BioXcel Therapeutics, Inc. (BTAI) Q1 2024 Earnings Report, Transcript and Summary

Good morning, and welcome to the BioXcel Therapeutics First Quarter 2024 Earnings Conference Call. [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 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 annual report on Form 10-K for the year ending December 31, 2024, which can be found at bioxceltherapeutics.com or on www.sec.gov and which will be updated in its quarterly report on Form 10-Q for the quarterly period ended March 31, 2024. As a reminder, today's call is being recorded. Speaking on today's call are Dr. Vimal Mehta, Chief Executive Officer; Dr. Vince O'Neill, Chief of Product Development and Medical Officer; and Richard Steinhart, Chief Financial Officer. They will be joined in the Q&A session by Dr. Frank Yocca, Chief Scientific Officer; Matt Wiley, Chief Commercial Officer; and Dr. Rob Risinger, Chief Medical Officer of Neuroscience. It is now my pleasure to turn the call over to Dr. Mehta. Please go ahead.

Thank you, operator. Good morning, and thank you for joining us. 2024 has been an important period of progress for BioXcel Therapeutics, both at the program and corporate levels. Starting with our Neuroscience program. Our journey with BXCL501 is well underway to expand the market potential for our agitation portfolio into the retail setting. We are focused on potentially bringing this novel treatment option for bipolar and schizophrenia-related agitation into the home setting. We are also dedicated to expanding into a much larger indication, Alzheimer's-related agitation both in the in-care and home setting. We believe these 2 opportunities are unique with no known FDA-approved therapies and represent transformative value drivers for the company and our shareholders. We are pleased to be advancing the plans for both late-stage TRANQUILITY and SERENITY programs. While Vince will discuss the details of these programs shortly, I want to point out that we believe SERENITY At-Home may provide us with a nearer term opportunity to create shareholder value through a potential label expansion for the previously approved 120-microgram dose. The TRANQUILITY In-Care trial is similar in design to our positive Phase III TRANQUILITY II trial, we see a larger long-term growth potential with this program. We believe there is a significant upside to be the first to enter this untapped market. In addition to progressing our clinical development program, we have further expanded intellectual property for our Neuroscience franchise. We were recently granted 2 new patents in U.S. and Japan, we believe this provides long-term protection for our assets and gives us a solid foundation from which to pursue further development of BXCL501 and potential partnerships in key international markets. Our IP portfolio is substantial. As of April 2024, we have 30 granted or allowed patents and more than 140 additional patent applications in prosecution. We also have 8 U.S. patents for our approved drug, IGALMI, listed in the FDA's Orange Book, with 2 additional recently allowed patents eligible for listing, one issued by the U.S. Patent and Trademark Office. Turning to IGALMI commercialization traction. Our revised and focused strategy is yielding results, as we increased net revenue in the Q1 2024 by 55% over the Q4 2023. This growth is being primarily driven by volume contracting, new customer acquisitions, increased utilization from existing customers and the recently implemented permanent J-Code for IGALMI. We are seeing this momentum carrying forward into the second quarter with carton volume already exceeding that of the first quarter this year. We are pleased that IGALMI is reaching a greater number of patients and health care providers, and expect this momentum to continue. Both institutional and home setting market for bipolar and schizophrenia-related agitation are symbiotic and commercially strategic. We are excited about achieving an uptick in IGALMI utilization and having a clear development path for the home setting. Turning now to the corporate front. We are pleased to have completed the $25 million registered direct offering we recently announced. This transaction provides an important bridge to continue advancing our business strategy and clinical trial plans. We remain focused on further strengthening our balance sheet and exploring multiple financing options, including potential partnerships to extend our cash runway. We also continue to optimize operational efficiencies. To wrap up, we believe our business fundamentals are strong. We are advancing 2 late-stage clinical programs, strengthening intellectual property and seeing progress with commercialization of IGALMI. These accomplishments are underpinned by a compelling value proposition for driving future growth for the company. With that, I will turn it over to Vince.

Thank you, Vimal. I appreciate the opportunity to review the progress we've made with our late-stage clinical development programs for 501. So since speaking with you in March, we received the minutes from our meetings with the FDA regarding the development plans for the TRANQUILITY and SERENITY programs. Based on that feedback, we have developed and announced the designs of both pivotal Phase III trials. We are pleased to have clarity on development paths, which may lead to 2 potential sNDA submissions, both for Alzheimer's-related agitation and bipolar and schizophrenia-related agitation. As a reminder, in the TRANQUILITY program, we're evaluating 501 as an acute treatment for agitation associated with Alzheimer's dementia. Our TRANQUILITY In-Care trial is designed as a double-blind, placebo-controlled multicenter study to evaluate the efficacy and safety of a 60-microgram dose of 501 over a 12-week period. The primary endpoint is change in PEC score at 2 hours post-first dose. It's important to note that this is the same end point used in previous positive TRANQUILITY trials and in studies that supported the FDA approval of IGALMI. In the SERENITY program, we're evaluating the potential at-home use of 501 for agitation associated with bipolar disorders or schizophrenia. Our SERENITY At-Home trial is designed to be a double-blind, placebo-controlled multicenter study to evaluate the safety and efficacy of a 120-microgram dose of 501 over a 12-week period. The primary objective is safety, with efficacy measures as exploratory end points. Again, we've taken a thoughtful and deliberate approach to our trial designs, with the ultimate goal of accessing the retail setting in mind, and we look forward to advancing our plans. The trial protocols have now been finalized and are being shared with the FDA and our CRO is for clinical site selection. In our PMR study, we recently completed the enrollment of 22 patients with frequent episodes of agitation for bipolar disorders or schizophrenia in that open-label study. It's designed to evaluate whether tolerance, tachyphylaxis or withdrawal occur following repeat dosing of the 180-microgram dose of IGALMI after 7 days of repeated treatment. These trial results can help address the language around limitations of use and warnings and precautions in IGALMI's current label. We are performing data cleaning currently and look forward to announcing results from this PMR study shortly. I'd like to end my remarks with a few comments about our lead immuno-oncology asset, 701. Earlier this year, we announced the completion of patient enrollment in the safety portion of the Phase II trial of 701 in combination with KEYTRUDA in metastatic pancreatic ductal adenocarcinoma. The trial is being led by Georgetown Lombardi Comprehensive Cancer Center. We are pleased that a late-breaking abstract was selected for presentation at the 2024 ASCO Annual Meeting and look forward to sharing the data on June 1 with you. We have formally initiated the process for monetization of this asset. I would now like to turn the call over to Rich, who will review our financial results for the first quarter of '24. Richard?

Thank you, Vince. Net revenue from IGALMI was $582,000 for the first quarter of 2024 compared to $206,000 for the same period in 2023, a 182% year-over-year increase. Sequential quarterly revenue increased 55% in the first quarter of 2024 from the fourth quarter of 2023. The increased revenue for both periods was primarily attributable to increasing demand with our existing customer base, the addition of new customer orders and volume-based contracting. Research and development expenses were $11.4 million for the first quarter of 2024 compared to $27.8 million for the same period in 2023. The decreased expenses were primarily attributable to the wind down of the SERENITY III and the TRANQUILITY II and III trials, as well as decreased professional fees, personnel and related costs. Selling, general and administrative expenses were $13.3 million for the first quarter of 2024 compared to $23.6 million for the same period in 2023. The reduced expenses were primarily attributable to a decrease in personnel and costs associated with the commercialization of IGALMI compared to the first quarter of 2023. The reduced expenses were partially offset by increased professional fees during the first quarter of 2024. BioXcel Therapeutics had a net loss of $26.8 million for the first quarter of 2024 compared to a net loss of $52.8 million for the same period in 2023. The company used approximately $17.7 million in operating cash during the first quarter of 2024. Cash and cash equivalents totaled $74.1 million as of March 31, 2024. This includes the $25 million from the registered direct offering announced on March 25, 2024. This investment extends our cash runway beyond our previous guidance of mid-2024 into the second half of 2024. Now I'd like to turn the call back to Vimal.

Thank you, Rich. I'd like to add that in the coming weeks, we plan to attend several upcoming investor health care conferences and look forward to continuing our discussions. We would now like to open the call for questions. Operator?

[Operator Instructions] Our first question is from Colin Bristow with UBS.

So I think the major question investors are wrestling with are what is the time line for the data approval in Alzheimer's agitation? And what do you expect the cost of this program to be? And then just as a kind of follow-up on that. With regards to this path to approval in Alzheimer's agitation, can you say what FDA has specifically said regarding the need for the 12-month safety data?

[Operator Instructions]

Can you hear us now?

Yes, we can.

Okay. So sorry, we have a technical glitch on the site. So Colin, thanks for the question. Just to try and answer that, and sorry for the delay. We can't give specific dates today, this morning. But what I can see in terms of the TRANQUILITY In-Care study, look to TRANQUILITY II, they're very similar trials in design. So we would anticipate a time line and a cost very similar to the TRANQUILITY II study.

Okay. And on the FDA requirement for 12-month safety?

Yes. So I think as we've said, we will reapproach the FDA to discuss specifically the details around the long-term safety trial. But the need for that trial is clearly not in doubt. That has to be done, and that would form part of the package for the TRANQUILITY In-Care sNDA.

Our next question is from Ram Selvaraju with H.C. Wainright.

With respect to IGALMI. Can you offer us some additional color regarding the status of the group contracting discussions and when you anticipate the impact to net revenue to manifest itself in the coming quarters? Are there any important GPO purchasing contracting decisions expected in the coming months, please?

This is Matt. So yes, the answer to the question is we continue to matriculate contracts. We had multiple contracts in Q1. We continue to execute the plan, and over Q2, we've seen an increase in unit volume. In fact, as Vimal said in the prepared remarks, we've already seen unit volume increase more than what we posted in Q1 so far in Q2. So the contracting strategy, the volume contracting strategy is working. We see that existing customers continue to order, and we also see the acquisition of new accounts, which I think is really important for continued growth throughout the year.

And then secondly, with respect to the earlier stage Neuroscience assets, are you exploring strategic options for these? Or is the aim to effectively continue to develop them in-house?

Ram, this is Vimal. Our focus, as I mentioned, is primarily on the 2 late-stage clinical program, SERENITY At-Home and TRANQUILITY In-Care. We are dedicating all our resources to those programs. But early programs certainly will be explored if there is interest for potential partnership. And that, we plan to explore.

Our next question is from Alec Stranahan with Bank of America.

Just 2 from us. Maybe both on the metastatic PDAC data we should be expecting at ASCO. I guess maybe just high level, walk us through how 701 is designed to treat these patients. And then as a follow-up, what would we typically expect with KEYTRUDA monotherapy in this line of treatment in these patients?

Alec, this is Vince. So I'll take the second part of your question first. KEYTRUDA is not active as a monotherapy. I think that's generally accepted. Pancreatic cancer is a very, very cold tumor, really the definition of a cold tumor. The only exception would be MSI-high pancreatic cancer. KEYTRUDA has a separate label to cover tissue-agnostic MSI-high patients. So that's 1% approximately, of pancreas. So KEYTRUDA is not active there. Our approach is to combine with KEYTRUDA, so 701 plus KEYTRUDA in a combination. It's second-line refractory pancreatic cancer, approximately 40 patients in total, Simon 2-stage, stage 1 of about 20 patients followed by another 20 patients. So that's the general gist of the approach. The reason we're doing the study at all is because we have very strong and encouraging preclinical data for the combination, which we've presented. And just lastly, on the point that pancreas is a cold tumor. And it's also surrounded, as you all know, by a fibrous layer, which, again, makes it very difficult to treat. We've now published data that show that 701 essentially makes that collagen disappear. So there's multiple reasons to anticipate encouraging results, and you'll see those results in June at ASCO.

Our next question is from Avantika Joshi with Mizuho Securities.

Can you hear me?

Yes.

This is Avantika on for Graig. Our question is between TRANQUILITY In-Care and SERENITY At-Home, which trial would you say is the priority for you guys? And would you run these studies concurrently, or would it make more sense to run than one after another?

Thanks, Avantika. Strategically, we would prefer to run both trials in parallel. As I indicated, both are big value drivers for the company. There are no approved FDA therapies and they represent the transformative value drivers. SERENITY, on one hand, is a near-term opportunity through label expansion for the 120-microgram approved dose, while TRANQUILITY is a much larger and longer-term opportunity with a significant upside and being first to market. So to answer your question, we prefer to run both. If we have to, then we will take the decision of prioritizing one over the other or stepwise approach.

[Operator Instructions] Our next question is from Sumant Kulkarni with Canaccord Genuity.

I have 3. So on -- how would you frame the capital needs that you -- for running TRANQUILITY and SERENITY as they stand now relative to your current cash and the additional $25 million that you'll need to raise in November to conform to your financing agreement? That's the first.

Sumant, this is Vimal. As Vince indicated, TRANQUILITY In-Care trial is very similar to the TRANQUILITY II trial, where we had the positive data. We are trying to have another well controlled Phase III trial for confirmation of efficacy and safety. So we expect the trial cost to be very similar to the TRANQUILITY. So we have very good -- like idea about what the per patient cost is. And in terms of time lines, it will be pretty much similar. While when we think of the SERENITY At-Home, it's a much smaller number of patients, almost 100 patients. So that is -- recruitment is much faster, what we have observed in our previous 3 trials, SERENITY I, II and III. And cost is much lower, almost 50% of what it would be in a TRANQUILITY. So we are trying to look at both opportunity. And as you know, with SERENITY, we can be, potentially, if we can complete the trial, file the sNDA in 2025. So it's very synergistic because we already have a commercial product. So I would say that we have very good handle. And based on our current cash, which was reported at $74 million, we are laying out what the trial cost is and what the capital requirement is and how to finance the trials, and previously answered, then we prioritize or we use a stepwise approach.

Got it. And then I'll ask the second and third question in one shot here. So in TRANQUILITY In-Care, what's the general target percentage of patients you expect to enroll that might already be on Rexulti as a chronic treatment for agitation in Alzheimer's. And going back to cost, do you think that the operating expense base at the company as it stands currently is optimized relative to the things you need to execute on?

So on Rexulti, I'll ask my colleague, Dr. Risinger to come in here. I don't think we exclude or...

We do not exclude patients who are on Rexulti or any other antipsychotic. And I'll point back to the TRANQUILITY II data, which demonstrated about 50% of patients are on concomitant antipsychotics.

And your last question, Sumant, I'm sorry, can I ask you to repeat it?

Yes, sure. Do you think the operating expense base at the company as it stands currently, is optimized relative to all the things that you need to execute on in the near to midterm here?

Yes. Thanks, Sumant. It's Richard. The answer is we continue to evaluate the operating overhead, and we continue to look at ways to make it more efficient and optimize it. So that's an ongoing process here.

Our next question is from Samir Devani with Rx Securities.

I just wanted to come back to the comment about the 12-month safety study that would be required for the TRANQUILITY In-Care study. I just want to confirm that, that would be required before you make the sNDA? And also, now that you've essentially completed these discussions with the FDA, what's the trigger left now to initiate that trial?

Sure. This is Vince. So I think as we've said, we will go to the FDA and discuss the -- not the need, of course, for long-term safety. That's clear. But the details, and that will fundamentally be around the data that we collect in the study. So it's going to be a protocol discussion, which, of course, is typically why we go and discuss things with the FDA. In terms of the -- I think your question was maybe around the numbers and requirements. I mean, those are obviously set by ICH guidelines. So 300 at 6 months and 100 at 1 year. We would need the long-term safety data to support an sNDA submission.

And Samir, to answer your question, when do we expect to initiate this study. As Vince mentioned, and now we are sharing the protocol with the FDA and given it to the CROs for site selection. And once we have the financing in place up to the data readout, we will initiate the study. We are getting the technical readiness.

We have reached the end of our question-and-answer session. I would like to turn the call back over to management for closing remarks.

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

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.