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Document And Entity Information - shares	3 Months Ended
Document And Entity Information - shares	Mar. 31, 2018	May 04, 2018
Document And Entity Information [Abstract]
Entity Registrant Name	Xenon Pharmaceuticals Inc.
Document Type	10-Q
Trading Symbol	XENE
Current Fiscal Year End Date	--12-31
Amendment Flag	false
Entity Central Index Key	0001582313
Entity Filer Category	Smaller Reporting Company
Document Period End Date	Mar. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Entity Common Stock, Shares Outstanding		14,172,188

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 17,200	$ 20,486
Marketable securities	17,878	23,181
Accounts receivable	432	438
Prepaid expenses and other current assets	1,151	716
Total current assets	36,661	44,821
Prepaid expenses, long term		230
Property, plant and equipment, net	1,101	1,070
Total assets	37,762	46,121
Current liabilities:
Accounts payable and accrued expenses (note 7)	2,388	3,383
Loan payable, current portion (note 8)	1,400	700
Total current liabilities	3,788	4,083
Loan payable, long-term (note 8)	5,476	6,104
Total liabilities	9,264	10,187
Shareholders’ equity:
Preferred shares, without par value; unlimited shares authorized; issued and outstanding: 2,868,000 (December 31, 2017 - nil) (note 9a)	21,825
Common shares, without par value; unlimited shares authorized; issued and outstanding: 14,171,301 (December 31, 2017 - 17,998,420) (notes 9a and b)	147,887	173,841
Additional paid-in capital	36,919	36,471
Accumulated deficit	(177,143)	(173,388)
Accumulated other comprehensive loss	(990)	(990)
Shareholders' equity	28,498	35,934
Total liabilities and shareholders’ equity	37,762	46,121
Commitments and contingencies (note 10)

Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Statement Of Financial Position [Abstract]
Preferred shares, without par value
Preferred shares, shares authorized	Unlimited	Unlimited
Preferred shares, issued	2,868,000	0
Preferred shares, outstanding	2,868,000	0
Common shares, without par value
Common shares, shares authorized	Unlimited	Unlimited
Common shares, Issued	14,171,301	17,998,420
Common shares, Outstanding	14,171,301	17,998,420

Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Revenue:
Collaboration revenue		$ 16
Operating expenses:
Research and development	$ 5,580	5,903
General and administrative	2,238	2,100
Total operating expenses	7,818	8,003
Loss from operations	(7,818)	(7,987)
Other income (expense):
Interest income	108	149
Interest expense	(159)
Foreign exchange gain (loss)	(284)	321
Gain on termination of collaboration agreement (note 9b)	4,398
Net loss and comprehensive loss	(3,755)	(7,517)
Net loss attributable to preferred shareholders	(33)
Net loss attributable to common shareholders	$ (3,722)	$ (7,517)
Net loss per common share (note 5):
Basic	$ (0.21)	$ (0.42)
Diluted	$ (0.21)	$ (0.43)
Weighted-average common shares outstanding (note 5):
Basic	17,804,421	17,946,209
Diluted	17,804,421	17,974,469

Consolidated Statement of Shareholders' Equity (Unaudited) - USD ($)
$ in Thousands

Total

Convertible Preferred Shares [Member]

Common Shares [Member]

Additional Paid-in Capital [Member]

Accumulated Deficit [Member]

Accumulated Other Comprehensive Loss [Member]

^[1]

Balance at Dec. 31, 2016

$ 63,901

$ 173,246

$ 34,326

$ (142,681)

$ (990)

Balance (in Shares) at Dec. 31, 2016

17,930,590

Net loss

(30,704)

Stock-based compensation expense

2,460

Issued pursuant to exercise of stock options

177

$ 595

(415)

(3)

Issued pursuant to exercise of stock options (in Shares)

67,830

Issuance of warrants

100

Balance at Dec. 31, 2017

35,934

$ 173,841

36,471

(173,388)

(990)

Balance (in Shares) at Dec. 31, 2017

17,998,420

Net loss

(3,755)

Issued (cancelled) pursuant to exchange agreement (note 9a)

$ 21,825

$ (21,825)

Issued (cancelled) pursuant to exchange agreement (note 9a) (in Shares)

2,868,000

(2,868,000)

Cancelled pursuant to termination of collaboration agreement (note 9b)

(4,470)

$ (4,470)

Cancelled pursuant to termination of collaboration agreement (note 9b) (in Shares)

(1,000,000)

Stock-based compensation expense

670

Issued pursuant to exercise of stock options

$ 119

$ 341

(222)

Issued pursuant to exercise of stock options (in Shares)

84,668

^[2]

40,881

Balance at Mar. 31, 2018

$ 28,498

$ 21,825

$ 147,887

$ 36,919

$ (177,143)

$ (990)

Balance (in Shares) at Mar. 31, 2018

2,868,000

14,171,301

[1]	Our accumulated other comprehensive loss is entirely related to historical cumulative translation adjustments from the application of U.S. dollar reporting when the functional currency of the Company was the Canadian dollar.
[2]	During the three months ended March 31, 2018, 13,374 stock options were exercised for the same number of common shares for cash (three months ended March 31, 2017 – 62,397). In the same period, the Company issued 27,507 common shares (three months ended March 31, 2017 – 3,693) for the cashless exercise of 71,294 stock options (three months ended March 31, 2017 – 5,524).

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Operating activities:
Net loss	$ (3,755)	$ (7,517)
Items not involving cash:
Depreciation	150	165
Amortization of discount on term loan	72
Stock-based compensation	663	478
Unrealized foreign exchange (gain) loss	267	(326)
Gain on termination of collaboration agreement (note 9b)	(4,398)
Changes in operating assets and liabilities:
Accounts receivable	3	11
Prepaid expenses, and other current assets	(435)	404
Prepaid expenses, long term	230	139
Accounts payable and accrued expenses	(1,016)	186
Net cash used in operating activities	(8,219)	(6,460)
Investing activities:
Purchases of property, plant and equipment	(181)	(137)
Purchase of marketable securities	(8,148)
Proceeds from marketable securities	13,306	9,384
Net cash provided by investing activities	4,977	9,247
Financing activities:
Issuance of common shares pursuant to exercise of stock options	119	174
Net cash provided by financing activities	119	174
Effect of exchange rate changes on cash and cash equivalents	(163)	104
Increase (decrease) in cash and cash equivalents	(3,286)	3,065
Cash and cash equivalents, beginning of period	20,486	17,095
Cash and cash equivalents, end of period	17,200	20,160
Supplemental disclosures:
Interest paid	71
Interest received	141	55
Supplemental disclosures of non-cash transactions:
Fair value of stock options exercised on a cashless basis	176	$ 19
Issuance of preferred shares in exchange for common shares (note 9a)	21,825
Teva Pharmaceuticals International GmbH and Teva Canada Limited [Member]
Supplemental disclosures of non-cash transactions:
Termination of Teva agreement through cancellation of common shares (note 9b)	$ 4,470

Nature of the Business

3 Months Ended

Mar. 31, 2018

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Nature of the business

1.	Nature of the business:

Xenon Pharmaceuticals Inc. (the “Company”), incorporated in 1996 under the British Columbia Business Corporations Act and continued federally in 2000 under the Canada Business Corporation Act, is a clinical stage biopharmaceutical company focused on developing innovative therapeutics to improve the lives of patients with neurological disorders. Building upon its extensive knowledge of human genetics and diseases caused by mutations in ion channels, known as channelopathies, the Company is advancing a novel product pipeline of central nervous system therapies to address areas of high unmet medical need, such as epilepsy and pain.

The Company has incurred significant operating losses since inception. As of March 31, 2018, the Company had an accumulated deficit of $177,143 and a $3,755 net loss for the three months ended March 31, 2018. Management expects to continue to incur significant expenses in excess of revenue and to incur operating losses for the foreseeable future. To date, the Company has financed its operations primarily through funding received from collaboration and license agreements, private placements of common and preferred shares, public offerings of common shares, debt financing, and government funding.

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

Basis of Presentation

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Basis of presentation

2.	Basis of presentation:

These consolidated financial statements are presented in U.S. dollars.

The Company has one wholly-owned subsidiary as at March 31, 2018, Xenon Pharmaceuticals USA Inc., which was incorporated in Delaware on December 2, 2016.

These unaudited interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All intercompany transactions and balances have been eliminated on consolidation.

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, these consolidated financial statements do not include all of the information and footnotes required for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2017 and included in the Company’s 2017 Annual Report on Form 10-K filed with the SEC and with the securities commissions in British Columbia, Alberta and Ontario on March 7, 2018.

These unaudited interim consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of results for the interim periods presented. The results of operations for the three months ended March 31, 2018 and 2017 are not necessarily indicative of results that can be expected for a full year. These unaudited interim consolidated financial statements follow the same significant accounting policies as those described in the notes to the audited consolidated financial statements of the Company included in the Company’s 2017 Annual Report on Form 10-K for the year ended December 31, 2017, with the exception of the policy described in note 3 below.

Changes in Significant Accounting Policies

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Changes in significant accounting policies

3.	Changes in significant accounting policies:

The new revenue standard (Accounting Standards Codification “ASC" 606) became effective for the Company on January 1, 2018, and was adopted using the modified retrospective method under which previously presented financial statements are not restated and the cumulative effect of adopting the new revenue standard on contracts in process is recognized by an adjustment to retained earnings at the effective date. The adoption of the new revenue standard did not change the Company’s recognized revenue under its one ongoing significant collaborative research and license agreement with Genentech, a member of the Roche Group, described in note 11b to the audited consolidated financial statements of the Company included in the Company’s 2017 Annual Report on Form 10-K for the year ended December 31, 2017 and no cumulative effect adjustment was required.

The new guidance in ASC 606 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers under a five-step model: (1) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when or as a performance obligation is satisfied.

The Company generates revenue primarily through collaboration agreements. Such agreements may require the Company to deliver various rights and/or services, including intellectual property rights or licenses and research and development services. Under such collaboration agreements, the Company is generally eligible to receive non-refundable upfront payments, funding for research and development services, milestone payments, and royalties.

In contracts where the Company has more than one performance obligation to provide its customer with goods or services, each performance obligation is evaluated to determine whether it is distinct based on whether (i) the customer can benefit from the good or service either on its own or together with other resources that are readily available and (ii) the good or service is separately identifiable from other promises in the contract. The consideration under the contract is then allocated between the distinct performance obligations based on their respective relative stand-alone selling prices. The estimated stand-alone selling price of each deliverable reflects the Company’s best estimate of what the selling price would be if the deliverable was regularly sold on a stand-alone basis and is determined by reference to market rates for the good or service when sold to others or by using an adjusted market assessment approach if selling price on a stand-alone basis is not available.

The consideration allocated to each distinct performance obligation is recognized as revenue when control is transferred to the customer for the related goods or services. Consideration associated with at-risk substantive performance milestones, including sales-based milestones, is recognized as revenue when it is probable that a significant reversal of the cumulative revenue recognized will not occur. Sales-based royalties received in connection with licenses of intellectual property are subject to a specific exception in the revenue standards, whereby the consideration is not included in the transaction price and recognized in revenue until the customer’s subsequent sales or usages occur.

Future Changes in Accounting Policies

3 Months Ended

Mar. 31, 2018

Accounting Changes And Error Corrections [Abstract]

Future changes in accounting policies

4.	Future changes in accounting policies:

In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842): Recognition and Measurement of Financial Assets and Financial Liabilities. The update requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. The new guidance retains a distinction between finance leases and operating leases, with cash payments from operating leases classified within operating activities in the statement of cash flows. These amendments will be effective for public entities for fiscal years and interim periods within those years, beginning after December 15, 2018. The Company is currently evaluating the new guidance to determine the impact it will have on the Company’s consolidated financial statements.

Net Income (Loss) Per Common and Preferred Share

3 Months Ended

Mar. 31, 2018

Earnings Per Share [Abstract]

Net income (loss) per common and preferred share

5.	Net income (loss) per common and preferred share:

Basic net income (loss) per common share is calculated using the two-class method required for participating securities which includes the convertible preferred shares as a separate class. The preferred shares entitle the holders to participate in dividends and in earnings and losses of the Company on an equivalent basis as common shares. Accordingly, undistributed earnings (losses) are allocated to common shares and participating preferred shares based on the weighted-average shares of each class outstanding during the period.

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

The if-converted method is used to compute the dilutive effect of the Company’s convertible preferred shares. Under the if-converted method, dividends on the preferred shares, if applicable, are added back to earnings attributable to common shareholders, and the preferred shares and paid-in kind dividends are assumed to have been converted at the share price applicable at the end of the period. The if-converted method is applied only if the effect is dilutive.

For the three months ended March 31, 2018, all stock options, warrants and convertible preferred shares were anti-dilutive and were excluded from the diluted weighted average common shares outstanding for the period. For the three months ended March 31, 2017, 1,943,508 stock options were excluded from the calculation of diluted net loss per common share as their inclusion would be anti-dilutive.

The following table sets out the computation of basic and diluted net loss per common and preferred share:

	Three Months Ended March 31,
	2018						2017
Numerator:	Common Shares			Preferred Shares			Common Shares			Preferred Shares
Allocation of loss attributed to shareholders
Basic	$	(3,722	)	$	(33	)	$	(7,517	)	$	—
Adjustment for change in fair value of liability classified stock options		—			—			(133	)		—
Diluted	$	(3,722	)	$	(33	)	$	(7,650	)	$	—
Denominator:
Weighted average number of shares:
Basic		17,804,421			159,333			17,946,209			—
Adjustment for dilutive effect of stock options		—			—			28,260			—
Diluted		17,804,421			159,333			17,974,469			—
Net loss attributable to shareholders per share - basic	$	(0.21	)	$	(0.21	)	$	(0.42	)	$	—
Net loss attributable to shareholders per share - diluted	$	(0.21	)	$	(0.21	)	$	(0.43	)	$	—

Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Fair value of financial instruments

6.	Fair value of financial instruments:

Certain financial instruments and other items are measured at fair value.

To determine the fair value, the Company uses the fair value hierarchy for inputs used to measure fair value of financial assets and liabilities. This hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels: Level 1 (highest priority), Level 2, and Level 3 (lowest priority).

•

Level 1 - Unadjusted quoted prices in active markets for identical instruments.

•

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

•

Level 3 - Inputs are unobservable and reflect the Company’s assumptions as to what market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available.

Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy.

The Company’s Level 1 assets include cash and cash equivalents and marketable securities with quoted prices in active markets. The carrying amount of accounts receivables, accounts payable and accrued expenses approximates fair value due to the nature and short-term of those instruments. The Company’s term loan bears interest at a rate that approximates prevailing market rates for instruments with similar characteristics and, accordingly, the carrying value of the loan approximates fair value.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Accounts Payable and Accrued Expenses

3 Months Ended

Mar. 31, 2018

Payables And Accruals [Abstract]

Accounts Payable and Accrued Expenses

7.	Accounts payable and accrued expenses:

Accounts payable and accrued expenses consisted of the following:

	March 31,		December 31,
	2018		2017
Trade payables	$	473	$	1,253
Employee compensation, benefits, and related accruals		573		1,017
Consulting and contracted research		1,026		817
Professional fees		253		252
Other		63		44
Total	$	2,388	$	3,383

Term Loan

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Term Loan

8.	Term Loan:

At March 31, 2018, the Company determined the effective interest rate on the initial tranche of its loan with Silicon Valley Bank (the “Bank”) to be 9.48% (December 31, 2017 - 9.25%). Amortization of the debt discount was $72 for the three months ended March 31, 2018. Interest payments are made monthly.

Interest expense was $159 for the three months ended March 31, 2018.

The outstanding loan and unamortized debt discount balances are as follows:

	March 31,
	2018
Term loan	$	7,000
Less: unamortized discount on loan		(177	)
Less: current portion		(1,400	)
Accrued portion of final payment fee		53
Loan payable, long-term	$	5,476

Scheduled principal payments on outstanding debt, excluding the final payment fee of $455, as of March 31, 2018, are as follows:

2018	$	700
2019		2,800
2020		2,800
2021		700
Total	$	7,000

The loan agreement contains affirmative and negative covenants, including, among others, covenants that limit or restrict the Company’s ability to incur indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into certain transactions with affiliates, engage in any new line of business, pay dividends or make distributions, or repurchase stock, in each case subject to certain exceptions. The Company is in compliance with these covenants at March 31, 2018.

At March 31, 2018, the Company has a warrant outstanding to the Bank to purchase 50,411 of the Company’s common shares at a price per share of $2.43.

Share Capital

3 Months Ended

Mar. 31, 2018

Stockholders Equity Note [Abstract]

Share Capital

9.	Share Capital:

(a)

Exchange agreement with certain funds affiliated with BVF Partners L.P. (collectively, “BVF”):

On March 23, 2018, the Company and BVF entered into an exchange agreement pursuant to which the Company issued to BVF 2,868,000 Series 1 Preferred Shares in exchange for 2,868,000 common shares which were subsequently cancelled by the Company on the closing date of March 27, 2018.

The Company filed articles of amendment creating an unlimited number of Series 1 Preferred Shares. The Series 1 Preferred Shares are convertible into common shares on a one-for-one basis subject to the holder, together with its affiliates, beneficially owning no more than 9.99% of the total number of common shares issued and outstanding immediately after giving effect to such conversion (the “Beneficial Ownership Limitation”). The holder may reset the Beneficial Ownership Limitation to a higher or lower number, not to exceed 19.99% of the total number of common shares issued and outstanding immediately after giving effect to such conversion, upon providing written notice to the Company which will be effective 61 days after delivery of such notice. Each Series 1 Preferred Share is also convertible into one common share at any time at the Company’s option without payment of additional consideration, provided that prior to any such conversion, the holder, together with its affiliates, beneficially owns less than 5.00% of the total number of common shares issued and outstanding and such conversion will not result in the holder, together with its affiliates, beneficially holding more than 5.00% of the total number of common shares issued and outstanding immediately after giving effect to such conversion. In the event of a change of control, holders of Series 1 Preferred Shares shall be issued one common share for each outstanding Series 1 Preferred Share held immediately prior to the change of control (without regard to the Beneficial Ownership Limitation), and following such conversion, will be entitled to receive the same kind and amount of securities, cash or property that a holder of common shares is entitled to receive in connection with such change of control.

The Series 1 Preferred Shares rank equally to the common shares in the event of liquidation, dissolution or winding up or other distribution of the assets of the Company among its shareholders and the holders of the Series 1 Preferred Shares are entitled to vote together with the common shares on an as-converted basis and as a single class, subject in the case of each holder of the Series 1 Preferred Shares to the Beneficial Ownership Limitation. Any Series 1 Preferred Shares that are ineligible to be converted into common shares due to the Beneficial Ownership Limitation, measured as of a given record date that applies for a shareholder meeting or ability to act by written consent, shall be deemed to be non-voting securities of the Company. Holders of Series 1 Preferred Shares are entitled to receive dividends (without regard to the Beneficial Ownership Limitation) on the same basis as the holders of common shares. The Company may not redeem the Series 1 Preferred Shares.

The Company recorded the issuance of Series 1 Preferred Shares and corresponding cancellation of common shares at $7.61 per share, the estimated weighted average cost at which BVF acquired the common shares. The Series 1 Preferred Shares are recorded wholly as equity under ASC 480, with no bifurcation of conversion feature from the host contract, given that the Series 1 Preferred Shares cannot be cash settled and have no redemption features.

(b)

Termination of collaboration agreement with Teva Pharmaceuticals International GmbH and Teva Canada Limited (together, “Teva”):

On March 7, 2018, the Company and Teva, entered into a termination agreement terminating by mutual agreement the collaborative development and license agreement dated December 7, 2012, as amended, which subsequently closed on March 27, 2018. In connection with the termination, Teva returned and the Company cancelled 1,000,000 common shares that were owned by Teva. Pursuant to the terms of the termination agreement, Teva also agreed to return, license or assign to the Company certain intellectual property, including certain patent rights and will transfer regulatory filings related to TV-45070 to the Company. The termination agreement requires the Company to pay a low single-digit percentage royalty to Teva based on net sales of approved products, if any, resulting from any continued development and commercialization of TV-45070 by the Company during the period that assigned or licensed patents cover such products. To date, no such sales have occurred.

The Company recorded a gain on the termination of the collaboration agreement of $4,398, net of direct costs incurred in connection with the termination and cancellation of 1,000,000 common shares, based on the estimated fair value represented by the market price of the common shares prior to the closing of the transaction.

(c)

Stock-based compensation:

The following table presents stock option activity for the period:

	Three Months Ended March 31,
	2018			2017
Outstanding, beginning of period		2,339,905			1,910,823
Granted		563,700			416,750
Exercised⁽¹⁾		(84,668	)		(67,921	)
Forfeited, cancelled or expired		(22,996	)		(1,415	)
Outstanding, end of period		2,795,941			2,258,237
Exercisable, end of period		1,505,459			1,293,367

⁽¹⁾

During the three months ended March 31, 2018, 13,374 stock options were exercised for the same number of common shares for cash (three months ended March 31, 2017 – 62,397). In the same period, the Company issued 27,507 common shares (three months ended March 31, 2017 – 3,693) for the cashless exercise of 71,294 stock options (three months ended March 31, 2017 – 5,524).

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

	Three Months Ended March 31,
	2018			2017
Average risk-free interest rate		2.77	%		2.44	%
Expected volatility		75	%		81	%
Average expected term (in years)		7.36			7.47
Expected dividend yield		0	%		0	%
Weighted average fair value of stock options granted	$	3.41		$	6.34

Commitments and Contingencies

3 Months Ended

Mar. 31, 2018

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

10.	Commitments and contingencies:

(a)

Priority access agreement with Medpace Inc. (“Medpace”):

In August 2015, the Company entered into a priority access agreement with Medpace for the provision of certain clinical development services. Under the terms of the agreement, the Company has committed to using Medpace non-exclusively for clinical development services over the five year term of the agreement. In consideration for priority access to Medpace resources and preferred service rates, the Company has committed to $7,000 of services over the term of the agreement, $3,000 of which was paid in the year ended December 31, 2015.

(b)

License, manufacture and supply agreement:

In March 2017, the Company entered into a license, manufacture and supply agreement with a pharmaceutical contract manufacturing organization for the access and use of certain regulatory documents as well as for the manufacture and supply of clinical and commercial drug product to support the development of XEN007. Under the terms of the agreement, the Company paid an upfront fee of $500 CAD and will be required to pay a low single-digit percentage royalty on net sales of any products developed and commercialized under the agreement.

(c)

Asset purchase agreement with 1st Order Pharmaceuticals, Inc. (“1st Order”):

In April 2017, the Company acquired XEN1101 (previously known as 1OP2198) from 1st Order pursuant to an asset purchase agreement. 1st Order previously acquired 1OP2198 from an affiliate of Valeant Pharmaceuticals International, Inc. (“Valeant”), and the Company has assumed certain financial responsibilities under that agreement. Under the terms of the agreement, the Company paid an upfront fee of $350 and milestone payments in 2017 totaling $700, which were expensed as research and development. Future potential payments to both 1st Order and Valeant include $1,000 in clinical development milestones, up to $13,000 in regulatory milestones, and up to approximately $33,600 in sales-based and other milestones, which includes a $1,500 milestone that may be payable pre-commercially, plus a mid-to-high single-digit percentage royalty on commercial sales.

(d)

License agreement

In July 2017, the Company entered into a license agreement with a pharmaceutical company for the access and use of certain regulatory documents to support the development of XEN007. Under the terms of the agreement, the Company paid an upfront fee of $1,000, which was expensed as research and development. Future potential payments include $2,000 in clinical development milestones, up to $7,000 in regulatory milestones, plus a low-to-mid single-digit percentage royalty on net sales of any products developed and commercialized under the agreement.

(e)

Guarantees and indemnifications:

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

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

Related Parties

3 Months Ended

Mar. 31, 2018

Related Parties

11.	Related Parties:

(a)

Exchange agreement with BVF:

On March 23, 2018, the Company and BVF entered into an exchange agreement pursuant to which the Company issued 2,868,000 Series 1 Preferred Shares in exchange for 2,868,000 common shares which were subsequently cancelled by the Company. Prior to the closing of the transactions contemplated in the exchange agreement on March 27, 2018, BVF held a number of common shares representing approximately 19.9% of the Company’s then outstanding common shares. For additional information regarding the Series 1 Preferred Shares, refer to note 9a.

(b)

Termination of collaboration agreement with Teva:

Net Income (Loss) Per Common and Preferred Share (Tables)

3 Months Ended

Mar. 31, 2018

Earnings Per Share [Abstract]

Computation of Basic and Diluted Net Loss Per Common and Preferred Share

The following table sets out the computation of basic and diluted net loss per common and preferred share:

	Three Months Ended March 31,
	2018						2017
Numerator:	Common Shares			Preferred Shares			Common Shares			Preferred Shares
Allocation of loss attributed to shareholders
Basic	$	(3,722	)	$	(33	)	$	(7,517	)	$	—
Adjustment for change in fair value of liability classified stock options		—			—			(133	)		—
Diluted	$	(3,722	)	$	(33	)	$	(7,650	)	$	—
Denominator:
Weighted average number of shares:
Basic		17,804,421			159,333			17,946,209			—
Adjustment for dilutive effect of stock options		—			—			28,260			—
Diluted		17,804,421			159,333			17,974,469			—
Net loss attributable to shareholders per share - basic	$	(0.21	)	$	(0.21	)	$	(0.42	)	$	—
Net loss attributable to shareholders per share - diluted	$	(0.21	)	$	(0.21	)	$	(0.43	)	$	—

Accounts Payable and Accrued Expenses (Tables)

3 Months Ended

Mar. 31, 2018

Payables And Accruals [Abstract]

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following:

	March 31,		December 31,
	2018		2017
Trade payables	$	473	$	1,253
Employee compensation, benefits, and related accruals		573		1,017
Consulting and contracted research		1,026		817
Professional fees		253		252
Other		63		44
Total	$	2,388	$	3,383

Term Loan (Tables)

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Schedule of Outstanding Loan and Unamortized Debt Discount Balances

The outstanding loan and unamortized debt discount balances are as follows:

	March 31,
	2018
Term loan	$	7,000
Less: unamortized discount on loan		(177	)
Less: current portion		(1,400	)
Accrued portion of final payment fee		53
Loan payable, long-term	$	5,476

Schedule of Principal Payments on Outstanding Debt

Scheduled principal payments on outstanding debt, excluding the final payment fee of $455, as of March 31, 2018, are as follows:

2018	$	700
2019		2,800
2020		2,800
2021		700
Total	$	7,000

Share Capital (Tables)

3 Months Ended

Mar. 31, 2018

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock Option Activity

The following table presents stock option activity for the period:

	Three Months Ended March 31,
	2018			2017
Outstanding, beginning of period		2,339,905			1,910,823
Granted		563,700			416,750
Exercised⁽¹⁾		(84,668	)		(67,921	)
Forfeited, cancelled or expired		(22,996	)		(1,415	)
Outstanding, end of period		2,795,941			2,258,237
Exercisable, end of period		1,505,459			1,293,367

Fair Value Assumptions for Stock Options

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

	Three Months Ended March 31,
	2018			2017
Average risk-free interest rate		2.77	%		2.44	%
Expected volatility		75	%		81	%
Average expected term (in years)		7.36			7.47
Expected dividend yield		0	%		0	%
Weighted average fair value of stock options granted	$	3.41		$	6.34

Nature of the business (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
Nature of the business (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Accumulated deficit	$ 177,143		$ 173,388
Net loss	$ 3,755	$ 7,517	$ 30,704

Basis of presentation (Details)	3 Months Ended
Basis of presentation (Details)	Mar. 31, 2018
Xenon Pharmaceuticals USA Inc. [Member]
Basis Of Presentation [Line Items]
Date of incorporation	Dec. 02, 2016

Net Income (Loss) Per Common and Preferred Share (Details)	3 Months Ended
	Mar. 31, 2017 shares
Stock Options [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Anti-dilutive shares excluded from the calculation of loss per common share	1,943,508

Net Income (Loss) Per Common and Preferred Share - Computation of Basic and Diluted Net Loss Per Common and Preferred Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Allocation of loss attributed to shareholders
Basic	$ (3,722)	$ (7,517)
Basic	$ (33)
Weighted average number of shares:
Basic	17,804,421	17,946,209
Diluted	17,804,421	17,974,469
Net loss attributable to shareholders per share - basic	$ (0.21)	$ (0.42)
Net loss attributable to shareholders per share - diluted	$ (0.21)	$ (0.43)
Common Shares [Member]
Allocation of loss attributed to shareholders
Basic	$ (3,722)	$ (7,517)
Adjustment for change in fair value of liability classified stock options		(133)
Diluted	$ (3,722)	$ (7,650)
Weighted average number of shares:
Basic	17,804,421	17,946,209
Adjustment for dilutive effect of stock options		28,260
Diluted	17,804,421	17,974,469
Net loss attributable to shareholders per share - basic	$ (0.21)	$ (0.42)
Net loss attributable to shareholders per share - diluted	$ (0.21)	$ (0.43)
Preferred Shares [Member]
Allocation of loss attributed to shareholders
Basic	$ (33)
Diluted	$ (33)
Weighted average number of shares:
Basic	159,333
Diluted	159,333
Net loss attributable to shareholders per share - basic	$ (0.21)
Net loss attributable to shareholders per share - diluted	$ (0.21)

Accounts Payable and Accrued Expenses - Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Payables And Accruals [Abstract]
Trade payables	$ 473	$ 1,253
Employee compensation, benefits, and related accruals	573	1,017
Consulting and contracted research	1,026	817
Professional fees	253	252
Other	63	44
Total	$ 2,388	$ 3,383

Term Loan (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Amortization of the debt discount	$ 72
Interest expense	$ 159
Silicon Valley Bank [Member]
Debt Instrument [Line Items]
Warrants outstanding to purchase common stock	50,411
Warrants exercise price per share	$ 2.43
Term Loan [Member]
Debt Instrument [Line Items]
Interest expense	$ 159
Final payment fee	455
Term Loan [Member] \| Silicon Valley Bank [Member]
Debt Instrument [Line Items]
Amortization of the debt discount	$ 72
Debt instrument, frequency periodic payment, interest	monthly
Initial Tranche [Member] \| Term Loan [Member] \| Silicon Valley Bank [Member]
Debt Instrument [Line Items]
Effective interest rate on initial tranche of debt instrument	9.48%	9.25%

Term Loan - Schedule of Outstanding Loan and Unamortized Debt Discount Balances (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Term loan	$ 7,000
Less: current portion	(1,400)	$ (700)
Loan payable, long-term	5,476	$ 6,104
Term Loan [Member]
Debt Instrument [Line Items]
Term loan	7,000
Less: unamortized discount on loan	(177)
Less: current portion	(1,400)
Accrued portion of final payment fee	53
Loan payable, long-term	$ 5,476

Term Loan - Schedule of Principal Payments on Outstanding Debt (Details) $ in Thousands	Mar. 31, 2018 USD ($)
Debt Disclosure [Abstract]
2018	$ 700
2019	2,800
2020	2,800
2021	700
Term loan	$ 7,000

Share Capital (Details) - USD ($) $ / shares in Units, $ in Thousands			3 Months Ended
	Mar. 23, 2018	Mar. 07, 2018	Mar. 31, 2018
Share Capital [Line Items]
Gain on termination of collaboration agreement		$ 4,398	$ 4,398
Teva Pharmaceuticals International GmbH and Teva Canada Limited [Member]
Share Capital [Line Items]
Collaborative development and license agreement termination date		Mar. 07, 2018
Teva Canada Limited [Member]
Share Capital [Line Items]
Number of common shares agreed to transfer and assign for cancellation		1,000,000
BVF Partners L.P [Member] \| Exchange Agreement [Member]
Share Capital [Line Items]
Estimated weighted average cancellation price per share of common stock	$ 7.61
BVF Partners L.P [Member] \| Exchange Agreement [Member] \| Series1 Preferred Shares
Share Capital [Line Items]
Issued (cancelled) pursuant to exchange agreement	2,868,000
Preferred shares convertible into common shares	one-for-one
Common shares issued on conversion of preferred stock	1
Maximum beneficial ownership limitation percentage for conversion of common stock issued and outstanding	9.99%
Maximum beneficial ownership limitation upon notice, percentage for conversion of common stock issued and outstanding	19.99%
Maximum beneficial percentage hold for conversion of number Of common stock issued and outstanding	5.00%
Minimum beneficial percentage hold for conversion of number Of common stock issued and outstanding.	5.00%
BVF Partners L.P [Member] \| Exchange Agreement [Member] \| Common Shares [Member]
Share Capital [Line Items]
Issued (cancelled) pursuant to exchange agreement	2,868,000

Share Capital - Stock Option Activity (Details) - shares

3 Months Ended

12 Months Ended

Mar. 31, 2018

Mar. 31, 2017

Dec. 31, 2017

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Number of Options Outstanding, Beginning balance

2,339,905

1,910,823

Number of Options, Granted

563,700

416,750

Number of Options, Exercised

^[1]

(84,668)

(67,921)

Number of Options, Forfeited, cancelled or expired

(22,996)

(1,415)

Number of Options Outstanding, Ending balance

2,795,941

2,258,237

2,339,905

Number of Options Exercisable

1,505,459

1,293,367

[1]

Share Capital - Stock Option Activity (Parenthetical) (Details) - shares	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Stock Options exercised for Number of Common Shares for cash	13,374	62,397
Common stock issued for cashless exercise	27,507	3,693
Cashless exercise of stock options	71,294	5,524

Share Capital - Fair Value Assumptions for Stock Options (Details) - $ / shares	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Fair Value Assumptions For Stock Options [Abstract]
Average risk-free interest rate	2.77%	2.44%
Expected volatility	75.00%	81.00%
Average expected term (in years)	7 years 4 months 9 days	7 years 5 months 19 days
Expected dividend yield	0.00%	0.00%
Weighted average fair value of stock options granted	$ 3.41	$ 6.34

Commitments and Contingencies (Details) $ in Thousands	1 Months Ended			3 Months Ended	12 Months Ended
Commitments and Contingencies (Details) $ in Thousands	Jul. 31, 2017 USD ($)	Apr. 30, 2017 USD ($)	Mar. 31, 2017 CAD ($)	Mar. 31, 2018	Dec. 31, 2017 USD ($)	Dec. 31, 2015 USD ($)	Aug. 31, 2015 USD ($)
Asset Purchase Agreement [Member] \| 1st Order Pharmaceuticals, Inc. [Member]
Commitments and Contingencies [Line Items]
Upfront fee paid		$ 350
Milestone payments paid					$ 700
Asset Purchase Agreement [Member] \| 1st Order Pharmaceuticals, Inc. and Valeant Pharmaceuticals International, Inc. [Member] \| Clinical Development Milestones [Member]
Commitments and Contingencies [Line Items]
Future potential payments		1,000
Asset Purchase Agreement [Member] \| 1st Order Pharmaceuticals, Inc. and Valeant Pharmaceuticals International, Inc. [Member] \| Regulatory Milestone [Member]
Commitments and Contingencies [Line Items]
Future potential payments		13,000
Asset Purchase Agreement [Member] \| 1st Order Pharmaceuticals, Inc. and Valeant Pharmaceuticals International, Inc. [Member] \| Sales-based and Other Milestones [Member]
Commitments and Contingencies [Line Items]
Future potential payments		33,600
Asset Purchase Agreement [Member] \| 1st Order Pharmaceuticals, Inc. and Valeant Pharmaceuticals International, Inc. [Member] \| Pre-commercial and Single Digit Percentage Royalty on Commercial Sales Milestone [Member]
Commitments and Contingencies [Line Items]
Future potential payments		$ 1,500
License Agreement [Member]
Commitments and Contingencies [Line Items]
Upfront fee paid	$ 1,000
License Agreement [Member] \| Clinical Development Milestones [Member]
Commitments and Contingencies [Line Items]
Future potential payments	2,000
License Agreement [Member] \| Regulatory Milestone [Member] \| Maximum [Member]
Commitments and Contingencies [Line Items]
Future potential payments	$ 7,000
Medpace Clinical Development Service Agreement [Member]
Commitments and Contingencies [Line Items]
Service agreement, term				5 years
Committed service obligation							$ 7,000
Contractual obligation paid						$ 3,000
License, Manufacture and Supply Agreement [Member]
Commitments and Contingencies [Line Items]
Upfront fee paid			$ 500

Related Parties (Details) - shares	Mar. 23, 2018	Mar. 07, 2018
Teva Pharmaceuticals International GmbH and Teva Canada Limited [Member]
Related Party Transaction [Line Items]
Collaborative development and license agreement termination date		Mar. 07, 2018
Teva Pharmaceuticals International GmbH and Teva Canada Limited [Member] \| Minimum [Member]
Related Party Transaction [Line Items]
Percentage of ownership		5.00%
Teva Canada Limited [Member]
Related Party Transaction [Line Items]
Number of common shares agreed to transfer and assign for cancellation		1,000,000
BVF Partners L.P [Member] \| Exchange Agreement [Member]
Related Party Transaction [Line Items]
Percentage of ownership	19.90%
BVF Partners L.P [Member] \| Exchange Agreement [Member] \| Series1 Preferred Shares
Related Party Transaction [Line Items]
Stock Issued	2,868,000
Common stock received in exchange of preferred shares	2,868,000