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.

So, we thought this is the best case scenario that we conduct a study in a home setting and get the best possible label we can in this patient population, whereas you know there are no drugs approved and, to our knowledge, no drugs under development also for acute treatment of agitation. So, we have a very unique position.

Sumant Kulkarni: Got it. And then, is there a specific limit to the number of episodes that you can treat per four week period in this new trial to be considered an acute treatment? And how confident are you that the new at-home trial will not end up in a TRANQUILITY III-like outcome where AD agitation is not really acute but chronic?

Vimal Mehta: We are not aware of any guidelines like migraine, where you have 15 episodes and it’s acute, and after 15, it’s considered as chronic. Those are the paths we will be working with the FDA what is the definition of acute and episodic. But as Rob said, we are developing a protocol and he will be providing you the details that what our inclusion criteria will be for a acute episodic treatment. And we will be discussing more on this one, but to answer your question, there is not a clear guideline set up or a path about that, or there’s no literature information which defines that if you have X number of episodes, it’s acute, and if you have Y number of episodes, it’s chronic.

Sumant Kulkarni: Got it. And then my last question before I jump back in the queue is, on the SERENITY III program, you now are allowed to go home with a 120-microgram dose. Could you just give us some color on what led to that and the discussions with the FDA around that, given it’s higher than what you had contemplated in the past?

Vimal Mehta: Yes. So, when we had meeting on the SERENITY III program, we had multiple choices for the doses. As you know, 120 microgram is already approved dose for IGALMI. And now, company estimate that it has been given to at least more than 10,000 people which is 120 and higher doses 180, and there is a lot of data generated which provides the confidence to the company as well as to the agency that this could be a dose we should evaluate in a home setting. We also had a choice to evaluate 80, where you understand and know that we had done PKPT modeling based on our 60-microgram dose and we could have chosen the 80-microgram dose. Those flexibility exists. The reason we are choosing 120, already a lot of safety data on 120.

Efficacy is already established. We need to evaluate primarily the safety in a home setting. And that will allow us to capture about 23 million episodes that happen in a home setting and extend it beyond the 16 million episode that’s in the hospital. So, it was very synergistic, same dose that’s given in a hospital setting if it can go in a home setting, and if patients in a home setting need any more, like, medications, they can always get 180 in the hospital. So, it’s very, very synergistic, and that’s part of the reason we have chosen 120 for evaluating in a home setting.

Sumant Kulkarni: Thank you.

Operator: Thank you. Our next questions come from the line of Colin Bristow with UBS. Please proceed with your questions.

Colin Bristow: Hey, good morning, and thanks for the update. Maybe just a point of clarification on the path forward in Alzheimer’s agitation. I think I heard you say the company believes the TRANQUILITY II data can be used, but what did FDA specifically say about the submissibility of the data, or will this still remain a review issue? And then, on the additional study, can you — it just feels like from the timelines of prior studies, we’re going to — this is looking to be a sort of 2025 readout. And then certainly on the cash runway, your last — in Q2, you said your cash will get you to mid-’24. You’ve maintained that language. Is that simply because the updated agreement isn’t finalized? Just more detail would be really helpful. Thanks.

Vimal Mehta: Sure, Colin. This is Vimal. Coming back to your question about the specifically about the TRANQUILITY II data, we have no reason to believe or we have not any discussion which tells that TRANQUILITY data is not usable. As you know, once you do submission of your sNDA, FDA does its assessment and that will continue to be the case for any sNDA. In terms of our discussion, we have no reason to believe that, and as we said, company believes this data is usable based on our own assessment as well as on the independent audit that was recently concluded. Your second question was what about the additional studies when the readout will be there. As you notice that we have about 100 patient study to conduct. It’s in a home setting.

We are developing the protocol. We are designing how many sites will be required to conduct the study. Only thing I can mention here is that conducting a trial in home setting is going to be a lot more easy than conducting a trial like a TRANQUILITY II and III. The reason for that is in TRANQUILITY II and III, you have to helicopter in the CRO to make the assessment for the efficacy. Here, as we mentioned, we are trying to evaluate the safety and will continue to collect caregiver assessment of the efficacy. So, these trials we expect are going to be relatively easier in that setting, but we have not done a trial in a home setting. So, we are very diligently working with our CRO, defining the protocol, getting the alignment on the protocol, and very soon we will be able to come back and say when we plan to initiate the trial, when the first patient will be dose, when recruitment will be completed, and how long will it take, and when the value inflection catalyst will be there for the Alzheimer’s-related agitation program.

Third question is related to the Oaktree. Recently, we had concluded a binding term sheet with Oaktree and Qatar Investment Authority. We are very grateful that they are very supportive. They have belief in BXCL501 drug and — like us, like we believe in it. And now having a very clear path for Alzheimer’s-related agitation and also a path for expanding the label for IGALMI in a home setting with SERENITY III program, we both, and based on our recent reprioritization of our commercial efforts and in the organization, this agreement or terms needed to be amended. We are very pleased to report today, they have been agreed upon under the binding term sheet, which will be documented very soon. And I will pass it on to Richard so that he can outline what is the value for the organization and why this was needed.

Richard Steinhart: Sure, Colin, thanks. It’s Richard. So, we’ve done a couple of things here, Colin, that make it attractive to us. We moved out the revenue covenants that would have started to impact our cash flow early next year for about a year. So that saves us some significant cash payments that may have been required under the original deal. And as Vimal said, the new covenants and the new revenue targets really align with our reprioritization in our new budgets. So, it gives us a lot more flexibility in terms of operation for us. And we renegotiated the tranches that may allow us to take down additional capital over the next few months.

Colin Bristow: Very helpful. Thank you.

Operator: Thank you. Our next questions come from the line of Robyn Karnauskas with Truist. Please proceed with your questions.

Robyn Karnauskas: Good morning, and thank you for my questions. I guess starting with the first one, so I think before you said like the FDA likes to cut the dose in half for these at-home trials. What kind of conversations did you have about using the 60 milligrams for — 60 microgram for the at-home setting for TRANQUILITY? Second question is, at-home, can you update us on your thoughts on the number of potential doses that are in the market or episodes now that you’re going for at home and in the hospital setting or assisted living setting? Like, what is now the number that we should be thinking about? And then, I have a follow-up.

Vimal Mehta: So, I’m just trying to understand, Robyn, your first question. Your first question is about the dose being used in the Alzheimer’s-related agitation, 60 microgram in a home setting? I just want to make sure that I understood.

Robyn Karnauskas: Yeah. I mean, I think before you talked about how the FDA always wants to cut the dose when they go at home, and that’s what you did with SERENITY, it was a little lower. And what gives you confidence that you’re using 60 microgram, which is the high dose for your trial that you did in assisted living?

Vimal Mehta: As you know, in our assisted living TRANQUILITY II program, we tested two doses, 40 microgram and 60 microgram. 60 microgram was statistically significant, and it was well tolerated, and we have a very clear safety profile established. And in TRANQUILITY I also we had the data for the 60 microgram. So that’s the dose we want to test in a home setting, because it’s clearly established the efficacy and the safety profile through two trials. Rob, you like to add anything on it?

Rob Risinger: Yeah. No, the FDA felt that 60 microgram had efficacy as demonstrated in TRANQUILITY II, and therefore, that’s the dose to test at home. The safety profile of 60 was consistent with being able to be dosed at home. And so, we believe a successful at-home trial will be demonstrating safety consistent with what we’ve shown in the TRANQUILITY II study.

Vimal Mehta: In terms of the number of episodes, we continue because there is no drug approved. We are — we believe one of the leaders in acute treatment of agitation, in Alzheimer’s-related agitation. So, we continue to do a lot of work internally to understand the opportunity. I will invite Matt to provide a little color what our understanding is on the number of episodes.

Matt Wiley: Sure, good morning, Robyn. As Vimal said earlier, better than 80% of patients with Alzheimer’s dementia are in an at-home setting. This is where the unmet need is potentially the greatest. Antipsychotics are not typically used in this population due to the side effects, and benzodiazepines are not an optimal choice. So, typically what’s used for these patients is some type of soothing technique. And these are relatively ineffective. And so, we believe that the opportunity is tremendous. What we’ve seen in our market research is that, on average, the number of episodes per month for these patients in the at-home setting is six. So, the opportunity out there is pretty tremendous.

Robyn Karnauskas: Would you get other reasons like patients that are not completely diagnosed, a lot of patients seem to have Alzheimer’s, but maybe they have other kinds of dementia? Would that be something that reads in your press release, like assumed Alzheimer’s that might be upside to the opportunity? And then, on the financing question, Vimal, maybe talk a little bit about how you’re thinking about prioritizing future development for SERENITY once you get the final minutes back versus TRANQUILITY versus, say, monetizing 701? Like, I guess you have to prioritize one given your cash position, how are you thinking about that?

Vimal Mehta: Regarding the prioritization, I think good news is that we have full clarity on both programs and from our two recent FDA meetings. So, we have both options at our disposal to bring this drug into the home setting. TRANQUILITY conceding a very large opportunity. It makes sense to prioritize TRANQUILITY program and that is the meeting we had in October and we are more advanced in our protocol development and like taking next steps forward with the TRANQUILITY program. Coming back related to your question about the financing, we believe that we are blessed that we have multiple options for financing. In addition to equity financing, we recently were able to revise our terms with our strategic partner to build financial flexibility.

In addition, we have opportunity to be able to partner 501 program. Now, we have a full clarity in the Alzheimer’s agitation ex U.S. That opportunity we have not explored because right now we were waiting for clarity on these two programs. And in addition, as you mentioned, and Vince also mentioned that we are focusing on monetization of OnkosXcel. So, depending on the business need, we can leverage one of these options to us to extend our cash runway and get to the clinical — meaningful clinical milestones for the TRANQUILITY program followed by the SERENITY program.

Matt Wiley: And, Robyn, this is Matt. I’ll just take on your question about the potential label for presumed Alzheimer’s dementia. And of course, these are things that we will test in the market to see how the market will react to them. But my initial reaction is that payers who might otherwise have a prior authorization due to a confirmed diagnosis might not be able to leverage a prior authorization in that way. That’s number one. Number two is that what we saw in our market research on episodes, one of the things we did collect is the number of episodes per month prior to the definitive diagnosis of Alzheimer’s dementia, and that was three per month. So, we do know that agitation exists prior to and may actually lead to the definitive diagnosis.

Robyn Karnauskas: Okay, great. Thank you.

Operator: Thank you. Our next questions come from the line of Yatin Suneja with Guggenheim. Please proceed with your questions.

Unidentified Analyst: Hi. Good morning. This is [Delma] (ph) for Yatin. Thanks for the update. Could you please clarify what are the safety long-term requirements for submission for the TRANQUILITY program? And then, in the next TRANQUILITY study, are you planning to use that clinical site which — where you saw misconduct issues? Thank you.

Vimal Mehta: Regarding the long-term safety, as we have outlined, that is a — will continue to be a topic of discussion with the FDA. Our drug is acute treatment of agitation. It’s episodic in nature. Depending on what is acute and episodic and what is chronic, those discussions will continue. So, it’s a topic that we — based on our frequency of agitation, we will discuss with the agency. In terms of the site, we are not planning to use that site which you mentioned, and that was specifically a site designed for an ALF setting. And now, as we mentioned that we are moving forward with the at-home setting, so we’ll be using the new site.

Unidentified Analyst: That’s helpful. Thank you, Vimal.

Operator: Thank you. Our next questions come from the line of Graig Suvannavejh with Mizuho. Please proceed with your questions.

Graig Suvannavejh: Thanks for taking my questions. A couple, if I could. Just with respect to the comments around long-term safety requirements, I’m just wondering in support of an sNDA in the 80 agitation setting, what is your current expectation around what you’ll need? And I guess the question is beyond the 100 patient four-week study, is there a current thinking that you will need additional long-term safety in order to support an sNDA? And then, a follow-up question, if I could. Just on the current OpEx, I think it came in significantly higher than we were expecting. And given the current burn, I’m just wondering how we should anticipate OpEx to evolve in the fourth quarter and the first half of next year. Thanks.

Vimal Mehta: So, Graig, regarding the long-term safety, as I mentioned, this will be a continued topic of discussion. It will happen between now when we are initiating the home-setting trial as well as at the pre-NDA meeting. There is not a like — there’s not a drug that has been approved which is acute treatment for agitation in Alzheimer’s and is episodic in nature. So that package will be discussed with the agency and we will continue to update like where we are on those discussions. Currently, we are focused on the study for the at-home setting pivotal trial that we have agreed with the agency. In terms of the cash burn rates, I will pass it on to Richard to provide color on it, what our guidance is.

Richard Steinhart: Sure. So, good morning, Graig. How are you? The results of the reprioritization will begin to impact the fourth quarter and then certainly into next year. So, we’ll see our burn rates start to decrease. In addition, there were a couple of one-time charges in this quarter that won’t be repeated moving forward. So, overall, we expect the burn rate to decrease next quarter and then continue into next year.

Graig Suvannavejh: All right, great. And if I could ask maybe just one follow-on. The J-Code, how should we expect how that might impact the trajectory of, like, sales? Thanks.

Richard Steinhart: So, Graig, first of all, we were very pleased with CMS’s decision to issue a permanent J-Code. We do believe that this will neutralize any economic concerns that hospitals and clinics might have in putting IGALMI either on formulary or providing broader use within the hospital or clinic. So, we look at this as a positive. Certainly, our corporate account director team has been getting positive feedback from either key hospitals or systems that they’ve been in contact with. So, we feel very good about this development and do think that it alleviates one of the barriers to increased use.

Graig Suvannavejh: Thank you.

Operator: Thank you. Our next questions come from the line of Corinne Jenkins with Goldman Sachs. Please proceed with your questions.

Corinne Jenkins: Great. Thanks. I guess a couple from us. When do you anticipate that you’re going to be able to finalize these protocols and initiate the at-home study for TRANQUILITY? And based on one of your prior answers, will these all be new trial sites that you need to enroll at? And then, on the TRANQUILITY point, you guided I think for 100 patients in that study, but it sounds like you’ve yet to determine the primary endpoint that you’ll be evaluating. So, how did you come up with that guidance for the number of patients required? And could it evolve as you determine the protocol?

Vimal Mehta: So, in terms of the protocol, it’s under development. We had a meeting with the FDA last month. So, we were expecting the meeting minutes to confirm our understanding. But protocol is in progress. We are finalizing the protocol once we had input from all our experts or at board then we will submit the protocol to the FDA. And after protocol has been submitted, as you know, we will be in a position within a short time after that to be able to initiate the trial. So, I will and we will provide the guidance on when we think the trial can be initiated and when first patient will be dose. Also, we are in the process of finding how many trial sites we will open and what the recruitment rate will look like. Coming back to your question about the 100 number, that was — as you saw, that — it is designed for safety and to collect efficacy data.

So, FDA and us felt that that number will be sufficient to add to our current data set we have with 501 in the elderly patient population. So, those were the choices and decisions we ended up making what needs to be shown in a home setting, what patient number will be relevant, and what the success criteria will be in terms of demonstrating the safety profile. Rob, you like to add anything?

Rob Risinger: Just that the protocol in development is really focused on both feasible and rapid generation. And I recognize this is a pivotal trial, but the primary aim is described safety in only about 100 patients and they are being treated as needed with the 60-microgram dose or placebo. So, it’s designed to generate placebo-controlled safety data on adverse events for the FDA to review with respect to including these in a potential labeling at home. So, we’re not able to say when the results will be available. However, we’ll share more facts once the protocol is finalized, and of course, we expect that we’ll announce when the enrollment begins.

Corinne Jenkins: Okay. And then, as you think about this extended agreement with Oaktree and QIA, how do you think about a way taking on additional debt versus seeking capital through the equity market?

Vimal Mehta: I think always it’s a delicate balance, based on the business need, your current cash position, the options you have at your disposal. Good news is that we have both equity as well as potential debt option in addition to, as I mentioned previously, partnering, which can be outside the U.S. for Alzheimer’s-related agitation, because this opportunity in U.S. and outside is really large. In addition, as we mentioned that we have started now more concerted efforts for the OnkosXcel. So, we leverage these assets to develop our financing strategy that is create best value for our shareholders.

Corinne Jenkins: Okay, thanks.

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

Sumant Kulkarni: Thanks for the follow-up. I have two. So, you mentioned it’s easier to conduct a trial at home because of the lack of, I think you used the term, helicoptering in a CRO. But would the burden of ensuring safety in older patients at home not be greater relative to a more monitored setting? And how real-time will feedback to the company be based on safety-based events in the new Phase 3 trial?

Vimal Mehta: So, ALF setting, as you know, is a non-medical setting where we have conducted TRANQUILITY I and II. So, the only reason you have to helicopter in a CRO is to measure the efficacy like PEC measurement and safety profile we now have in elderly patients in TRANQUILITY I and II, and we will be evaluating now in the home setting. So, safety will be measured as for any other drug, like you know, that is being tested in a home setting. And then, in terms of the efficacy, it will be more collecting the efficacy data, whether there was agitation, did the patient feel calm, given more by a caregiver. And we are developing the protocol and how we will measure that. But safety is — because we have now established 60 microgram efficacy in an ALF and that was primarily the reason to come up with the design in a home setting to expand the patient access to this drug to the patient population if we get approved.

Sumant Kulkarni: And then, we understand that the FDA could only opine on the data that you have in hand with TRANQUILITY II as part of a review. But did the agency specifically say that only this one additional trial would be required to submit an sNDA, or you won’t require more efficacy trials?

Vimal Mehta: I think this is our alignment, and this is a recommendation of the FDA that it is 100 patient home setting trial with efficacy assessment, as well as collecting the — safety assessment and collecting the efficacy using a caregiver, because that is the best possible design executable in a home setting. So that’s our clear understanding and company believes that there will be one more trial that we have outlined today will be required for potential submission of the sNDA.

Sumant Kulkarni: And last one, I’ll squeeze one in. Is this trial going to have a part one and part two like SERENITY III?

Vimal Mehta: No. This will not have part one and part two, because as you know, 60 micrograms efficacy has been established, we believe, in TRANQUILITY I and then further confirmed in our TRANQUILITY II trial. So, in SERENITY, we were trying to determine a lower dose than the approved dose and trying to see it will be efficacious and safe. That’s part of the reason it was designed as a two-part study. In TRANQUILITY, there was no need to design that as a two-part study.

Sumant Kulkarni: Thanks for the clarification.

Operator: Thank you. We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Dr. Mehta for closing remarks.

Vimal Mehta: Thank you everyone for joining us today and for your continued interest in BioXcel Therapeutics. Have a great day.

Operator: Thank you. This does conclude today’s teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.