Q1 2024 BioXcel Therapeutics Inc Earnings Call

Participants

Vimal Mehta; President, Chief Executive Officer, Director; BioXcel Therapeutics Inc

Vincent O'Neill; Executive Vice President, Chief of Product Development and Medical Officer; BioXcel Therapeutics Inc

Richard Steinhart; Chief Financial Officer, Senior Vice President; BioXcel Therapeutics Inc

Matthew Wiley; Senior Vice President, Chief Commercial Officer; BioXcel Therapeutics Inc

Robert Risinger; Chief Medical Officer; BioXcel Therapeutics Inc

Colin Bristow; Analyst; UBS

Ram Selvaraju; Analyst; H.C. Wainwright & Co.

Alec Stranahan; Analyst; Bank of America

Avantika Joshi; Analyst; Mizuho Securities

Sumant Kulkarni; Analyst; Canaccord Genuity Group Inc.

Samir Devani; Analyst; Rx Securities

Presentation

Operator

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 ended 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.

Vimal Mehta

Thank you, operator, and 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 level. 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 two 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 their plans for both late-stage tranquility and synergy programs. While Vince will discuss the details of this program shortly.
I want to point out that we believe SERENITY At-Home may provide us with a near-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 3 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 programs, we have further expanded intellectual property for our neuroscience franchise.
We were recently granted two new patents in US 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 partnership 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 eight US patent for our approved drug regarding me, listed in the FDA's Orange Book with two additional recently allowed patents eligible for listing once issued by the US Patent and Trademark Office.
Turning to IGALMI commercialization traction, our revised and focus strategy is yielding results as we increase net revenue in that 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. We also continue to optimize operational efficiencies.
So to wrap up, we believe our business fundamentals are strong. We are advancing to 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.

Vincent O'Neill

Thank you, Vimal. I appreciate the opportunity to review the progress we've made with our late-stage clinical development programs for [Fiber One]. Since speaking with you in March, we received the minutes from our meetings with FDA regarding the development plans for the TRANQUILITY and SERENITY programs.
Based on that feedback, we have developed and unknowns the designs of both pivotal Phase 3 trials. We are pleased to have clarity on development path, which may lead to potential NDA submissions, both for Alzheimer's related agitation and bipolar and schizophrenia related agitation.
As a reminder, in the TRANQUILITY program, we're evaluating Fiber One 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 two hours post first dose.
It's important to note that this is the same endpoint used in previous positive TRANQUILITY trials and in studies that supported the FDA approval IGALMI. In the SERENITY program, we're evaluating the potential at-home use of Fiber One 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, albeit 120 microgram dose of 501 over a 12 week period. The primary objective is safety with efficacy measures as exploratory endpoints.
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 one 80 microgram dose of IGALMI after seven 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 2 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 Asc 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?

Richard Steinhart

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.
For now, I'd like to turn the call back to Vimal.

Vimal Mehta

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

Question and Answer Session

Operator

(Operator Instructions) Colin Bristow, UBS.

Colin Bristow

Hey, good morning and thanks for taking the questions. So I think the major question is investors are wrestling with what is the timeline date to 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 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. Thank you.

Vincent O'Neill

Okay. So sorry, we had a technical glitch on this site. So Colin, thanks for the question. Just trying to 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 and look to TRANQUILITY II, a very similar trials in design. So we would anticipate a timeline and a cost very similar and to the TRANQUILITY II system.

Colin Bristow

Okay. And on the FDA requirement for 12 months safety?

Vincent O'Neill

Yeah. 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.

Operator

Ram Selvaraju, H.C. Wainwright.

Ram Selvaraju

Thanks very much for taking my questions. Back to IGALMI, can you offer us some additional color regarding the status of the group contracting discussions? And when do 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 for you?

Matthew Wiley

Yeah, good morning. This is Matt. So yes, the answer to 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 out 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 it's really important for continued growth throughout the year.

Ram Selvaraju

And then secondly, with respect to the earlier stage, neuroscience asset, are you exploring strategic options for these or is to this effectively continue to develop them in-house? Thank you.

Vimal Mehta

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

Operator

Alec Stranahan, Bank of America.

Alec Stranahan

Hey, guys, good morning. Thanks for taking our question. Just two from us, maybe both on the metastatic [PDEC] data we should be expecting at ASCO. I guess maybe just a 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? Thanks.

Vincent O'Neill

Sure, morning, Alec. This is Vince. So I'll take your second part of your question first, KEYTRUDA is not active as a monotherapy. I think that's generally accepted, pancreatic cancer and 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 at second line refractory pancreatic cancer, approximately 40 patients in total, Simon two-stage and Stage one, about 20 patients followed by another 20 patients.
So that's the general gist of the 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 in the pancreas is a cold tumor and it's also surrounded as you'll know by a fibrous layer, which again makes it very difficult to treat. We have no published data that show that 701 essentially makes that collagen disappear. So there's multiple reasons to anticipate encouraging results, you'll see those results in June.

Operator

Avantika Joshi, Mizuho Securities.

Avantika Joshi

Hi. This is Avantika on for Greg. Our question is up 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 them one after another? Thanks.

Vimal Mehta

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 a 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 and then we will take the decision of prioritizing one over the other or a stepwise approach.

Operator

(Operator Instructions) Sumant Kulkarni, Canaccord Genuity.

Sumant Kulkarni

Good morning. Thanks for taking my questions. I have three. So how would you frame the capital needs 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.

Vimal Mehta

Hi, 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 3 trial for confirmation of efficacy and safety. So we expect that trial cost to be very similar to the TRANQUILITY. So we have very good like an idea about what the per-patient cost is. And in terms of timelines, it will be pretty much similar.
While when we think of the SERENITY At-Home is much smaller number of patients, almost 100 patients. So that is recruitment is much faster than what we have observed in our previous three trials, SERENITY I, II and III and cost is much lower, almost 50% now what it would be in TRANQUILITY. So we are trying to look at both opportunity.
And as you know, with SERENITY, we can be potentially if we can complete that trial file an NDA in 2025. So we are very synergistic because we already have a commercial partner. So I would say that we have very good handle and based on our current cash, which was reported $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.

Sumant Kulkarni

Got it. And then I'll ask the second and third questions in one shot here. So in TRANQUILITY In-Care, what's a 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 costs, 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.

Vincent O'Neill

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

Robert Risinger

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.

Vincent O'Neill

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

Sumant Kulkarni

Yeah, sure. Do you have did 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?

Richard Steinhart

Yeah, thanks. It's Richard. How are you? The answer is we continually to evaluate. 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.

Operator

Samir Devani, Rx Securities.

Samir Devani

Hi, guys. Thanks for taking my question. I just wanted to come back to the comment about the 12 safety study that would be required as for the TRANQUILITY In-Care study. I just want to confirm 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?

Vincent O'Neill

Good morning. This is Vince. So I think as we've said, we will go to the FDA and discuss not the need, of course, for long-term safety, that's clear. And for 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 requirement, I think your question was when we ran the numbers and requirements, I mean those are obviously set by ICH guidelines, so 300 at six months and 100 at one year. We would need the long-term safety data outcome to support an SNDA submission.

Vimal Mehta

And Samir, to answer your question, when do we expect to initiate this study. As Vince mentioned, 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.

Samir Devani

Great. Thanks very much.

Operator

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.

Vimal Mehta

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

Operator

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