Good morning, and welcome to the BioXcel Therapeutics Third Quarter 2022 Financial Results Conference Call. 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, 2022 which can be found at www.BioXceltherapeutics.com or on www.sec.gov, which will be updated in its quarterly report on Form 10-Q for the quarter ended September 30, 2022. As a reminder, today's conference is being recorded. Joining us on today's call are Dr. Vimal Mehta, Chief Executive Officer; Richard Steinhart, Chief Financial Officer; Matt Wiley, Chief Commercial Officer; Dr. Rob Risinger, Chief Medical Officer of Neuroscience; Dr. Frank Yocca, Chief Scientific Officer; and Dr. Vince O’Neill, Chief Medical Officer of Oncology. It is now my pleasure to turn the call over to Dr. Mehta, the CEO and Founder of BioXcel Therapeutics. Please go ahead.

Thank you, operator. Welcome everyone and thank you for joining our call today to discuss BioXcel Therapeutics financial performance and business highlights. The third quarter of 2022 marked a pivotal moment in the history of BioXcel Therapeutics. In the last few months, we have transitioned to a commercial organization and successfully launched IGALMI. We have made tremendous progress across all facets of our business and are very excited for 2023 and beyond. We continue to fully execute on our land and expense strategy for lead program, BXCL501 to build our neuroscience agitation franchise. In that regard, we have multiple pivotal data readouts from our ongoing trials expected in the first half of 2023. We believe this will allow us to capitalize on the $15 billion agitation market opportunity. This consists of 139 million episodes in total for our first three indications, including bipolar disorder, schizophrenia and Alzheimer's. Agitation is an under diagnosed and underserved market that has not seen treatment innovation in nearly a decade. IGALMI is approved by the FDA for acute treatment of agitation for schizophrenia and bipolar disorders in adults. There are approximately 16 million agitation episodes of these conditions in the US annually, which are treated in the institutional medical setting. We truly believe the introduction of IGALMI could drive agitation market creation in a similar fashion as the emergence and rapid growth of the depression market following the introduction of novel treatment options in the early 1990s. IGALMI is a novel product with a broad label to treat the full spectrum of agitation in a schizophrenia and bipolar 1 and 2 disorders. In short, we are leading new trails in the agitation market. We recently hosted a commercial days and clearly outlined the evolving agitation market dynamics, positive initial momentum and launch performance matrices. In…

Thank you, Vimal, and good morning, everyone. As we reported in our Commercial Day a few weeks ago, we are making very good progress on our IGALMI launch efforts. These efforts are continuing to pay off, and I'm pleased to share some additional updates with you today, specifically in relation to our launch performance metrics. Our market access activities are a critical component of our strategy. So I'll start with our progress with group purchasing organization or GPO contracting efforts. As we have mentioned in previous communications, the typical contracting time frame of GPOs averages six to nine months. We have made steady progress and increased our access to GPO throughout the quarter. We are now contracted with two GPOs, including the largest in the country, covering nearly 50% of the bed in our target universe. We are in ongoing negotiations with the other leading GPOs and expect to continue to improve our access in the coming weeks and months. As a reminder, the three largest GPOs represent over 90% of our target beds. So we are very happy with our achievements to date. In tandem, we continue to engage with integrated delivery networks, or IDNs, focusing on those systems that exert high control to drive further downstream utilization of IGALMI. We are concentrating on 59 high-value IDNs with formulary voting currently scheduled for 21% of the targeted beds. As part of our ramp-up efforts, we've deployed a team of corporate account directors dedicated to coordinating with our sales team and driving the formulary and contracting activity. We have learned a lot about the deployment process in the last four months being in the field. In the first wave of our sales deployment, we chose 26 high-volume territories covering 700 target accounts and received resoundingly positive traction. We have been…

Thank you, Matt. I will now review our third quarter 2022 financial results. Net revenue for the quarter was $137,000, driven primarily by early trial of IGALMI with limited market access. Due to the company's direct shipping model to hospitals, no wholesaler stocking was expected. Research and development expenses were $22.1 million for the third quarter of 2022 compared to $11.9 million for the same period in 2021. The increase in R&D expenses was primarily attributable to an increase in clinical trial costs as the company expanded its BXCL501 clinical program for Alzheimer's related agitation, schizophrenia and bipolar-related agitation at-home use and MDD. Selling and general and administrative expenses were $17.1 million for the third quarter of 2022 compared to $14.9 million for the same period in 2021. The increase in SG&A expenses was primarily due to personnel and costs related to the launch of IGALMI in the United States. BioXcel Therapeutics reported a net loss of $41.8 million for the quarter -- for the third quarter of 2022 compared to a net loss of $26.8 million for the same period in 2021. Cash burn for the quarter was approximately $31.5 million, which is consistent with the first two quarters of 2022. As of September 30, 2022, cash and cash equivalents totaled approximately $232.3 million. Now, I'd like to turn the call back to Vimal.

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

Thank you. We will now be conducting our question-and-answer session. [Operator Instructions] Our first question today is coming from Greg Harrison from Bank of America. Your line is now live.

Hey, good morning, guys. Glad to see the progress. Thanks for taking our questions. So how should we be thinking about the timing from here on the 470 P&T decisions you cited and the rate at which you could expect those to convert into formulary wins?

Good morning, Greg. Thank you for your question. I will pass it on to Matt.

Yes. So, Greg, those are currently scheduled between now and the end of the year or into Q1 of next year. So we would expect that should those agendas actually go to vote on time, which these things can get pushed, but typically, we would expect the majority of them to happen on time, then they'll go to vote. And once the decision is made to put IGALMI on formulary, one of the things that I had provided in the Commercial Day is the expectation of uptake. And so, over the course of the year, both emergency department physicians and psyches, the majority of them would expect to try IGALMI within that first year post formulary access.

Got it. That's helpful. And then on the OnkosXcel side, what are your expectations for the differences between the 701 monotherapy arm and the KEYTRUDA combo. Just trying to think through mechanistically what the expectation could be for 701 response alone?

Vince, do you undertake that question? Vincent O’Neill: Sure. Happy to do that. Hi, Greg.

So, I think, the bottom line is, we don't know how 701 will behave as a monotherapy in a cold tumor. We know 701 has single-agent activity in a hot tumor, and that's now a normal and that was data generated by Point [ph] Therapeutics quite some time ago. We do know from the preclinical work that we've done, extensive preclinical work and we presented a lot of that. But it really seems to be the synergy between the checkpoint and 701. So that's probably the best answer I can give. And we don't know, but we think that primarily fundamentally, it is the synergy between the two drugs.

Got it. Well, thanks for taking questions and congrats on the progress, again.

Thank you, Greg.

Thank you. Next question is coming from Colin Bristow from UBS. Your line is now live.

Hey, good morning and thanks for taking my questions and congrats on the continued progress. First one on OnkosXcel, just curious when you expect to provide a more substantive update and sort of, details of the path forward and structure there? And then the second one, more of a broad sort of conceptual one on 501, just what is your best guess on when you'll be in a position to, I guess, A, report a sales number that you're sort of enthused about and B, sort of provide ongoing sales guidance? I know this is a much debated topic, but I think it's an important one from an investor standpoint. Thank you.

Thanks, Colin, for your questions. So regarding the sales guidance, as I said that we are in -- currently unprecedented area, because a product like IGALMI with a novel mechanism of action has never been launched in an institutional setting. So what we are doing, as you can see, is building our launch matrices. And once we build robust confidence in those matrices, based on that, we will start providing the guidance. So with that, I can pass it on to Matt to provide more details.

Yeah. So Colin, I think the way I would frame it up is this. I mean, we said that the process for formulary access typically takes 6 to 12 months. We have a lot of activity ongoing with just 26 reps in the field. That's about to change. And so the early progress that we're making is very encouraging. Certainly, getting on formularies when we can truly open up true demand driving activities. And we would expect that as these formularies are adopted in these hospitals that our team is going to be able to very rapidly pull through demand. Now we do know, and I mentioned this earlier, that there are uptake expectations and trial expectations based on market research. But some of the early enthusiasm from early formulary hospitals gives us good confidence that when the formularies do get approved in the hospital that the demand will shortly follow. So we feel really good about that. And just dovetail on Vamil's point, this is unprecedented. No neurocyte drug has been launched in the emergency department. And so we're breaking new ground here, but we feel really good about the response we're getting.

Great. And on the OnkosXcel sort of update path-forward structure?

Colin, can you please repeat that question?

Just in terms of your plans for OnkosXcel, just more details around the path-forward and structure there?

Sure. OnkosXcel as we presented the initial data update for our first 15 patients in SCNC that's very encouraging with 33% composite response rate and durable responses in a tumor where there is no approved therapy. We have completed the full cohort of now 28 patients, and that data is now getting analyzed and will be presented early next year. With this data in hand, we will explore all the possible strategic options, including partnering as well as third-party investments. OnkosXcel. We are very excited with the progress for 701, what we have seen in SCNC.

Okay. Great. Thank you.

Thanks, Colin.

Thank you. Next question is coming from Robyn Karnauskas from Truist. Your line is now live.

Hey. Hi. Thank you so much for taking my question. This is Anvesh [ph] on for Robyn. I have one on IGALMI. What are the main positive highlights and also pushbacks that you observed, if any, or -- and that you are hearing from your discussions with the peers and position?

Well, I mean -- so first of all, thanks for the question, Robyn. I haven't really heard any negative pushback on the product itself. Of course, directors are former are always going to question the price, but that isn't truly a negative. And actually, when we think about the value proposition of IGALMI and the potential for either throughput or the reduction of staff injuries and things of that nature, administrators and hospital pharmacists do understand that value. A lot of what we're hearing is the onset of action is very favorable. The expectation in just reading through the product profile and hearing our IGALMI story, they truly do understand the value proposition. So we're getting great response. Keep in mind that prior to launch, we conducted market research where we provided just a product profile. And just based on that product profile, the intent to use the drug was 20%, after we told the complete story that we're now using in the field that doubled. So they expect two out of every five patients to get this drug. That's a pretty compelling set of market research, and that's playing out in the field. We're hearing the same thing from our reps.

Okay. Great. And one more on dementia market. So looking ahead to the dementia market, how would a launch in nursing homes and long-term care facilities be different from schizophrenia and bipolar market? And do you anticipate adoption in dementia market being faster or slower than the schizophrenia and bipolar market?

So Robyn [ph], we're doing the work now to create a market entry strategy. And so we'll communicate that over time when we have better clarity on it. Suffice to say, the early market research that we're seeing is very compelling and that there's definitely an unmet need in this market. So we expect it to have really good penetration into that market.

And it's a different market dynamics, because it's been not in an institutional setting. So as Matt said, we are developing a market entry strategy and we lay it out more close to our data readout.

Okay. Got it. Thanks for taking my questions.

Thank you for your question.

Thank you. Next question is coming from Chris Howerton of Jefferies. Your line is now line.

This is A.J. [ph] for Chris. Two questions for me. My first one is about the launch. So are you seeing any early trends in use concentration geographic or otherwise? And do you have reorders yet, or is it still kind of too early?

So I'll answer the second part first. Yes, we've seen reorders. There's -- yes, I think the first part of your question, are we seeing any geographical adoption or concentrations geographically. That's not been the case. Where we're seeing our early orders is pretty much where there's interest or where there's early formulary access. And so that's anywhere within the 26 territories that we have currently deployed.

Got you. And okay. So my second question is about MDD. So is the intention for at home use similarly episodic space as in bipolar schizophrenia or what are the goals of the Phase 1 study, given that we already have a good idea of 501 safety profile?

Yes. This is Rob Risinger. The major depressive disorder will be a daily dosing regimen. It's not an as-needed regimen. So it will be taken in conjunction with their SS or SNRIs, serotonin-norepinephrine reuptake inhibitor. And we know that BXCL501 affects at least seven of the 17 items of the Hamilton Depression Rating Scale. So we know, for example, it will improve or augment sleep and treat insomnia. That's three items on the scale. For example, we know that patients reported regardless of the illness we've studied, they reported an improvement in anxiety. We know that's a major component of compression. So it will be a daily regimen. And that is the readout that we'll get from the daily dosing study. What is the regimen that can help people what the tolerability is given, again, on a day or even a twice-daily dosing?

So this is, again, our strategy to move the medical setting, and this will be at home setting like our SERENITY III program.

Okay. Thank you.

Thank you, AJ.

Thank you. Your next question is coming from Yatin Suneja with Guggenheim Partners. Your line is now live.

Thank you. Two for me as well. First one is on TRANQUILLITY. Could you just frame for us the expectations for that study is going to be down in the first half of 2023, what do you expect to show? And then if you can maybe further elaborate a little bit on the MAD side. It seems like you have completed a few dosing or dosing schedules. What are you learning from the safety perspective, given it is more of a daily dosing than episodic, just articulate that for us so far, the learning's that you have learned from the healthy voluntary studies? Thanks.

Sure. So I'll handle those in reverse your last question first. The study is ongoing, the daily dosing study in healthy volunteers, the fact that it's ongoing, and we continue to enroll cohorts testing greater and greater doses. It's an MAD study or multiple ascending dose study means that it has been well tolerated. We've not run into a stopping criteria, whereby you would not dose the next scheduled cohort. So we have tested a range of doses and continue to escalate. We've not reached what is commonly called a maximum tolerated dose. And I view that as a very positive thing. The study, when it will read out is when we finally have a maximum tolerated dose. When we reach that point, we'll then be testing it in conjunction with an SNRI. And that will then enable the trial in – or a proof of cause of trial in major depression. So turning now to your first question about TRANQUILITY, the readouts for the TRANQUILITY 2 study will be very similar to what we reported for TRANQUILITY 1. The primary efficacy measure is the change from baseline and the PANSS Excited Component at two hours after the first dose. We have repeated doses. So we'll report about the safety and tolerability of both first dose and every dose that they may receive whenever they have an episode of agitation over that three-month period. We will also be reporting some of the efficacy measures that are secondary or exploratory for example, the Pittsburgh Agitation Scale and clinical global improvement. And so those will be what we should be able to report in the first half of 2023.

So just Yatin, to add to what Rob said, it is pretty much a similar study, what we have seen in TRANQUILITY 1, which forms the basis for breakthrough therapy designation with the FDA. So pretty much everything is same except here, we are following up for three more months after first dosing each patient.

Got it. Thank you.

Next question is coming from Graig Suvannavejh from Mizuho Securities. Your line is now live.

Thank you. Good morning and congratulations on the progress. I did have a question just on what you reported for sales. And certainly, you have been telegraphing for some time, that it would be slow and gradual. I think perhaps this might have been a bit slower than we were anticipating. So as we think about the fourth quarter and perhaps into 2023, should the expectation be that it will be kind of similar to this and then there's a kind of inflection maybe after year 1. Just any color on how we should be thinking about the uptake curve? And then I have a follow-up. Thanks.

Yes. So Graig, it's Matt. I'll handle that one. So as we mentioned at Commercial Day and reiterated again this morning, we have over a dozen formulary wins. And so the expectation of uptake after formulary win, you know, you can kind of look back in the market research we did to see what that looks like. But it's roughly 37-or-so percent in emergency department and site physicians expect to try IGALMI the first six months or so post formulary approval. So I think things are falling in line based on those metrics. We expect there will be a very nice acceleration in formulary approvals over the next couple of quarters. And so we'll see improving metrics in true demand over that time. Keep in mind, we don't stock the wholesalers. So we are doing a drop ship model directly to the hospitals. So there's no stocking inventory to be concerned with. And we recorded this first quarter of revenue with 26 reps in the field. We're in the midst of expanding that. We will have 70 deployed by December 1, and we think that that's going to have a meaningful improvement and acceleration on all of these metrics. So I don't know if that's helpful in framing how you examine your uptake in your models. But I think that's how we think about it. And certainly, we feel really bullish about the early signs that we're seeing.

Thanks, Matt. Maybe my other question just has to do with the 137,000 in sales that you did, in fact, record by the math, if you divide by 105, it's about 1,300 strips. And I guess the question is those strips that were used were they bought basically or purchased through contracting, or were their hospitals that thought using the WAC price? I'm just trying to understand the dynamics of the actual films that were used? Thanks.

Yes. So one of the GPO contracts came online later in the third quarter. So a lot of those units would not have been impacted by that sort of contract. So you shouldn't really be thinking about too much gross to net deduction. There is some. But you wouldn't expect a lot of those contracts that would impact the GTN a little bit more to really be in place in a fulsome way in Q3.

Okay. Thanks, again.

Thanks, Graig.

Thank you. The next question is coming from Ram Selvaraju from H.C. Wainwright. Your line is live.

Thank you. Can you hear me?

Yes, we can hear you.

So just two quick ones. Firstly, I was wondering if you could comment on whether you expect inventory stocking to be a feature of any future channels label extension indications for IGALMI going forward? In other words, the absence of inventory stocking is a feature that is specific only to the initial approved indication and would not necessarily be applicable in the future? And then the second question is with respect to the cadence of completion of enrollment in the ongoing clinical trials of 501. If you could just give us a sense of that? I know you've provided us with the timeline for announcement of topline data. But if you could just give us a sense of when you expect those clinical programs to reach full enrollment, that would be helpful. Thank you.

So, hey Ram, it's Matt. So, on the wholesaler stocking question for future indications, typically, when you go into a retail setting, you would go full line in the channel, which means that we would stock the wholesalers and there'd be some stock inventory there. That is wholly dependent on whether we intend to use that traditional distribution model. Right now, that is a good operating assumption. And then secondarily for Alzheimer's dementia, we would have to cross that same bridge. Is it going to be in wholesale or is it going to be in specialty or some hybrid of each? So, I think as we get our market entry strategies in a more complete form, we can communicate that out to you at a later date. But if we go full retail, you would expect to see that there'll be some wholesaler stocking in the distribution centers.

Good morning Ram. Regarding your other question about the clinical trials. TRANQUILITY II is progressing on track. As you can see, we already had DSM meeting and that normally happens like when you have a well advanced in your clinical trial. So, enrollment is progressing well. As I indicated, there are two components, after first dosing, patients are followed for three months. So, we are well into that process and lots of patients have completed the three-month period as well. And we will provide a guidance once we have the full enrollment as we reach that point. In addition, for -- that was for the TRANQUILITY II. And Rob, you wanted to add something on the SERENITY III side?

Yes. SERENITY III, we'll be initiating before the end of this year. SERENITY III recall is similarly designed to SERENITY I and II, our pivotal trials, which enrolled in a matter of months, even during the peak of COVID, perhaps because of isolation, but we have now opened enrollment in the SERENITY III to both bipolar patients and patients with schizophrenia. So, we believe we're using the same site, same design, same raters. We believe this will be equally, if not faster enrolling than our pivotal trials were. And so we fully anticipate and are confident in reporting topline for SERENITY III in the first half of 2023.

Thank you.

Thank you, Ram.

Thank you. Our next question is coming from Sumant Kulkarni from Canaccord Genuity. Your line is now live.

Hey guys. This is Kyle speaking for Sumant. A few questions from us. Since your launch have any IDN notes on IGALMI and any instances where hospitals refused to move IGALMI to enrolling stage? And another question, any potential obstacles that can delay the timing of currently scheduled family decisions? And then maybe one last question. Any feedback from patients on self-administration and potential difficulties as well as any care giver experience on that?

So regarding your first question on IDNs. Right now, we have about 40,000 of our targeted IDN votes in process. So those are scheduled to vote, but we have not had votes yet. To date, we have not had any negative response for IDN votes. I did not, Kyle, get your second question. So I'll move to the third real quick and then maybe you can repeat it. But patients, we've only spoken to hospital pharmacists that have observed some of the velocity with IGALMI. And so the feedback that we're getting from them is that the drug is working as expected that the patients are able to take it, and that we've seen some improvements in discharge time, et cetera, and that it's well-tolerated to the profile that we present. So I haven't heard of any patient difficulty or anything like that or from administration perspective. So what was your second question, Kyle?

Second question is any potential obstacles that could delay the timing of the formulary decisions?

Well, I mean, I think one of the things that our guest speaker at the Commercial Day expressed that the P&T committees handle a lot of things beyond just drug evaluation for formulary inclusion, a lot of things. And so because the agendas and schedule can change, those are risks to getting formulary approval. But we've seen a pretty good cadence of P&T committees meeting. And assuming that they have a quorum, we would expect to be reviewed, and we believe that we put ourselves in a position for a positive formulary review.

That’s it from me.

Thank you. Your next question is coming from Corinne Jenkins from Goldman Sachs. Your line is now live.

Yeah. Good morning, everyone. Maybe just on SERENITY III, could you just share with us some of the powering assumptions there, particularly given we know pretty well the dose-dependent response with IGALMI?

Sure. We saw a very consistent dose-dependent response and we compare, for example, SERENITY I in patients with schizophrenia with Serenity II in patients with bipolar disorder and there's very little, precious little difference in their response. So knowing that it's a very consistent response, the FDA has agreed that we can enroll both patients with bipolar disorder or patients with schizophrenia in the trial. We have a total N, I believe, it's not on clinic trials that got it will be very shortly. But the end is much smaller than the SERENITY 1 or 2 trials. Again, we know it's a very high effect size, number needed to treat in the range of two or three. So our total end is around 200. And that gives us greater than 90% power to detect a difference from placebo in patients with schizophrenia or bipolar disorder.

Okay. And then, on the TRANQUILITY 3 study, just curious, what are the gating factors that are still standing between now and initiating that trial in December?

I think the gating factor has been to make sure that TRANQUILITY 2 can be completed on time. And these are pretty much same CRO like same size, similar size pretty much. And also gaining the experience and learning from TRANQUILITY 2 make sure we can deploy all of that experience and completely focus on TRANQUILITY 3 when it does begin as a TRANQUILITY 2 is tailing off. So there was -- otherwise, there was no other gating factor.

Okay. Understood. And then, just what does a December initiation, imply with respect to potential readouts? Is that kind of a 2023 idea, or is there any reason to think it would be earlier or beyond that?

I think once we have our first patient dose and we have good handle on the TRANQUILITY full enrollment then we will be able to provide guidance on TRANQUILITY 3 data readout, when the data readout is expected. But as you can see, size is pretty much similar to TRANQUILITY 2 and how long did it take us to complete the TRANQUILITY 2 starting from first dose -- patient dose, which was somewhere around May timeframe.

Yeah. Make sense. Thank you.

Thank you. We reach 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 interest in BioXcel Therapeutics. Have a great day.

That does conclude today's teleconference and Webcast. You may disconnect your line at this time. And have a wonderful day. We thank you for your participation today.