency requirements for healthcare and health insurance industries, impose new taxes and fees on pharmaceutical and medical device manufacturers and impose additional health policy reforms.

Among other things, PPACA revises the definition of “average manufacturer price”

for reporting purposes, which could increase the amount of Medicaid drug rebates to states.

Further, the PPACA also imposes a significant annual fee on companies that manufacture or import branded prescription drug products.

Since its enactment, there remain judicial and Congressional challenges to certain aspects of the PPACA, and we expect there will be additional challenges and amendments to the PPACA in the future.

Any changes to the PPACA are likely to have an impact on our results of operations, and may have a material adverse effect on our business.

In particular, in June 2021 the U.S.

Supreme Court held that Texas and other challengers had no legal standing to challenge the PPACA, dismissing the case on procedural grounds without specifically ruling on the constitutionality of the PPACA.

Thus, the PPACA will remain in effect in its current form.

We cannot predict how this decision or future litigation will impact our business, or what other healthcare measures and regulations will ultimately be implemented at the federal or state level or their effect on our business.

Under the American Rescue Plan Act of 2021, effective January 1, 2024, the statutory cap on Medicaid Drug Rebate Program rebates that manufacturers pay to state Medicaid programs will be eliminated.

Elimination of this cap may require a pharmaceutical manufacturer to pay more in rebates than it receives on the sale of products, which could have a material impact on our business.

In August 2022, Congress passed the Inflation Reduction Act of 2022, which includes prescription drug provisions that have significant implications for the pharmaceutical industry and Medicare beneficiaries, including allowing the federal government to negotiate a maximum fair price for certain high-priced single source Medicare drugs, imposing penalties and excise tax for manufacturers that fail to comply with the drug price negotiation requirements, requiring inflation rebates for all Medicare Part B and Part D drugs, with limited exceptions, if their drug prices increase faster than inflation, and redesigning Medicare Part D to reduce out-of-pocket prescription drug costs for beneficiaries, among other changes.

The impact of these legislative, executive, and administrative actions and any future healthcare measures and agency rules implemented by the Biden administration on us and the pharmaceutical industry as a whole is unclear.

The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our product candidates if approved.

Complying with any new legislation and regulatory changes could be time-intensive and expensive, resulting in a material adverse effect on our business.

federal and state levels that seek to reduce healthcare costs generally and drug costs specifically.

In the U.S., for example, the Patient Protection and Affordable Care Act, as amended, or PPACA, is a sweeping law enacted in March of 2010 that expanded health care coverage through Medicaid expansion and the implementation of the individual mandate for health insurance coverage and which included changes to the coverage and reimbursement of drug products under government healthcare programs.

Beyond the PPACA, there are ongoing and widespread health care reform efforts, a number of which have focused on regulation of prices or payment for drug products.

Drug pricing and payment reform was a focus of the Trump Administration and has been a focus of the Biden Administration.

For example, federal legislation enacted in 2021 eliminates a statutory cap on Medicaid drug rebate program rebates effective January 1, 2024.

As another example, the Inflation Reduction Act (IRA) of 2022 contains various drug price negotiation, inflationary rebate, and pricing provisions with varying implementation dates.

The IRA allows the federal government to negotiate a maximum fair price for certain high-priced single-source Medicare drugs, imposes penalties and excise tax for manufacturers that fail to comply with the drug price negotiation requirements, requires inflation rebates for all Medicare Part B and Part D drugs (with limited exceptions) if their drug prices increase faster than inflation, and redesigns Medicare Part D to reduce out-of-pocket prescription drug costs for beneficiaries, among other changes.

The impact of the IRA on our business and the broader pharmaceutical industry remains uncertain as implementation is ongoing.

As another example, in 2022, subsequent to the enactment of the IRA, the Biden administration released an executive order directing the HHS to report on how the Center for Medicare and Medicaid Innovation (“CMMI”) could be leveraged to test new models for lowering drug costs for Medicare and Medicaid beneficiaries.

The report was issued in 2023 and proposed various models that CMMI is currently developing which seek to lower the cost of drugs, promote accessibility and improve quality of care.

These changes or other changes could affect the market conditions for our products.

We expect continued scrutiny on drug pricing and government price reporting from Congress, agencies, and other bodies.

At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

For example, a number of states are considering or have recently enacted state drug price transparency and reporting laws that could substantially increase our compliance burdens and expose us to greater liability under such state laws once we begin commercialization after obtaining regulatory approval for any of our products.

Implementation of cost containment measures or other healthcare reforms that affect the pricing and/or availability of drug products may impact our ability to generate revenue, attain or maintain profitability, or commercialize products for which we may receive regulatory approval in the future.

We expect that PPACA, as well as other healthcare reform measures that have been and may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any approved product, and could seriously harm our future revenue.

For example, on January 5, 2024, the FDA approved Florida’s Section 804 Importation Program, or SIP, proposal to import certain drugs from Canada for specific state healthcare programs.

It is unclear how this program will be implemented, including which drugs will be chosen, and whether it will be subject to legal challenges in the United States or Canada.

Other states have also submitted SIP proposals that are pending review by the FDA.

Any such approved importation plans, when implemented, may result in lower drug prices for products covered by those programs.

Additionally, a number of states have enacted state drug price transparency and reporting laws that could substantially increase our compliance burdens and expose us to greater liability under such state laws if and when we have marketed products.

Healthcare reform efforts have been and may continue to be subject to scrutiny and legal challenge.

For example, with respect to the PPACA, tax reform legislation was enacted that eliminated the tax penalty established for individuals who do not maintain mandated health insurance coverage beginning in 2019 and, in 2021, the U.S.

Supreme Court dismissed the latest judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the PPACA.

As another example, revisions to regulations under the federal anti-kickback statute would remove protection for traditional Medicare Part D discounts offered by pharmaceutical manufacturers to pharmacy benefit managers and health plans.

Pursuant to court order, the removal was delayed and recent legislation imposed a moratorium on implementation of the rule until January 2032.

As another example, the IRA drug price negotiation program has been challenged in litigation filed by various pharmaceutical manufacturers and industry groups.

We expect that healthcare reform measures that have been or in the future may be adopted, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any approved product, and could seriously harm any future revenue generation.

Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payers.

The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our products.

Complying with any new legislation and regulatory changes could be time-intensive and expensive, resulting in a material adverse effect on our business.

Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products.

We cannot be sure whether additional legislative changes will be enacted, or whether FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the regulatory approvals of our product candidates, if any, may be.

In addition, increased scrutiny by Congress of the FDA’s approval process may significantly delay or prevent regulatory approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements.

In addition, different pricing and reimbursement schemes exist in other countries.

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Some jurisdictions operate positive and negative list systems under which products may be marketed only once a reimbursement price has been agreed upon.

Some of these countries may require, as condition of obtaining reimbursement or pricing approval, the completion of clinical trials that compare the cost-effectiveness of a particular product candidate to currently available therapies.

Some of these countries may require, as a condition of obtaining reimbursement or pricing approval, the completion of clinical trials that compare the cost-effectiveness of a particular product to other then-available therapies.

Other member states allow companies to fix their own prices for medicines, but monitor and control company profits.

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In addition, in some countries, cross-border imports from low-priced markets exert a commercial pressure on pricing within a country.

On May 1, 2021, the EU and UK trade and cooperation agreement, or TCA, entered into application.

The TCA includes specific provisions concerning pharmaceuticals, which include the mutual recognition of the outcomes of GMP inspections.

Applicants and MA holders may submit GMP certificates issued by the MHRA for sites located outside the EU/EEA as supporting information for EU regulatory submissions.

However, the TCA does not foresee wholesale mutual recognition of UK and EU pharmaceutical regulations.

The regulatory regime in Great Britain currently broadly aligns with EU regulations.

However, it is possible that these regimes may diverge in the future, given proposed legislative changes such as the European Commission’s proposals for the entire overhaul of the pharmaceutical regulatory regime.

Other Healthcare Laws and Compliance Requirements

In the U.S., the research, manufacturing, distribution, sale and promotion of drug products that we are developing are subject to regulation by various federal, state and local authorities in addition to the FDA, including the Centers for Medicare & Medicaid Services, other divisions of the U.S.

Department of Health and Human Services (e.g., the Office of Inspector General), the U.S.

Department of Justice, state Attorneys General, and other state and local government agencies.

For example, sales, marketing and scientific/educational grant programs must comply with applicable health care fraud and abuse laws, such as the federal Anti-Kickback Statute, the federal False Claims Act, Stark law, and implementing regulations, and similar state laws.

Pricing and rebate programs must comply with the Medicaid Drug Rebate Program requirements of the Omnibus Budget Reconciliation Act of 1990, as amended, and the Veterans Health Care Act of 1992, as amended.

If products are made available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirements apply.

Other laws and regulations that may apply to prescription drug manufacturers include the Sunshine Act, prescription drug price reporting requirements, and various state transparency and reporting laws.

All business activities of prescription drug manufacturers are also potentially subject to federal and state consumer protection and unfair competition laws.

The federal Anti-Kickback Statute prohibits any person, including a prescription drug manufacturer (or a party acting on its behalf), from knowingly and willfully soliciting, receiving, offering or providing remuneration, directly or indirectly, to induce or reward either the referral of an individual, or the furnishing, recommending, or arranging for a good or service, for which payment may be made under a federal healthcare program such as the Medicare and Medicaid programs.

This statute can be applied broadly to include arrangements between pharmaceutical manufacturers on one hand and any referral source on the other, including prescribers, purchasers, and formulary managers.

The term “remuneration”

has been broadly interpreted to include anything of value, including, for example, gifts, discounts, the furnishing of supplies or equipment, credit arrangements, payments of cash, waivers of payments, ownership interests, and service fees, unless expressly exempted or protected by a safe harbor.

Further, the statute has been interpreted to cover any arrangement where one purpose of the remuneration was to obtain remuneration in exchange for referral or to induce further referrals for an item or service.

Although there are a number of statutory exemptions and regulatory safe harbors protecting certain legitimate business arrangements from prosecution, the exemptions and safe harbors are drawn narrowly, and practices that involve remuneration intended to induce prescribing, purchasing or recommending may be subject to scrutiny if they do not qualify for an exemption or safe harbor.

Our practices may not in all cases meet all of the criteria of an applicable safe harbor for protection from liability under the federal Anti-Kickback Statute.

The reach of the Anti-Kickback Statute was broadened by PPACA, which, among other things, amends the intent requirement of the federal Anti-Kickback Statute such that the government does not need to prove that a person had the intent to specifically violate the statute in order to find a violation.

In addition, the PPACA provides that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act (discussed below) or the civil monetary penalties statute, which imposes fines against any person who is determined to have presented or caused to be presented claims to a federal healthcare program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.

Additionally, many states have adopted laws similar to the federal Anti-Kickback Statute, and some of these state prohibitions apply to referral of patients for healthcare items or services reimbursed by any third-party payer, not only the Medicare and Medicaid programs in at least some cases, and do not expressly provide for certain safe harbors or impose different requirements for safe harbor protection under applicable state laws.

The federal False Claims Act imposes liability on any person or entity that, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment by a federal healthcare program.

The qui tam provisions of the False Claims Act allow a private individual to bring civil actions on behalf of the federal government alleging that the defendant has submitted or cause to be submitted a false claim to the federal government, and to share in any monetary recovery.

In recent years, the number of suits brought by private individuals has increased dramatically.

In addition, various states have enacted false claims laws analogous to the False Claims Act.

Many of these state laws apply where a claim is submitted to any third-party payer and not merely a federal healthcare program.

There are many potential bases for liability under the False Claims Act.

Liability arises, primarily, when an entity knowingly submits, or causes another to submit, a false claim for reimbursement to the federal government.

The False Claims Act has been used to assert liability on the basis of inadequate care, kickbacks and other improper referrals, improperly reported government pricing metrics such as Best Price or Average Manufacturer Price, improper use of Medicare numbers when detailing the provider of services, improper promotion of off-label uses (i.e., uses not expressly approved by FDA in a drug’s label), and allegations as to misrepresentations with respect to the services rendered.

Our future activities relating to the reporting of discount and rebate information and other information affecting federal, provincial, state and third-party reimbursement of our products, and the sale and marketing of our products and our service arrangements or data purchases, among other activities, may be subject to scrutiny under these laws.

We are unable to predict whether we would be subject to actions under the False Claims Act or a similar state law, or the impact of such actions.

However, the cost of defending such claims, as well as any sanctions imposed, could adversely affect our financial performance.

Also, the Health Insurance Portability and Accountability Act of 1996, or HIPAA, created several new federal crimes, including healthcare fraud, and false statements relating to healthcare matters.

The healthcare fraud statute prohibits knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private third-party payers.

The false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.

In addition, we may be subject to, or our marketing activities may be limited by, data privacy and security regulation in the U.S.

and foreign jurisdictions in which we conduct our business, including jurisdictions in which we conduct our clinical trials.

For example, HIPAA and its implementing regulations established uniform federal standards for certain “covered entities”

(healthcare providers, health plans and healthcare clearinghouses) governing the conduct of certain electronic healthcare transactions and protecting the security and privacy of protected health information.

The American Recovery and Reinvestment Act of 2009 included expansion of HIPAA’s privacy and security standards called the Health Information Technology for Economic and Clinical Health Act, or HITECH.

Among other things, HITECH makes HIPAA’s privacy and security standards directly applicable to “business associates”—independent contractors or agents of covered entities that create, receive, maintain, or transmit protected health information in connection with providing a service for or on behalf of a covered entity.

HITECH also increased the civil and criminal penalties that may be imposed against covered entities, business associates and possibly other persons, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney’s fees and costs associated with pursuing federal civil actions.

In addition, in May 2016, the EU formally adopted the General Data Protection Regulation, or GDPR, which applies to all EU member states from May 25, 2018 and replaced the European Union Data Protection Directive.

The GDPR has imposed many new or additional requirements including, but not limited to, obtaining consent of the individuals to whom the personal data relates, the nature and scope of notifications provided to the individuals, the security and confidentiality of the personal data, data breach notification and using third-party processors in connection with the processing of the personal data.

Failure to comply with the GDPR could subject us to regulatory sanctions, delays in clinical trials, criminal prosecution and/or civil fines or penalties.

Additionally, GDPR creates a direct cause of action by individual data subjects.

The GDPR is a complex law and the regulatory guidance is still evolving, including with respect to how the GDPR should be applied in the context of clinical trials or other transactions from that we may gain access to personal data.

In 2021, the UK became a “third country”

under the GDPR.

These changes in the law will increase our costs of compliance and result in greater legal risks.

Other countries maintain different privacy laws that we are subject to.

The Physician Payment Sunshine Act, or the Sunshine Act, requires applicable manufacturers and certain distributors of prescription drugs, among other products, that are available for coverage by Medicare, Medicaid or the Children’s Health Insurance Program to report annually to the Secretary of HHS:

(i) payments or other transfers of value made by that entity, or by a third-party as directed by that entity, to covered recipients, such as physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician healthcare professionals (such as physician assistants and nurse practitioners, among others), and teaching hospitals or to third parties on behalf of such physicians, non-physician healthcare professionals or teaching hospitals;

and (ii) physician ownership (including immediate family member’s ownership) and investment interests in the entity.

There are also an increasing number of state and local “sunshine”

or transparency and reporting laws that require applicable manufacturers to make reports to states on pricing and marketing information.

federal government discloses the reported information on a publicly available website.

Several states have enacted legislation requiring pharmaceutical companies to, among other things, establish marketing compliance programs, file periodic reports with the state, make periodic public disclosures on sales, marketing, pricing, clinical trials and other activities, and/or register their sales representatives, as well as to prohibit pharmacies and other healthcare entities from providing certain physician prescribing data to pharmaceutical companies for use in sales and marketing, and to prohibit certain other sales and marketing practices.

These federal, state, and local laws may affect our sales, marketing, and other promotional activities by imposing administrative and compliance burdens on us.

If we fail to track and report as required by these laws or otherwise comply with these laws, we could be subject to the penalty provisions of the pertinent state and federal authorities.

Because of the breadth of these health care laws and the narrowness of available statutory and regulatory exemptions, it is possible that some of our business activities could be subject to challenge under one or more of such laws.

If our operations are found to be in violation of any of the federal and state laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including criminal and significant civil monetary penalties, damages, fines, imprisonment, exclusion from participation in government healthcare programs, injunctions, recall or seizure of products, total or partial suspension of production, denial or withdrawal of pre-marketing product approvals, private qui tam actions brought by individual whistleblowers in the name of the government or refusal to allow us to enter into supply contracts, including government contracts, the curtailment or restructuring of our operations, and corporate integrity agreement, which impose certain compliance, certification and reporting obligations, any of which could adversely affect our ability to operate our business and our results of operations.

In the United States, pharmaceutical manufacturers are subject to numerous other federal, state and local laws designed to, for example, prevent fraud and abuse;

promote transparency in interactions with others in the healthcare industry;

regulate pricing of drugs and protect the privacy of individual information.

These laws are enforced by various federal and state enforcement authorities, including but not limited to, the U.S.

Department of Justice, and individual U.S.

Attorney offices within the Department of Justice, the U.S.

Department of Health and Human Services, or HHS, HHS’ various divisions, including but not limited to, the Centers for Medicare & Medicaid Services, or CMS, and the Office of Inspector General, and state boards of pharmacy.

We may be subject to various federal and state laws pertaining to health care “fraud and abuse,” including anti kickback laws, and false claims laws, for activities related to past and future sales of any products reimbursable by third party payers such as federal health care programs (including Medicare and Medicaid) or, in some cases, commercial health plans.

Anti-kickback laws generally prohibit a pharmaceutical manufacturer from soliciting, offering, receiving, or paying anything of value to generate business, including the purchase, prescription or use of a particular drug.

False claims laws generally prohibit anyone from knowingly and willingly presenting, or causing to be presented, any claims for payment for reimbursed drugs or services to third-party payers that are false or fraudulent.

Although the specific provisions of these laws vary, their scope is generally broad and there may not be regulations, guidance or court decisions that apply the laws to particular industry practices.

There is therefore a possibility that our practices might be challenged under such laws.

Laws and regulations have also been enacted by the federal government and various states to regulate the sales and marketing practices of pharmaceutical manufacturers with marketed products.

The laws and regulations generally limit financial interactions between manufacturers and health care providers;

require manufacturers to adopt certain compliance standards;

require disclosure to the government and public of financial interactions;

require disclosure of marketing expenditures or pricing information, regulate drug pricing and/or require the registration of pharmaceutical sales representatives.

Many of these laws and regulations contain ambiguous requirements or require administrative guidance for implementation.

Given the lack of clarity in laws and their implementation, any future activities (if we obtain approval and/or reimbursement from federal healthcare programs for our product candidates) could be subject to challenge.

Federal laws, including the Medicaid Drug Rebate Program, require pharmaceutical manufacturers to report certain calculated product prices to the government or provide certain discounts or rebates to government authorities or private entities, often as a condition of reimbursement under government healthcare programs.

These laws are complex and the failure to calculate reported prices correctly or provide appropriate prices and rebates can expose a manufacturer to penalties and other sanctions.

The distribution of drugs and biological products is subject to additional requirements and regulations, including extensive record-keeping, licensing, storage and security requirements intended to prevent the unauthorized sale of pharmaceutical products.

Federal and state consumer protection and unfair competition laws and regulations broadly regulate marketplace activities and that potentially harm consumers and could apply to the activities of pharmaceutical manufacturers.

We may be subject to data privacy and security laws in the various jurisdictions in which we operate, obtain or store personally identifiable information.

Numerous U.S.

federal and state laws govern the collection, use, disclosure and storage of personal information.

Various foreign countries also have, or are developing, laws governing the collection, use, disclosure and storage of personal information.

Globally, there has been an increasing focus on privacy and data protection issues that may affect our business.

Efforts to ensure that our activities comply with applicable healthcare laws and regulations will involve substantial costs.

Given the breadth of the laws and regulations, limited guidance for certain laws and regulations and evolving government interpretations of the laws and regulations, governmental authorities may possibly conclude that our business practices may not comply with such laws.

If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, exclusion from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations.

Further, defending against any such actions can be costly, time-consuming and may require significant personnel resources.

Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired.

To the extent that any of our products are sold in a foreign country or if we contract with vendors or independent contractors outside of the U.S., we may be subject to similar foreign laws and regulations, which may include, for instance, applicable post-approval requirements, including safety surveillance, anti-corruption/anti-bribery laws, anti-kickback laws, healthcare fraud and abuse laws, and implementation of corporate compliance programs and reporting of payments or transfers of value to healthcare professionals.

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Some of the regulations under the current regulatory structure provide for strict liability, holding a party potentially liable without regard to fault or negligence.

We could be held liable for damages and fines as a result of our, or someone else’s, business operations should contamination of the environment or individual exposure to hazardous substances occur.

We cannot predict how changes in laws or development of new regulations will affect our business operations or the cost of compliance.

We believe that we are in material compliance with applicable environmental laws and that continued compliance therewith will not have a material adverse effect on our business.

We cannot predict, however, how changes in laws or development of new regulations will affect our business operations or the cost of compliance.

Human Capital

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Of our employees, 190 were primarily engaged in research and development, 78 of whom hold a Ph.D.

(or equivalent) degree.

(or equivalent) degree, and 69 were engaged in general and administrative or commercial activities.

None of our employees are represented by a labor union.

We have not experienced any work stoppages and we consider our relations with our employees to be good. 

As competition for qualified personnel in the biotechnology and pharmaceutical field is intense, attracting and retaining qualified employees at all levels is critical to our business.

We continuously strive to ensure that employee morale remains strong, and conduct employee engagement surveys to identify areas of focus and monitor employee turnover rates.

We have established comprehensive and competitive compensation, leave and benefits programs to attract and retain the highly qualified personnel essential to our business.

In addition to providing our employees with competitive salaries, we believe that employees should share in the potential financial gains resulting from the advancement of our programs.

Our practice is to award stock options to permanent employees, both upon initial hiring and annually thereafter, and pay annual bonuses to permanent employees based on the achievement of corporate and/or personal objectives.

As of December 31, 2023, and for the last several years, our company turnover rate was and has been lower than the industry market average.

We have established comprehensive and competitive compensation and benefits programs to attract and retain highly qualified personnel and to incentivize and reward strong performance.

In addition to providing our employees with competitive salaries, we believe that employees should share in the potential financial gains resulting from the advancement of our programs by way of annual bonuses to permanent employees based on the achievement of corporate and/or personal objectives.

To align the interests of our employees with those of our shareholders, we award stock options to all permanent employees, both upon initial hiring and annually thereafter.

Our leave programs include paid vacation, personal, sick, disability and other paid and unpaid leaves.

Our health and wellness programs include medical, dental, vision care, retirement savings, employee assistance programs and other benefits. 

Our health and wellness programs include medical, dental, vision care, retirement savings, employee assistance programs, flexible work schedules and other benefits.

As a biopharmaceutical company with highly educated employees, we believe that our employees must stay current with advances in our industry and continue to grow in their careers.

We offer a variety of internal training and development opportunities as well as dedicated resources for colleagues to attend conferences and external professional development programs. 

We are committed to diversity, equity and inclusion, or DEI, at all levels of our company, and we have established a joint management/employee DEI Committee to progress this important issue.

We support our employees' further development through a variety of internal training and external professional development opportunities, including conference attendance and tuition reimbursement.

We are committed to diversity, equity, inclusion and accessibility, or DEIA, at all levels of our company, and we have established a joint management/employee committee to progress these important issues.

We will continue to focus on measuring and extending our diversity and inclusion initiatives across our entire workforce.

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Manufacturing

We currently rely, and expect to continue to rely, on collaborators, either directly or through third-party contract manufacturers, or CMOs, to manufacture product candidates licensed to them or work with multiple CMOs to produce sufficient quantities of materials required for the manufacture of our product candidates for pre-clinical testing and clinical trials and intend to do so for the commercial manufacture of our products.

We currently rely, and expect to continue to rely, on third-party contract manufacturers, or CMOs, to manufacture (or produce sufficient quantities of materials required for the manufacture of) our product candidates for pre-clinical testing and clinical trials, and we intend to do so for the commercial manufacture of our products.

Similarly, we may rely on collaborators to manufacture, either directly or through CMOs, product candidates licensed to them.

Accordingly, we have not internally developed any manufacturing facilities or hired related personnel.

To date, we have obtained materials for our product candidates from multiple third-party manufacturers.

To date, we have obtained materials for our product candidates from multiple third-party manufacturers and suppliers.

We believe that all of the materials required for the manufacture of our product candidates can be obtained from more than one source.

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Our product candidates generally can be manufactured in reliable and reproducible synthetic processes from readily available starting materials, excipients and packaging components.

The drug substance chemistry generally is amenable to scale-up and does not require unusual equipment in the manufacturing processes.

Corporate Information

We were incorporated in the Province of British Columbia on November 5, 1996 under the predecessor to the Business Corporations Act (British Columbia) under the name “Xenon Bioresearch Inc.”

We continued from British Columbia to the federal jurisdiction pursuant to Section 187 of the Canada Business Corporations Act, or the CBCA, on May 17, 2000 and concurrently changed our name to “Xenon Genetics Inc.”

We registered as an extra-provincial company in British Columbia on July 10, 2000 and changed our name to “Xenon Pharmaceuticals Inc.”

on August 24, 2004.

We have one wholly-owned subsidiary as of December 31, 2022, Xenon Pharmaceuticals USA Inc., which was incorporated in Delaware on December 2, 2016.

Our principal executive offices are located at 200 –

3650 Gilmore Way, Burnaby, British Columbia, Canada V5G 4W8, and our telephone number is (604) 484-3300.

We were incorporated in the Province of British Columbia on November 5, 1996 under the predecessor to the Business Corporations Act (British Columbia) under the name “Xenon Bioresearch Inc.” We continued from British Columbia to the federal jurisdiction pursuant to Section 187 of the Canada Business Corporations Act, or the CBCA, on May 17, 2000 and concurrently changed our name to “Xenon Genetics Inc.” We registered as an extra-provincial company in British Columbia on July 10, 2000 and changed our name to “Xenon Pharmaceuticals Inc.” on August 24, 2004.

We had one wholly-owned subsidiary as of December 31, 2023, Xenon Pharmaceuticals USA Inc., which was incorporated in Delaware on December 2, 2016.

Our principal executive offices are located at 3650 Gilmore Way, Burnaby, British Columbia, Canada V5G 4W8, and our telephone number is (604) 484-3300.

We are a reporting issuer in British Columbia, Alberta and Ontario, but our shares are not listed on any recognized Canadian stock exchange.

Our common shares trade on the Nasdaq Global Market under the symbol “XENE.”

Where You Can Find Additional Information

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Securities and Exchange Commission, or SEC.

These reports may also be obtained without charge by contacting Investor Relations, Xenon Pharmaceuticals Inc., 200 –

3650 Gilmore Way, Burnaby, British Columbia, Canada V5G 4W8, e-mail:

These reports may also be obtained without charge by contacting Investor Relations, Xenon Pharmaceuticals Inc., 3650 Gilmore Way, Burnaby, British Columbia, Canada V5G 4W8, e-mail:

investors@xenon-pharma.com.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business