BioXcel Therapeutics (BTAI) 14 Nov 242024 Q3 Earnings call transcript

Good morning, and welcome to the BioXcel Therapeutics Third Quarter 2024 Earnings Conference Call. [Operator Instructions] After the formal remarks, 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 could affect future results are detailed in the company's quarterly report on Form 10-Q for the quarterly period ended June 30, 2024, 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 quarterly year period ended September 30, 2024.

As a reminder, today's call is being recorded.

Speaking on today's call are Dr. Vimal Mehta, Chief Executive Officer; and Richard Steinhart, Chief Financial Officer, be joined in the Q&A session by Dr. Vince O'Neill, Chief of Product Development and Medical Officer; Dr. Frank Yocca, Chief Scientific Officer; and Dr. Rob Risinger, Chief Medical Officer of Neuroscience.

It's now my pleasure to turn the call over to Dr. Mehta.

Thank you, operator. Good morning, everyone, and thank you for joining us. This past Tuesday, we announced important milestones with our 2 pivotal Phase III trials with BXCL501. These trials are for agitation associated with bipolar disorder or schizophrenia in the home setting and for agitation associated with Alzheimer's dementia.

We believe BXCL501 could potentially be a much needed acute treatment option for the millions of patients who do not have FDA-approved therapy for these challenging conditions.

Our goal is to transform the treatment paradigm. Starting with our SERENITY At-Home trial to evaluate BXCL501 for acute treatment of bipolar schizophrenia-related agitation, we believe this indication represents a near-term growth opportunity and in our immediate focus area. We designed this study leveraging our substantial clinical experience with BXCL501 conducting 10 double-blinded placebo controlled trials.

We are particularly excited to advance this trial because it marks the first evaluation of BXCL501 in the home setting.

The first patient was randomized late last week, and we look forward to advancing enrollment. Trial duration is expected to be 9 to 12 months from the September initiation as we previously communicated.

We are also continuing our planning for our TRANQUILITY In-Care trial to evaluate BXCL501 as a potential acute treatment for Alzheimer's related agitation. This represents a much larger longer-term growth opportunity.

We recently received feedback from the FDA on our proposed protocol for the trial, which will be our second pivotal Phase III trial for this condition and which largely mirrors our TRANQUILITY II Phase III study.

In addition to acutization, we are pleased with the potential chronic treatment opportunities with BXCL501 through externally funded study currently being conducted by leading academic research institutions.

We recently announced a Department of Defense grant to fund a Phase IIa efficacy and safety study of BXCL501 for acute stress disorder at the University of North Carolina. This marks the second externally funded stress-related trial of BXCL501, just to remind everyone, we discovered BXCL501 using our AI platform and are pleased to see further validation of its broad therapeutic potential.

While focusing on clinical development, we are continuing to maintain our approved product, IGALMI in the market with minimal resources.

We are committed to making this drug available to patients while maintaining our brand equity. To support our trials with the goal of reaching data readout, we are working to strengthen our balance sheet, at the same time we continue evaluating strategic financing alternatives.

In summary, we are pleased with the progress of our SERENITY and TRANQUILITY program. We believe we have attractive opportunities to address substantial unmet medical needs while expanding the market potential for BXCL501. This belief is reinforced by a growing intellectual property portfolio that provides long-term patent protection from which we aim to build a leadership position in the treatment of agitation.

I would now like to turn the call over to Rich, who will review our financial results for the third quarter of 2024. Rich?

Thank you, Vimal. Net revenue from IGALMI was $214,000 for the third quarter of 2024 compared to $341,000 for the same period in 2023. The decrease in sales was primarily due to the timing of reorders from existing customers.

However, for context, it's important to point out that net revenue of $1.9 million for the 9 months ended September 30, 2024, represents an 89% increase from $1 million in the same period in 2023. The increase in new customer acquisitions and increased sales activity reflects rising utilization. Cost of goods sold for the 3 months ended September 30, 2024, and 2023, were $1.2 million and $512,000, respectively. Cost of goods sold is related to the cost to produce, package and deliver IGALMI to customers as well as costs related to excess or obsolete inventory. The increase in cost of goods sold for the 3 months ended September 30, 2024, is a result of higher noncash charges for reserves for excess or obsolete inventory compared to the same period in 2023.

Charges for reserves for excess or obsolete inventory were $1.2 million and $495,000 for the 3 months ended September 30, 2024, and 2023, respectively. Research and development expenses were $5.1 million for the third quarter of 2024 compared to $19.6 million for the same period in 2023. The decreased expenses were primarily due to decreased clinical trial expenses, professional fees as well as personnel and related costs resulting from the company's reprioritization in August of 2023 and reduction in force in May 2024.

Selling, general and administrative expenses were $7.7 million for the third quarter of 2024 compared to $24.3 million for the same period in 2023. The lower expenses were primarily due to decreased personnel and related costs resulting from the company's reprioritization in August 2023 and further reduction in force in May 2024 as well as decreased professional fees and commercial expenses.

BioXcel Therapeutics had a net loss of $13.7 million for the third quarter of 2024 compared to a net loss of $50.5 million for the same period in 2023. The company used $16.3 million in operating cash during the third quarter of 2024. Cash and cash equivalents totaled $40.4 million as of September 30, 2024.

Now I'd like to turn the call back to Vimal.

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

[Operator Instructions] Our first question today is coming from Alec Stranahan from Bank of America.

Just 2 quick ones from us. I guess first, how has the launch of the SERENITY study gone so far? Maybe walk us through the process of getting the first patient on the study and whether you expect the rate of enrollment could be similar or maybe accelerate for the other 200 or so patients on the study. And then I've got a follow-up.

Sure. Good morning, Alec, this is Vince here.

So I'll start that, and then I'll hand over to Rob to give a bit more detail if he feels I'm missing anything.

So essentially, as you know, the study has kicked off, first patient randomized relatively recently. We're in the ramp-up phase right now. It will be totally typical for a study like this. I will mention we're coming into the holiday season.

So that would typically involve a little bit of a slowdown at the sites, but then we would typically see a rebound in the January time frame.

So this is our approach to the study and what we've seen so far is absolutely standard.

I'll just mention lastly, we have a large number of sites.

So 200 patients, and I think the final number is 26 active site.

So that's a large number of sites for the number of patients or target enrollment.

So we're very comfortable with the time line, and I'll just state it again, anticipated 9, 12 months. Anything to add to that, Rob.

No, we're right on track, and the ramp-up is occurring at the moment.

So we're tracking and rolling this out across multiple sites and coordinating all of these activities.

So it's truly integrated across sites.

Okay. That makes sense. And then on the randomization, could you just remind us if rescue medications are allowed, especially thinking about the placebo arm and whether this might actually be a helpful data point that you may be measuring over the 12-week study period.

Yes. Rescue medications are allowed in the trial. Patients may receive a rescue if necessary. And as you said, half -- literally 1/2 of the patients, 100 versus 100 will be receiving placebo.

So it's a sort of safety measure. And yes, we are tracking that as a sort of surrogate of, in efficacy, we'll call it, an indicator of inefficacy for those patients on placebo.

[Operator Instructions] Our next question is coming from Graig Suvannavejh from Mizuho Securities.

I've got 2.

First, just, I might have missed this earlier, but on the TRANQUILITY trial protocol, what was the specific feedback that you got from FDA, if you could provide any color on that? And then secondly, I was just hoping if you could provide an update on where you are with the cash runway and optionality or options that you are considering with regards to funding the company.

Sure, this is Vince. I'll take the first part of that question.

So I mean, we don't typically give blow-by-blow details of FDA comments. What I can say, though, very comfortable in saying this. The feedback was direct actionable and really very concise.

So we're actually very happy with the feedback we received. Did you want to handle second part Rich?

I will handle it. Graig, did you have any more feedback you needed on the FDA feedback because we have already outlined that what that trial design is and what are the key elements of the design of the trial. Is there anything else we can embellish for you? Or that's good. .

No, thank you very much. That's very good.

Sure, sure.

Regarding the strengthening our balance sheet as in my prepared remarks, we are working on all options that we have previously outlined, and we work with our strategic partner also so that we can get to the data readout and that the company's key focus how to get to the data readout and strengthen the balance sheet.

Maybe just a follow-up here with the trial underway of sorts. Can you provide color as to whether the current financing or cash you have is sufficient to take the trial to completion. Again, my apologies if I may have missed it before.

We have not provided any guidance, Greg, but we initiated the trial with a view that we want to get to the data readout and work with all stakeholders so that we can get to the data readout, which is not that far off from where we are, and we initiated this trial in September and our guidance is 9 to 12 months.

Next question today is coming from Sumant Kulkarni from Canaccord Genuity.

I have two, one financial and one trial related. The financial one is, how would you characterize your latest negotiations with your large investors on your ability to keep financial covenants at bay? And second, how important is the successful completion of SERENITY At-Home to the company in terms of that trial's ability to potentially unlock partnership opportunities for the larger at-home agitation market.

Good morning, Sumant. This is Vimal.

As I mentioned that we are continuing speaking with all our stakeholders, including our strategic partners. And as you know, they've been very collaborative, and we are very pleased with that.

We are continuing on that path and focus continues to be that we can strengthen the balance sheet. At the same time, we can get to the data readout. And for the SERENITY, coming back to your question regarding the SERENITY At-Home partnership, now if we think about the company, we are way advanced than where we were last year, we already have SERENITY At-Home trial in progress, and we're expecting the data read out like next year. The TRANQUILITY In-Care, which is our second Phase III trial, which mirrors the TRANQUILITY II, where we had positive data in efficacy and safety, so that is ready to start.

So company from a clinical trial perspective and moving these trials forward, which can be huge value drivers for all stakeholders, like particularly patients, caregivers, health care providers and all our other stakeholders, we are pursuing every path that will allow us to maximize our value for our shareholders, and that continues to be the focus of the company.

Our next question today is coming from Samir Devani from Rx Securities.

I guess the first one is just -- I think last time we spoke, you mentioned that the TRANQUILITY In-Care trial would have a cohort of 20 patients in the at-home setting.

So I just wanted to confirm, following the FDA feedback, whether that was still the case. I guess that's question one.

Yes, this is Vince here.

So yes, at the end of the day, after discussion internally, we took that pilot out of the protocol.

So currently, that's not part.

Okay. And then I guess the second question is just really on BXCL701 and where you've had made any progress in terms of options for progressing that product.

Sure.

So I can give the following update.

So we're still in the process.

I think, as I maybe mentioned on the last quarterly, probably a longer process than at least I personally had anticipated, but it's still within that process, working with our firm who has expertise in this area with potential partners, diligence room activities, et cetera.

So it's still an ongoing process.

Great. And maybe if I can just sneak one more in.

In terms of the stock write-down, could you just confirm that or give us an indication of what sort of inventory you're still holding at and what may be at risk going forward?

Sure.

So this is Rich. Thanks.

I think we're in pretty good shape now with that write-down. We should have enough product to sustain us for the next couple of years. And remember, this is a noncash charge. And if sales pick up, we'll have plenty of inventory to sell with this. It's just looking at where we are today and projecting out.

So I think we're in pretty good shape with inventory.

We reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

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

That does conclude today's teleconference and webcast.

You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.