BioXcel Therapeutics, Inc. (NASDAQ:BTAI) Q3 2023 Earnings Call Transcript

BioXcel Therapeutics, Inc. (NASDAQ:BTAI) Q3 2023 Earnings Call Transcript November 14, 2023

BioXcel Therapeutics, Inc. misses on earnings expectations. Reported EPS is $-1.72 EPS, expectations were $-1.29.

Operator: Good morning, and welcome to the BioXcel Therapeutics Conference Call, which will cover its alignment with the FDA on its TRANQUILITY program, provide an update on strategic financing, and review its financial results for the third quarter of 2023. At this time, all participants are in a listen-only mode. [Operator Instructions] After the presentation, there will be a question-and-answer session. [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 quarterly report on Form 10-Q for the quarter ended June 30, 2023, 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 September 30, 2023. As a reminder, today’s conference is being recorded. Presenting on today’s call are Dr. Vimal Mehta, Chief Executive Officer; and Richard Steinhart, Chief Financial Officer. Joining them for participation in the Q&A session are Matt Wiley, Chief Commercial Officer; Dr. Rob Risinger, Chief Medical Officer of Neuroscience; Dr. Vince O’Neill, Chief R&D Officer of OnkosXcel Therapeutics; and Dr. Frank Yocca, Chief Scientific Officer. It is now my pleasure to turn the call over to Dr. Mehta.

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Vimal Mehta: Thank you, operator. Good morning, and thank you for joining us. Today, I begin with several exciting and highly anticipated updates on our recent development with our two late-stage clinical programs for BXCL501, TRANQUILITY and SERENITY III. In addition, I will cover important news about our financing terms with Oaktree Capital Management and Qatar Investment Authority. After this, I will touch briefly on updates for our IGALMI commercial activities and OnkosXcel Therapeutics. Rich will then cover the financial results for the third quarter. Let me begin with TRANQUILITY and SERENITY III programs. I am very pleased to highlight the tremendous progress that we have made with these late-stage clinical program, which we believe represent significant value creating catalysts.

In both cases, we completed productive meetings with the FDA regarding two proposed development paths. We are aligned with the FDA’s recommendation regarding a Phase 3 trial in the at-home setting for TRANQUILITY program as confirmed in the meeting minutes. And our development path with SERENITY III is based on the feedback we received in last week’s meeting with the FDA, subject to receipt of final meeting minutes we expect in December. Going into the TRANQUILITY in more detail, we are aligned with the FDA’s recommendation regarding an additional Phase 3 trial in the at-home setting for TRANQUILITY as a potential path to an sNDA submission. This important development follows our positive pivotal TRANQUILITY II study results in June, the completed independent third-party TRANQUILITY II trial audit in October, and the receipt of our FDA meeting minutes just this month.

Specifically, we plan to conduct a Phase 3 clinical trial of BXCL501 in the at-home setting for the acute treatment of agitation associated with Alzheimer’s disease. This potential market opportunity could include acute treatment of agitation across the full spectrum of Alzheimer’s-related dementia and severity of agitation across all care settings. We believe we are well-positioned to bring BXCL501 to this very large and underserved market, which represents a unique opportunity for which there are no FDA approved drugs. While the agency has approved a chronic agitation treatment, we believe we are breaking new ground for this important unmet medical need. We are pleased that as a result of our updated development plan, the TRANQUILITY III trial is no longer required as part of an FDA submission.

We expect this will let us redeploy resources and focus on the recently agreed at-home-based trial for the TRANQUILITY II — TRANQUILITY program. In summary, we believe we are now poised to advance the program efficiently and cost effectively. Our confidence is further reinforced by the positive findings of an independent third-party audit of data integrity at the single TRANQUILITY II trial site we have previously identified. This audit found no evidence of misconduct or fraud beyond the instance previously reported. In addition, no findings were identified that impact data integrity. We look forward to finalizing our study protocol and moving this forward. Let me now turn to SERENITY III program, which is also making steady progress. As a reminder, here we are evaluating the potential at-home use of BXCL501 for agitation associated with bipolar disorder or schizophrenia, the current approved indication for IGALMI.

Last week, we completed a productive meeting with the FDA and expect to receive meeting minutes in the first half of December. However, I can share now that based on preliminary FDA feedback, we plan to conduct an additional Phase 3 trial evaluating safety of the 120-microgram dose to treat agitation in the home setting associated with bipolar or schizophrenia. We’ll provide more details on this program as we advance. For now, we are pleased that we have multiple opportunities to bring BXCL501 to a much larger number of patients in the home setting. This is the expand portion of our land-and-expand strategy. In conjunction with the clinical development work, we are focused on enhancing our operational and financial flexibility. As reported today, we have entered into a binding term sheet with the Oaktree Capital and Qatar Investment Authority to amend our existing financing agreements.

Subject to final documentation, we have agreed to revise terms that will increase our potential to access additional tranches of capital, and have agreed to revise the revenue covenant to extend the compliance requirement and covenant levels to align with our current projections following our business reprioritization. We believe this is very positive news for the company as this is an integral part of our overall financing strategy. We are grateful to our strategic financial partners for their ongoing support. Briefly turning to IGALMI. We have focused commercial efforts to provide access to IGALMI to our current customers and deploy direct contracting with hospital systems. The recent issuance of a J-Code by CMS is expected to streamline the reimbursement process across commercial and government peers.

We hope this will help us continue to establish brand equity in IGALMI and act as a bridge to the larger potential at-home market opportunities. Additionally, IGALMI patent protection has been extended to 2043 with two new Orange Book-listed U.S. patents. Before wrapping up, I would like to highlight that we are pleased with the continued progress of NIDA-funded trial of BXCL501 for potential treatment of opioid use disorder being conducted by Columbia University. This may offer an important opportunity to address fentanyl combined with xylazine in what has been called an “emerging threat” by the White House Office of National Drug Control Policy. I’m also energized by our emerging neuroscience clinical development programs that are the result of our unique use of artificial intelligence platform to drive drug innovation.

We look forward to sharing more information about our opioid use disorder program and exciting pipeline in an R&D event that we plan to host next month. Look for more details soon. In addition, we were pleased with the recent positive survival data reported for BXCL501 in our open-label Phase 2 trial in patients with metastatic castrate-resistant prostate cancer and in patients with small cell neuroendocrine prostate cancer. With these data in hand, we are focusing on various strategic options for OnkosXcel. I like to end with by thanking all of our colleagues for their dedication to our mission of bringing transformative medicines to patients. It is ultimately their tireless work that drives our success. I will now turn the call over to Rich, who will review our third quarter financial results.

Rich?

Richard Steinhart: Thank you, Vimal. The quarter was indeed a transformative time for the company and I’m pleased to review our financial results for the third quarter of 2023. Net revenue of IGALMI was approximately $341,000 for the quarter. Research and development expenses were $19.6 million for the third quarter of 2023 compared to $22.1 million for the same period in 2022. The decreased expenses were primarily attributable to a decrease in costs associated with BXCL501 SERENITY III and the TRANQUILITY II clinical trials. Selling, general and administrative expenses were $24.3 million for the third quarter of 2023 compared to $17.1 million for the same quarter in 2022. The increased expenses were primarily attributable to an increase in one-time legal and professional fees, costs associated with the OnkosXcel potential public offering, as well as in personnel and related costs to support commercialization of IGALMI in the United States prior to our reprioritization.

BioXcel Therapeutics had a net loss of $50.5 million for the third quarter of 2023 compared to a net loss of $41.8 million for the same period in 2022. Company used approximately $37.6 million in operating cash during the third quarter. Cash and cash equivalents totaled $90 million as of September 30, 2023. The company estimates that its current cash and cash equivalents will last through mid-2024. This estimated cash runway does not include potential additional capital that may become available under the amendments to the strategic financing agreements or resulting from any potential financing activities that we may undertake. Now, I’d like to turn the call back to Vimal.

Vimal Mehta: Thank you, Rich. We would now like to open the call for questions. Operator?

Operator: Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question is coming from the line of Greg Harrison with Bank of America. Please proceed with your questions.

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Q&A Session

Greg Harrison: Hey, good morning, guys. Thanks for the update and for taking the questions. With respect to the 100 patient trial, can you give us some more color on the TRANQUILITY development strategy of going for a broad label initially? And then, what are the criteria for success in this trial, and what would a positive trial look like?

Vimal Mehta: Good morning, Greg. This is Vimal. We were very pleased that we have an alignment on recommendation from the FDA to conduct a home-setting trial. As you know, home setting — or most of the patients in Alzheimer’s do live in the home setting. And this was a very important development after we observed in TRANQUILITY III that number of episodes that were required were like more chronic in nature, so we don’t need to conduct TRANQUILITY III anymore. So, under the circumstances, this is our best case scenario to move this drug and provide access to this medication to broadest possible patient population. So that’s very exciting. And in terms of the clinical trial program, I will pass it on to Rob to describe what this program will entail. Just remember, we just received the meeting minutes from the FDA and we are in the process of developing the clinical protocol right now. Rob?

Rob Risinger: Sure. So, let me just highlight that we’re really excited that we now agree with FDA’s proposed design. This will be a double-blind, placebo-controlled study, primarily safety, and that includes describing clinical benefit as assessed by family or caregivers. We’re actually working on the protocol. And we expect to get back to you with further facts about that protocol.

Greg Harrison: Got it. And can you clarify whether you’re able to use all of the data collected from TRANQUILITY II as part of your sNDA package?

Vimal Mehta: Company believes after receiving our independent audit and all the information we have that we will be able to use the TRANQUILITY II data that we announced in June.

Greg Harrison: Great. Thanks for taking the questions.

Vimal Mehta: Thanks.

Operator: Thank you. Our next questions come from the line of Ram Selvaraju with H.C. Wainwright. Please proceed with your questions.

Ram Selvaraju: Hi, thanks very much for taking my questions. I was wondering first of all if you could provide us with some additional context and clarity on what you expect to be the ultimate path forward for 501 in chronic agitation and within what timeline you expect to pursue this, and if we should be thinking about this as being something that you would look to target only once you have an approval of the label in Alzheimer’s associated acute agitation. Thank you.

Vimal Mehta: That’s a great question, Ram. When we had the conversation with the FDA, TRANQUILITY III, conceding there are so many number of episodes, we did dose 501 multiple times to treat those agitation episodes. So, there was a discussion that would there be a possibility that 501 may be useful or could treat or could be developed as a chronic treatment. We have done chronic dosing, as you know, in the healthy volunteers for our MDD program and we have data, but we have no data right now that it can treat chronic agitation. We will work with the agency to develop a path or explore the path. Currently, our laser-focus is on acute treatment of agitation in a home setting, so that we can expand our use of this drug in Alzheimer’s-related agitation. So that path exists for us and we will have the opportunity to explore, but at this point in time, strategy will be to deploy all resources and focus in completion of the trial in a home setting.

Ram Selvaraju: Okay. And then secondly, with respect to the opioid use disorder indication, do you have any additional information you can provide to us regarding the potential size of this market opportunity? And maybe give us a sense of how you would expect 501 to potentially be deployed if it were to be approved?

Vimal Mehta: So, as you know, Ram, this program is funded by NIDA. It’s a huge, like, on a national emerging threat. And the investigators we are working, they are world-renowned investigators in this area and there is an ongoing trial, Phase 2 trial. Upon outcome of that trial, we will know what the path forward will be. But in terms of the market opportunity, I will pass it on to Matt, if he can provide any color on this.

Matt Wiley: Sure. Ram, we’ll give additional data as we get closer to data readout, but we do know that the fentanyl plus xylazine phenomenon is an emerging threat. It’s growing. And so, there’s not really great epidemiology yet on it. We do know that certain cities like Philadelphia or the State of Connecticut, for instance, have significant problems with this emerging threat and it’s certainly gotten the attention of the White House and others [indiscernible].

Ram Selvaraju: And lastly, if you can maybe comment on — obviously, there’s been some recent data that looks pretty positive for OnkosXcel. Can you give us a sense of, on a qualitative basis, to what extent the availability of this clinical data might make it easier for you to either identify some kind of strategic partnership for 701 or indeed consummate the spin out of OnkosXcel into a separate entity? Thanks.

Vimal Mehta: With the data in hand and you saw the data from the two trials, I think that’s very reinforcing about the 701 potential. Vince, you want to take the question?

Vince O’Neill: Yeah. Good morning, Ram. I would just add to that, that really the complete data package that we have, as you said, including survival, but also biomarker work, is exactly the data potential partners would really want and need to see to form an assessment. So, now that we have that in hand, I can tell you we are actively having those conversations.

Ram Selvaraju: Thank you.

Operator: Thank you. Our next questions come from the line of Sumant Kulkarni with Canaccord Genuity. Please proceed with your questions.

Sumant Kulkarni: Good morning. Thanks for taking my questions and all the updates. So, on your alignment with the FDA, did you specifically ask the agency about your ability to file on the basis of the TRANQUILITY II trial alone? Asked another way, I guess, why did the company not choose to go with a more limited sNDA initially with the potential to expand the label further at some time? Or was that not possible because you still need to establish a safety profile in older patients?

Vimal Mehta: Sumant, with the agency, when we met, we had all the conversation around the TRANQUILITY II program, what will allow us to file an SNDA. In terms of our strategy, we adopted the strategy we want to have the broadest access to this drug to the patients. We know 80% of the patients live in the home setting, which is home and ALF. We have data in the ALF, and to be able to get to the 80% patient, we needed to demonstrate safety and collect data on efficacy in a home setting. And that was the optimal choice by the company working with the agency that this will allow a broader access to the patient and also for the caregiver. One of the biggest reasons for these patients to go from a home to ALF or to nursing home is, as you know, in Alzheimer’s patients is agitation.