BioXcel Therapeutics, Inc. (NASDAQ:BTAI) Q1 2023 Earnings Call Transcript May 8, 2023

BioXcel Therapeutics, Inc. misses on earnings expectations. Reported EPS is $-1.84 EPS, expectations were $-1.62.

Operator: Good morning, and welcome to the BioXcel Therapeutics First Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Just to remind everyone, certain matters discussed in today’s conference call and or answers that may be given to questions asked are forward-looking statements that are subject to risks and uncertainties related to future events and/or the future financial or business performance of the company. Actual results could differ materially from those anticipated in these forward-looking statements. Risk factors that may affect future results are detailed in the company’s annual report on Form 10-K for the year ended December 31, 2022, which can be found at www.bioxceltherapeutics.com or on www.sec.gov and which will be updated in its quarterly report on Form 10-Q for the quarter ended March 31, 2023.

As a reminder, today’s conference is being recorded. Joining us on today’s call are Dr. Vimal Mehta, Chief Executive Officer; Richard Steinhart, Chief Financial Officer; Matt Wiley, Chief Commercial Officer; Dr. Rob Risinger, Chief Medical Officer of Neuroscience; Dr. Vince O’Neill, Chief R&D Officer of Onco XL Therapeutics; and Dr. Frank Yocca, Chief Scientific Officer. It is now my pleasure to turn the call over to Dr. Mehta, the CEO and Founder of BioXcel Therapeutics. Please go ahead.

Vimal Mehta: Thank you, operator. Welcome, everyone, and thank you for joining our call today to discuss Biocell Therapeutics’ First Quarter 2023 financial performance and business highlights. This is shaping up to be a momentous year for BixelDeapeutics. Our success in advancing our corporate objectives continues on an exciting trajectory. We are maturing as a commercial organization, solidifying our position as a leading innovator in a nascent agitation market and advancing our pipeline towards critical value-creating and business transformative milestones. We believe we are well on track to realizing our vision of becoming the leading AI-enabled neuroscience company. I have truly never been more excited than I am today for BioXcel’s promising future.

Now let me highlight our commercial progress and upcoming clinical milestones. On the commercial front, we continue to execute on our launch for iGaming approved for the acute treatment of mine, moderate and severe forms of agitation associated with schizophrenia and bipolar disorders in adults. With our integrated commercial team now fully deployed for only 1 full quarter, we are already seeing encouraging market traction. For example, since our last earnings call, we have more than doubled our number of formulary wins. This is opening a significant addressable market opportunity for Regal. I would like to emphasize that we are continuing to build a new agitation market because Igal represent the first innovation for this indication in nearly a decade.

While we recently celebrated the anniversary of Igalmi’s FDA approval in April 2022, it is still less than 1 year since our trade launch last July. I’m proud of the strong performance we have achieved to date and the real-world utility Egalmiis demonstrating. I will be sharing several inspirational anecdote of this later on the call. On the clinical front, we are very excited for 3 key data readouts across our lead neuropsychiatric program, BXCL501. These data readouts are on track and expected to enable significant potential market expansion. The overall agitation market remains underdiagnosed and underserved. There are an estimated 139 million education episodes occurring each year in the U.S. across our 3 priority indication, bipolar disorder, schizophrenia and Alzheimer’s disease.

Similar large market exists for these conditions in other geographies outside the U.S. Starting with bipolar disorder in schizophrenia, we are looking to potentially expand into the at-home setting, where an estimated 23 million agitation episodes occur in the U.S. every year. Our SERD 3 program is investigating BXCL501 in this important setting through a 2-part study design. We anticipate announcing top line pivotal data from Part 1 of the study this month. We also look forward to initiating part 2 of the study this quarter. Turning to Alzheimer’s disease, a very large underserved market with no approved therapies, agitation episode are one of the primary reasons for the patients to move into long-term care facility. — up to an estimated 100 million agitation episodes occur annually in the U.S., our Tant program continues to advance, and we are on track to report top line data in June.

In Parel, enrollment is advancing for Trinco3. Here, we are investigating 501 in patients with moderate to severe dementia in long-term care facility. Outside of agitation, we are making strides towards unlocking BXCL501’s full therapeutic potential. It has a novel mechanism of action for potential use as an adjunctive treatment for major depressive disorder. We look forward to sharing top line results from our Phase Ib multiple ascending dose trial this month. There are over 300 million antidepressant prescription fill annually in the U.S. Currently available treatment options are characterized by slow onset of action and complete response. We believe this represents a significant market opportunity as a chronic treatment in depression and in other neuropsychiatric conditions.

Turning to Onco Xcel Therapeutics. We remain excited about our subsidiaries potential. We continue to explore strategic options for this business and advance our immuno-oncology clinical pipeline. In the second half of this year, we expect to initiate our randomized Phase IIb trial, evaluating BXCL701 as monotherapy and in combination with KEYTRUDA for small cell neuroendocrine prostate cancer C. This trial could serve as a potential registration study for SCNC pending our discussions with the FDA. There are an estimated 288,000 new prostate cancer patients expected in the U.S. this year with approximately 11,500 progressing to SCLC. This patient population is entire need of treatment options as there are no approved FDA tariff. To close, we have had a very productive quarter and have laid a solid foundation for many near-term exciting development.

I’m confident we will continue to meet the high expectations we have set forth for ourselves. With that, I would now like to turn the call over to Rob Risinger to provide some additional details on our 3 upcoming data readout this quarter. Rob?

Rob Risinger: Thank you, Vamil. This is indeed a very exciting time for our neuroscience clinical pipeline at BioXcel Therapeutics. We are expecting 3 near-term data readouts across the BXCL501 program. These will potentially help expand this novel asset outside of the institutional setting and into additional therapeutic areas of significant unmet need. Let me briefly summarize these important milestones, their clinical relevance and significance. We are on track to announce top line data in schizophrenia and bipolar disorder from part 1 of our SERENITY I study this month. This study will report both efficacy and safety information for a 60-microgram dose. Given the purpose of this study, we chose a lower dose to help establish a greater safety margin for at-home use while maintaining a margin of efficacy.

Dose selection was informed by our experience with the 60-microgram dose in our Phase Ib trial. Our goal is to arrest agitation episodes in its earliest stages at home. Patients at home are aware of becoming agitated and have not yet reached the magnitude requiring emergency treatment. This contrast with the magnitude of improvements in PEC total scores in Serenity 1 and 2, which were designed for the emergency setting, where patients require a rapid onset of action, considering their acuity. In Part 1 of the SERENITY II study, we have 80% power for a single 60-microgram dose to separate from placebo by 1 point or greater in the PECtotalscore with an alpha of 0.05 or better. For potential home use, we have powered the SERENITY II trial for a dose intended to maximize the margin of safety for broader community use.

Data cleaning and verification is in progress with expected readout this month. Part 2 of our SERENITY 3 study is expected to initiate this quarter and is designed to evaluate the safety of a 60-microgram dose plus a second dose, if required at home. Let me turn now to Tranquility 2, which is evaluating 501 for the acute treatment of Alzheimer’s-related agitation in assisted living facilities and residential settings. The primary endpoint is the change in baseline PEC total scores 2 hours after the first dose as in tranquility 1 and treatment over a 3-month observation period. Confirmatory measures include the Clinical Global Impression of Improvement, the Pittsburgh Agitation Scale and agitation Calmness Evaluation scale. In Tranquility One, we observed statistical significance for the primary endpoint as well as efficacy across these confirmatory measures for the 60-microgram dose.

The data cleaning and verification process is underway. We expect to announce top line data from this pivotal trial in June. Lastly, our Phase Ib multiple ascending dose trial was designed to test safety and tolerability of daily dosing of BXCL501 for 7 days in healthy volunteers to inform proof-of-concept trial, dose selection. In Phase II program, treatment in MDD patients will be evaluated with BXCL501 in combination with first initiation of selective serotonin or serotonin norepinephrine reuptake inhibitors, SSRIs or Esener, respectively, in order to assess accelerating the response to an antidepressant. This study lays the foundation for combination of BXCL501 with antidepressants for MDD and for the potential chronic dosing in a variety of other neuropsychiatric conditions.

We anticipate announcing top line results this month. To summarize, over the next several weeks, we expect to announce key data via 3 separate readouts for BXCL501, with plans intended to further unlock this asset’s full therapeutic potential by demonstrating its ability to treat agitation across additional indications in additional medical settings and potential expansion into illnesses, which require chronic dosing. Let me now turn the call over to Matt for an overview of our commercial progress. Matt?

Matt Wiley: Thank you, Rob, and good morning, everyone. Before we dive into the specific commercial metrics for the quarter, I want to underscore Game’s positive reception as our commercial organization continues to build and shape the agitation treatment market. Following the full deployment of our 70-person field force last December and building upon a strong early launch foundation, we’ve had a very productive first quarter and start to the second quarter across our sales, market access and marketing functions. While we’re still relatively early in the hospital launch, particularly for the recently deployed 2/3 of our field force, our commercial momentum is building. We are very enthusiastic about our progress and confident in our prospects for success.

The team is working diligently to ensure Agomi is on hospital shelves and available to patients as quickly as possible. We have made great progress with the game’s formulary adoption, achieving more than 130 formulary wins, which more than doubled the number of wins reported just 2 months ago. Along with approvals for over 14,000 Target Integrated Delivery Network or IDM beds, this equates to over $55 million addressable market that has been unlocked to date. Beyond these secured approvals, the efforts of our combined field teams have resulted in formulary votes scheduled for approximately 600 hospital P&T committees and for IDNs covering another 70,000 target beds. This represents 25% of our target IBN universe. Taken together, this represents approximately an additional $255 million in market opportunity that’s scheduled to vote.

We’re pleased with our current approval rate of nearly 70% of boats. This reinforces our confidence in Agalmi’s perceived value to our hospital customers. Given the standard formulary time lines, we expect to see a meaningful uptick in votes in process later this year. We have also observed that more than half of all ordering hospitals have reordered, which we believe demonstrates real-world utility and growing health care provider interest in the value of Agalmi. To provide additional color on this, we recently analyzed our top hospital accounts to benchmark Digomi adoption. Our target hospitals each manage over 4,000 agitation episodes per year, and we estimate that each of our early adopting institutions have treated over 160 episodes in the first 6 months of use.

This represents an implied market share of over 4% in that short time period. We have provided this uptake case study on Slide 25 in our corporate presentation, which was posted this morning on our company’s website. Our broader integrated commercial team continues to increase awareness of Agomi and further amplify our message. The sales team has reached over 75% of the 1,700 targeted hospitals with focus on deepening advocacy and driving demand. Late in the first quarter, we successfully deployed our Game hospital free trial program and since then have observed nearly 700 ordering website interactions with several early orders having already shipped. This program is designed to facilitate early experience with the game and to support hospitals and health systems and value determination.

We expect this will help accelerate demand for Agomi and de novo institutions nationwide. Additional marketing efforts have bolstered customer engagement and include over 90 peer-to-peer speaker programs so far in 2023, educating nearly 1,300 health care providers. Our comprehensive first half media blitz has generated over 12 million impressions in the first quarter, which represents a 70% quarter-over-quarter increase. We expect these enhanced sales and marketing efforts will drive a meaningful acceleration in formulary voting volume and increased pull-through demand as we move throughout the year. In summary, all early indicators are tracking well and point to growing revenue uptick in the second half of 2023. We are incredibly pleased with our progress to date and look forward to leveraging and building upon these efforts as we generate further demand and unlock additional opportunity for game to reach patients in need.

I’ll now turn the call over to Richard, who will discuss first quarter financial results. Rich?

Richard Steinhart: Thank you, Matt. I will now review the first quarter 2023 financial results. Net revenue was approximately $206,000 for the quarter, similar to our prior quarter. We expect to see a notable uptick in revenue in the second half of the year as we believe we will continue to accrue more formulary approvals. Research and development expenses were $27.8 million for the first quarter of 2023 compared to $18.6 million for the same period in 2022. Increased expenses were primarily attributable to multiple clinical trials and CMC costs related to our upcoming 3 data readouts. Sales, general and administrative expenses were $23.6 million for the first quarter of 2023 as compared to $12.9 million for the same period in 2022.

The increased expenses were primarily attributable to personnel, sales, market access and marketing costs associated with the commercialization of eGame in the United States. BioXcel Therapeutics had a net loss of $52.8 million for the first quarter of 2023 compared to a net loss of $31.5 million in the same period of 2022. Cash and cash equivalents totaled $165.5 million as of March 31, 2023. The — we believe that full execution of our strategic financing with Oaktree and Qatar Investment Authority and El game revenues will result in a cash runway into 2025. Thank you. Now, I’d like to turn the call back to Vimal.

Q&A Session

Vimal Mehta: Thank you, Richard. Before turning to Q&A, I would like to briefly highlight a few of the many recent unsolicited real-world examples that were related to me by our sales organization. These 2 anecdotes demonstrate the profound benefit Galmed having for patients and caregivers. And SCP customer last week described a highly agitated uncontrollable patients who were jumping on the bed, taking their close off and all. The patient appears to be a danger to themselves and to hospital staff. The patient was offered gaming, took the drug and in under 30 minutes was sitting back on the bad fully dressed and much more cooperative. The psychiatrist feedback was that Egan worked fabulously for this patient. Another hospital informed us that they have multiple patients coming in and requesting gale by its name.

One of these patients after taking Egoli was described by her caregivers as firm, clear here and able to hold conversations. And that she definitely wanted to get Egalet to use at home. As you are aware, BXCL501 is currently under investigation for at-home use. We are constantly receiving such anecdotal feedback, which further assures us that not only is a game providing real-world utility for those in need in the institutional setting, but it also supports our expansion strategy. Having first-hand accounts of these positive changes we are creating also continues to be both ratifying and motivating. As you know, we are beginning to make an important societal change. We would now like to open the call for questions. Operator?

Operator: Thank you. [Operator Instructions] Our first questions come from the line of Robyn Karnauskas with Truist Securities.

Operator: Our next questions come from the line of Greg Harrison with Bank of America.

Operator: Our next questions come from the line of Colin Bristow with UBS.

Operator: Our next questions come from the line of Karin Jenkins with Goldman Sachs.

Operator: Our next questions come from the line of Yatin Suneja with Guggenheim Partners.

Operator: Our next questions come from the line of Graig Suvannavejh with Mizuho.

Operator: Our next questions come from the line of Sumant Kulkarni with Canaccord Genuity.

Operator: Our next questions come from the line of Ram Selvaraju with H.C. Wainwright.

Operator: Thank you. There are no further questions at this time. I would now like to hand the call back over to Dr. Mehta for any closing remarks.

Vimal Mehta: Thank you, everyone, for joining us. And if you have any questions, please feel free to reach out to us, and have a great day.

Operator: Thank you. This does conclude today’s conference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.