BioXcel Therapeutics, Inc. (BTAI) Q2 2019 Earnings Report, Transcript and Summary

Good morning, and welcome to BioXcel Therapeutics Second Quarter 2019 Earnings Conference Call and Audio Webcast. Before we start, I would like to inform you that this conference is being recorded and that all participants are in listen-only mode. At the request of company we will open the conference up for question and answers after the presentation. [Operator Instructions] Just to remind everyone, certain matters discussed in today's conference call or answers that may be given to questions asked are forward-looking statements that are subject to risks and uncertainties relating to future events and/or the future financial performance of the company. Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that may affect results are detailed in the company's most recent public filings with the U.S. Securities and Exchange Commission, including its quarterly report on Form 10-Q for the quarterly period ended June 30, 2019, which can be found on its website, www.bioxceltherapeutics.com or on www.sec.gov. I would now like to turn the call over to Vimal Mehta, Chief Executive Officer of BioXcel Therapeutics. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining our conference call to discuss BioXcel Therapeutics' financial results and business highlights for the second quarter of 2019. We appreciate everyone's time and attention today and are very pleased to discuss our second quarter results. This quarter proved to be pivotal in driving our lead neuroscience program, BXCL501, as we believe the positive results reported in our recent Phase Ib clinical trial such as the potential of advancing our program directly to Phase III trial. We are also excited by the progress made in our Immuno-oncology program, BXCL701, which met several key milestones and continues to advance as planned. Looking to the second half of 2019, we remain confident in our business strategy and our ability to execute upon our strategic growth and development plans. I would like to start by highlighting the progress that we have made, executing strategic initiatives in our neuroscience clinical development program, BXCL501. Just to remind everyone, BXCL501 is our proprietary thin-film formulation of dexmedetomidine or Dex. Following the announcement of positive results from the bioavailability and safety study of BXCL501 in 42 healthy volunteers, we initiated a Phase Ib study in May 2019, assessing the efficacy of BXCL501 as an acute treatment option for agitation in schizophrenia patients. In this randomized, double-blind, placebo-controlled, multicenter U.S. Phase Ib trial, we evaluated a total of 135 agitated schizophrenia patients and observed the efficacy of BXCL501 over a six-hour treatment period. During the trial, we administered 20, 60, 80, 120 and 180 microgram doses of BXCL501 to groups randomized 2 to 1. To measure the primary endpoint of the study, we utilize the PANSS Excitatory Component commonly referred to as PEC score. Additionally, we leveraged the Agitation-Calmness Evaluation Scale, ACES, for secondary evaluation of agitation and sedation. Typically, acute agitation studies are of short duration and have quantifiable endpoints that are easily measured. This proved evidence as we announced results from our study that began in May and completed in July. Top line findings from our Phase Ib study corroborate our belief that BXCL501 represents a viable treatment option for agitation as BXCL501 met the primary endpoint. Furthermore, BXCL501 demonstrated a statistically significant reduction in the PEC score for agitation and sustained separation from placebo at certain dosages. Of the five dosages tested during the trial, three dosages, 80, 120 and 180 micrograms showed high statistical significance when compared with the placebo and delivered rapid clinically meaningful reductions in PEC score at the regulatory endpoint measured at two hours. These results were also consistent with the data measured by the ACES scale, which showed statistically significant calming at the two hour endpoint in the 80, 120 and 180 microgram doses. BXCL501 was also shown to be safe and well tolerated. As trial results indicated, no severe adverse effects were recorded across the entirety of the dose range. We strongly believe that data recorded during our successful Phase Ib trial warrants advancing our BXCL501 program directly to Phase III pivotal studies. During the pre IND meeting with the FDA, we had high-level discussions with the FDA on overall clinical plan for BXCL501. Now we plan to request pre-Phase III meeting, which is also referred as end-of-Phase II meeting with the FDA to obtain additional feedback and optimize the late stage clinical development of this program. In keeping with the results of the recently completed trial, we believe Phase III studies will be rapid, capital efficient and are sufficiently derisked. We anticipate on enrolling approximately 600 to 700 patients with 300 to 350 each in its schizophrenia or bipolar disorder patient pool. We plan to measure reduction in PEC at two hours as the primary endpoint, as used in clinical trials of other approved agents and our Phase Ib study. We expect this study will be initiated during the fourth quarter of 2019 and anticipate a data readout to follow in the first half of 2020. As discussed previously, we have already transitioned to an automated process to scale up manufacturing of the BXCL501 to support Phase III production needs. As a result of the positive data demonstrated in our Phase Ib trial and automated manufacturing, we believe we will be able to submit our first NDA for BXCL501 during the second half of 2020. In addition to driving the development of BXCL501 through clinical trials, we continue to evaluate the scope of its efficacy as a treatment option for agitation in other neuropsychiatric disorders. We're currently working to initiate a Phase Ib trial in agitated Alzheimer's disease/dementia patients in the fourth quarter of 2019. We are also putting strategic development plans in place to test BXCL501 as a treatment option for acute treatment in hyperactive delirium and opioid withdrawal. We are motivated by the many opportunities that lie ahead of us, and we continue to pursue our goal of developing a noninvasive, well-tolerated rapid-onset treatment to target acute agitation. We are truly pleased by the achievements made during this quarter and remain confident in our vision and our ability to execute upon our strategic plan. Now switching gears to our second clinical and lead Immuno-oncology program, BXCL701. We are currently enrolling patients in the U.S. in the double combination of BXCL701 and Keytruda, clinical trials for treatment-emergent neuroendocrine prostate cancer, tNEPC. Multiple patients have been treated in the safety and escalation portion of the trial, which will be followed up by a 2-stage efficacy portion of the clinical program. A data-readout is expected in the second half of 2019. Earlier in the year, in an effort to expand our global footprint, we filed a clinical trial application, CTA, with the U.K. Medicines and Healthcare products Regulatory Agency, MHRA, which was accepted. We expect to activate clinical sites, subject to approval from local U.K. authority. This CTA will enable us to expand our clinical development plan for this novel double combination of BXCL701 and Keytruda into the U.K. Moving on to the triple combination of BXCL701, bempegaldesleukin from Nektar and avelumab from Pfizer and Merck KGaA, the investigational new drug application for the triple combination of Immuno-oncology agents has received authorization from the FDA and the safety escalation of that trial is ongoing. This will be followed by a 2-stage efficacy portion with an expected data readout in the first half of 2020. As a reminder, under the collaboration agreement, BTI will be responsible for initiating and managing the BXCL701 clinical program with development costs shared with Nektar. Additionally, we remain dedicated to exploring additional indications for BXCL701 with synergistic combinations to improve patient lives across multiple oncology indications. On the financial end, we were recently added to the Russell 2000 and 3000 Indexes. We believe our admittance to these indexes has raised our visibility in the financial community. Overall, in the second quarter of 2019, we reached several value-creating milestones and continue to focus our efforts to achieve many others in the remainder of the year. With that, I would like to turn the call over to our CFO, Richard Steinhart. Richard?

Thanks, Vimal. Once again, thank you all for joining us this morning, and welcome to our shareholders. For the second quarter of 2019, we reported a net loss of approximately $8.5 million compared to a net loss of $3 million for the second quarter of 2018. Research and development expenses totaled approximately $6.5 million for the second quarter of 2019 compared to approximately $1.8 million for the same period in 2018. The increase was primarily driven by an expansion of research and development activities for both BXCL501 and BXCL701 and include increased personnel costs, clinical trial expenses, manufacturing costs and professional fees associated with our two main products. General and administrative expenses in the second quarter of 2019 were approximately $2.1 million compared to approximately $1.5 million for the second quarter of 2018. The increase was primarily due to additional payroll and payroll expenses as we continue to increase headcount to support our growing business. Total operating expenses for the second quarter of 2019 were approximately $8.6 million as compared to total operating expenses of approximately $3.2 million for the same period in 2018. The 2019 results include approximately $1 million in noncash stock based compensation. We had cash and cash equivalents of approximately $30 million as of June 30, 2019. We expect cash burn to increase going forward as we progress our two leading drug candidates. We believe our cash position is well-managed and will be sufficient to fund key milestones and operations through mid 2020. That concludes the financial review of our second quarter. Now I’d like to turn the call back to Vimal for any further comments.

Thanks, Richard. We are truly excited by the BXCL501 positive results and believe we are well positioned to achieve key product development milestones with cash through mid 2020. I would like to thank you for your continued support of BioXcel Therapeutics and our mission to develop the next wave of medicines across neuroscience and Immuno-oncology. Once again, thank you everyone for joining our conference call to discuss BioXcel Therapeutics financial results for the second quarter of 2019. We hope to provide additional updates on our programs in the coming quarters. That concludes our prepared remarks. We would now like to open the call to questions. Operator?

Thank you. [Operator Instructions] We will now take our first question from Carter Gould of UBS. Please go ahead.

Hi, guys. This is Andrea on for Carter. A couple of questions in 501. So first, in conversations with KOLs, they’ve highlighted that everyone at some point really given oral agent, which I would think is the likely target market for 501, be it oral upfront or post injection. I guess my question here is where do you think 501 sweet spot is in the treatment paradigm? Do you see it more so as a follow-on for much milder patients, particularly as those entering the ER are likely of a higher severity? And then, I guess, I’ll throw in my second one now. How are you thinking about expanding its use -- of 501’s use for chronic or at-home administration? What are the stage gates to getting this accomplished? Thank you.

Thanks. This is Vimal. I will start and then I will have Frank add to it. So our understanding of market has been, it’s a pretty large market, there are about 19 million patients who are at risk, 8 point some few, 8.3 million patient experienced agitation, and schizophrenia and bipolar is a major part of that. We are targeting a patient pool that is mild to moderate, and it could be moderate to aggressive also. As we saw in our trial of 135 patients, every patient was able to take film, and mean PEC score was 19. So if you go over 20, you are going in the aggressive situation. So we believe that we are targeting that population. And it's not about, in any way, that this will be a second line of treatment or anything. This is the primary treatment being developed. There is a very strong need for having a noninvasive, easy-to-administer agent that does not result in excessive sedation, so the physicians can talk to the patient and like find out the underlying reasons for their agitation, so that they can treat that. So that is a big promise of the drug that it is noninvasive. It's not another antipsychotic drug. Most of the orals are antipsychotic. With that, I will stop, and I will let Frank make some comments about what we are targeting here.

So I think Vimal said it very nicely. I think the first approach that the emergency room physician take when a patient comes in, it's agitated is to try to verbally de-escalate the patient. If the patient has a PEC score over 20, they usually are considered severe. So we actually had some patients around 26 and those patients actually were convinced to take the film and the film is very, very easy for self-administration. But the bottom line here is that over the last 10 years, there's been a number of consensus guideline meetings that have highlighted the need for noninvasive treatments in this area. And again, it's dominated by intramuscular treatments. So we believe that our drug and especially with the data that we just generated, which shows that it works as good if not better than IM antipsychotics or benzodiazepine without causing the excessive sedation, will really compete quite well in this space. And with regard to your comment about home use, I think what we will need to do here is that this is the first exposure of our film to patients, and we're getting a sense of its safety profile, which looks very promising and very good. I think the more we use the drug, the more we can make a convincing argument that the drug given in this formulation is safe, then the closer we get to actually moving the drug outside of the emergency room setting into nursing homes and then finally, into homes. That's our plan.

Great and one follow-up actually on 701, are you, do you still expect to give some kind of efficacy or safety update on the tNEPC's trial by year-end?

That's right.

Our next question comes from Do Kim of BMO Capital Markets.

This is Jamison [ph] dialing in for Do and congrats on the progress and good quarter, question on the 701 program. I know you briefly mentioned this in the press release and your call, but given the promising preclinical data and synergistic effects in combination, can you offer some more color on the other indications or immunotherapy modalities you're interested in and your approach in exploring these options? Thank you.

That’s a very good question. So we chose two tumors to target initially, which were cold tumors, pancreatic cancer and with the triple combination. And as you said, data was very convincing it results in complete eradication of the tumor. And it didn’t come back. So we believe there was a formulation of memory T cells. Besides that, 701 already had a single agent activity in melanoma. And we continue to test other synergistic combinations. And we find that there could be other opportunities where immunotherapy currently is not working. And those can be called as lukewarm tumors or refractory patient segment, and we are exploring those opportunities working with the key opinion leaders. And as we move our other combinations forward, we will provide more guidance what our specific plan is related to those combinations.

Thank you.

[Operator Instructions] Our next question comes from Raghuram Selvaraju of H.C. Wainwright. Please go ahead.

Good morning. This is Edward on for Ram. Thanks for taking my questions. Just a few from me. Just wondering about 501 in acute delirium. I know you mentioned in the press release that you’re still looking into this a little bit, but I was just wondering if this is a 2019 story or a 2020 story? And then whether you’re going to do similarly to the agitation, will you go start in the hospital setting first or whether you're going to move into perhaps a nursing home setting for these patients?

So, deliriums certainly is a 2019 story because we’ve been working on it for a while. As you know, with the IV Dex we had, like you know, it was previously demonstrated that there was almost 300% response in all 46 patients. So it is -- we know that there is a big unmet medical need. And in our Investor Day Conference on May 22, Maurizio Fava from MGH showed how what kind of a problem is with the delirium. So we continue to explore those avenues, and we believe we will be able to provide more guidance this year that what and when we’re going to launch our study for hyperactive delirium.

Okay. Thank you. A couple of questions on 501, I mean, 701, I’m sorry. You mentioned that there’s a data readout for the triple combination in the first half of 2020. So it seems like enrollment is currently going well for that trial. But I was wondering if there's going to be any interim data? And whether this would be in how many patients? And just thinking about whether it’s going to be, perhaps, like an ACR or whether you're going to wait all the way until ASCO for the final presentations?

That’s a great question. In pancreatic cancer, we have two phases. One is the dose escalation phase and it’s a triple combination, so we are escalating the doses of these three agents. And as soon as that escalation phase is finished we will be able to move into the efficacy phase. And as you know, these are open label trials, and it's a Simon two stage 15 plus 15 patients in our efficacy trial. As we get data and depending on the nature of the data, how compelling it is and how mature the data is, we would like to discuss the data once we know that it has matured to a level where we are in a position to discuss. So as in next 12 months, we can give more guidance that what the data readout plan will be, and I know our CMO is on the line, Vince. So I will have him embellish anything more he likes to about the data rollout. Vince?

Sure. Thanks, Vimal. I've very little to add to. Maybe we'd just say that, as you've said, the designs of these PoC studies are Simon 2-stage. So strictly and by the book, we would want to get to the end of a stage to be able to report out data. But if we see very-very interesting signals earlier, it's entirely up to us how we would present the data and where, et cetera so back to your original question, probably more likely ASCO.

Okay, that makes sense. And then since you're on the call, if I could just ask about whether these patients have any prior therapies? And maybe what the target enrollment population is, so that's like a first line, second line, that's all.

Sure. So for the pancreatic indication, this is a second line trial. So patients will have received one line of therapy for metastatic disease essentially. For the tNEPC studies, much more interesting, there really is no standard of care there. Patients who clearly had either Zytiga or Xtandi, the androgen deprivation agents, they will have had a Taxotere at some point during their treatment journey. But in terms of tNEPC, they we will not have had anything for that disease. Just really is nothing. We are allowing, as you'd see, investigators to use platinum-based chemotherapy, but it's not generally viewed as effective and active. And therefore, we don't expect many patients to have received that.

All right, I appreciate the detail and just a final follow-up from one of the previous questions. Looking at 701, you presented some - data at AACR earlier this year that was pretty compelling. Just wondering if this was one of your very specific targets that you're going to go to first? Or whether that was just sort of proof-of-concept with 701 as a couple of therapy? And that you're still investigating a lot of different options?

Yes. I'll maybe answer that question more generally, because I think you will see some more preclinical data as the year progresses. So OX40 is a good example, as you know, it's a co-stimulator. Co-stimulates as a single agent, maybe they don't have any significant activity. And in combination, they have been, I think it's probably fair to say, a little bit disappointing. So I think we know that we have very genuine and strong synergy with agents like OX40, so that's one area. And again I'm deliberately being high level because you'll learn more about this later. That's one area. So I think the co-stimulators is one bucket. I think combining 701 with other adaptive immune approaches, again, just based on the synergy argument, it makes huge sense. You probably hear more about that. And then we have said publicly that it makes a lot of sense, combining agent like 701 with CAR-T, right, especially in solid tumor because we have a macro environment and altering property of the 701. And of course, we inflamed the tumor. So I guess, those are just testers to potentially, you may hear more about later in the year.

[Operator Instructions] There are no further questions over the telephone at this time.

Thank you again for participating in today’s call, and we look forward to providing you with future updates. Thanks.

This concludes today’s call. Thank you for your participation. You may now disconnect.