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.

A scientist working in a modern lab, examining small-molecule and protein therapeutics.

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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