BioXcel Therapeutics, Inc. Q2 FY2023 earnings call

• Strategic reprioritization: Company is making changes across business, including commercial reprioritization (shifting resources to retail pharmacy/outpatient from institutional for IGALMI), focusing development on BXCL501 for at-home agitation opportunities (SERENITY for bipolar/schizophrenia, TRANQUILITY for Alzheimer's agitation), pausing major depressive disorder program, and prioritizing AI-driven innovation to strengthen neuroscience clinical talent.
• TRANQUILITY program: Positive top-line data from TRANQUILITY II with 501 showing statistically significant reduction in PEC score, but investigator misconduct occurred in the trial; company is investigating, auditing data, and requesting FDA meeting. TRANQUILITY III enrollment paused due to higher than expected agitation episode frequency.
• Workforce reduction: Planning to reduce workforce from ~190 to 80 employees, with majority cuts in commercial organization, maintaining a core 12-member team for market access, etc.

Net revenue of IGALMI was approximately $457,000 for the second quarter of 2023. Research and development expenses were $27 million for Q2 2023 compared to $17.9 million in Q2 2022. Selling, general and administrative expenses were $25.9 million for Q2 2023 compared to $18.4 million in Q2 2022. BioXcel had a net loss of $53.5 million for Q2 2023 compared to a net loss of $37.7 million in Q2 2022. Cash and cash equivalents totaled $127.5 million as of June 30, 2023.

• Cash runway: Current cash and cash equivalents estimated to last through mid-2024; exploring ways to extend cash runway and in discussions with strategic financing partners to amend agreements.
• OnkosXcel: Examining strategic alternatives including partnerships or financing.

• Investigator misconduct in TRANQUILITY II trial, which has impacted the summer's progress.
• Uncertainty around FDA feedback and potential need for additional studies for TRANQUILITY program.
• Risk of not meeting milestones to access additional capital under financing agreements, affecting cash runway.

Q: How are you thinking about the outlook for the company with this restructuring and how do you think investors should think about the story at this point?

A: Vimal Mehta is excited about the outlook, laser focused on at-home opportunities for BXCL501, including SERENITY and TRANQUILITY programs, and looking forward to BXCL502 update at R&D Day.

Q: Could you give us some more color on why you made the decision to shift focus to the at-home setting and away from institutional medical setting?

A: Hospital setting was more difficult to penetrate than anticipated, especially post-COVID; will continue to support hospital customers via targeted contracting and small core team.

Q: How exactly does the FDA defined acute treatment of agitation in terms of number of episodes or instances of film usage per month?

A: Matt Wiley discussed market research on episodes and pricing, noting volume of episodes in mild Alzheimer's dementia patients and appetite for the price point.

Q: How is the new cash runway affected by potential need for redo of TRANQUILITY II?

A: Vimal Mehta stated they are doing an audit and meeting with FDA, will comment further after feedback.

Q: How do you expect the split between R&D and SG&A going forward?

A: Richard Steinhart said commercialization will have a small core team of ~12 people, reducing SG&A expenses; R&D expenses should go down as SERENITY III and TRANQUILITY II implementation is completed.

Q: What is the approximate market opportunity breakdown for dementia setting between assisted living facility versus nursing home?

A: Matt Wiley said ~80% of Alzheimer's disease agitation patients are in at-home or assisted living facility settings, with over 50% of episodes in those settings.

Q: What are the best options to further extend runway beyond mid-2024?

A: Vimal Mehta mentioned working with strategic partners, corporate partners, and monetizing core assets; Robert Risinger discussed potential study design if FDA requires additional study.

Q: What are the proposed features in the protocol amendment for SERENITY III Part 2?

A: Vimal Mehta said selected dose 80 micrograms based on modeling, modifying protocol and submitting to FDA, with primary focus on safety and efficacy trends over 12 weeks.

Q: Is it realistic to market directly to generalist physicians for at-home setting and thoughts on partnership for IGALMI?

A: Matt Wiley discussed targeting psychiatrists and relevant physicians for bipolar/schizophrenia, and potential partnerships for Alzheimer's dementia, noting ongoing work on market entry strategy.