BioXcel Therapeutics, Inc. (BTAI) Earnings Call Transcript & Summary

All right. Welcome, everybody, to the afternoon session of the BofA Virtual Health Care Conference. I'm Scott Puckhaber, one of the biopharma analysts here at BofA. We're really thrilled to have BioXcel present with us today and have CEO Vimal Mehta with us. Also I have Geoff Meacham on the line as well. So with that, I'll hand it over to Vimal for some initial prepared remarks, and then we'll get into the Q&A. So Vimal, you there?

Yes, I'm here. Good afternoon, everyone. I'm Dr. Vimal Mehta, Chief Executive Officer of BioXcel Therapeutics, a clinical-stage company utilizing artificial intelligence approaches to identify and advance novel opportunities in neuroscience and immuno-oncology. I want to thank Geoff and Scott for organizing this conversation and providing us with another opportunity to stay in communication with our investors during this challenging time. As a reminder, I will be making forward-looking statements regarding our financial outlook in addition to regulatory product development -- and regulatory. Before we begin, I want to highlight that today, we announced the completion of patient enrollment in our SERENITY program, 2 Phase III studies of BXCL501 for the acute treatment of agitation in patients with schizophrenia and bipolar disorder. We look forward to reporting top line data from both trials in July of 2020. So those are kind of, Scott, my opening remarks. I will pass it back to you.

Great. So I guess I wanted to start on a topical COVID-19 opportunity. There seems to have been a number of articles of late describing delirium associated with patients coming off ventilators from coronavirus. So given these patients will have IVs already in and maybe put on IV Dex for agitation, what is the potential market opportunity for 501 and delirium as either step down treatment or other in the future?

Great question, Scott. It's -- as you said, it's very topical. We were very surprised to see so many articles coming out, which were basically indicating that COVID-19 is creating a delirium factory. And obviously, we are in the middle of clinical planning stage for hyperactive delirium and preparing to initiate our Phase Ib and II trial. So we've been talking to a lot of key opinion leaders who are the experts in the field, and they are giving us the inside view of what's really happening in ICU. So delirium is a frequent complication in the ICU setting. And currently, there has been a significant rise in delirium due to COVID. While IVs are common having to bolus dose over 10 minutes followed by a continuous infusion, that required monitoring of rates, CV status and replacing the bag periodically and places a burden on the health care staff. In addition, some of the agitated patients may not be very friendly with the IV because they may just try to take them out. And what we have been told is, once the post intubation, some of these patients, if they are not treated, that delirium can stay over several days or weeks. So while they may be in ICU and they may have IV, once they are improving from their disease and to control their delirium and agitation, a film can play a very important role in calming those patients. So there has been a very clear evidence with -- that it can play both roles in delirium and agitation. But in our trial, we intend to start with hyper treating agitation resulting from delirium like hyperactive delirium. And then we may have secondary endpoints related to the delirium. So that's kind of company strategy. I wish, we were in a position to help these patients now, but our drug is still an investigation drug. So we look forward to developing in delirium and hopefully helping any patient that comes out of the ICU post intubation.

Vimal, this is Geoff. I just wanted to ask you, you mentioned at the onset with the completion of enrollment for 501. You guys are also looking at biomarkers for agitation. Just want to get a sense from you for how you think about the potential cadence of new indications following the Phase III? And what maybe you could learn from biomarkers, just given your history as a company finding -- being very data sensitive?

Right, Geoff. So as you know, all of you that like we have finished the SERENITY trial, which is in schizophrenia and bipolar 2 indications. In addition, we have plans to expand into dementia, opioid withdrawal symptoms and delirium, as we talked about. It's quite a bit of work and heavy lifting to go across each indication because it's quite intensive and it takes time to conduct each study, first do Phase Ib/II and then go to the pivotal trial, what we did in our SERENITY program. In -- while talking to our experts, we entered into a relationship with Yale. And they suggested that if we can identify certain biomarkers that could form a basis to have conversations with FDA that if they will allow us to get a more broader indication with FDA, particularly, wherever this hyperarousal state exists. So the aim of the biomarker study is to identify biomarker associated with agitation such as skin conductance, response, heart rate variability, blood pressure. And we have chosen schizophrenia patients, but it can be expanded outside that. And the specific goal of that study is, EEG could address duration of action in the CNS during dosing, after dosing, standing systolic blood pressure will help to define which patient benefits most from 501, defining the biomarker will allow expansion of use of 501 in acute indications as well as it could be in some chronic indications, including post-traumatic stress disorder and alcohol withdrawal symptoms, where again, there is a hyperarousal state. So we are looking at this biomarker study as more strategically and seeing what signs we can bring forward that will help design our future indications and/or work with the FDA to see if we can get more broader agitation label at some point once we have success with first few indications. So that's how we see the role of the biomarkers. And sensitive early biomarkers for agitation that are responsive to BXCL501 will certainly be very helpful, and we will try to integrate these in our -- as our secondary endpoint once this study is completed and we build confidence in those biomarkers.

Great. This is Scott again. Maybe just switching a little bit. Another company in the agitation space recently released positive Phase III data for their chronic agitation therapy for Alzheimer's. So can you talk a little bit about the potential impact of a chronic therapy on the market for Alzheimer's agitation? And how that may be a headwind or tailwind for 501 in the future?

So we, as a company and our team were thrilled to see there was some success in the space of treating agitation in dementia -- in Alzheimer's/dementia. So there are a couple of players who are trying to develop drugs in that space. Our view is that agitation develops as Alzheimer's/dementia progresses, and it manifests into pre-agitation to mild- to moderate to severe agitation from intermittent to chronic. So basically, it's a manifestation of the -- due to the disease, these are the manifestations that happen in the patient. And there is a need to treat both the pre-agitation, you can avoid agitation going to more severe form or if it is sporadic like 2x a month, you want to be able to control with something that is the acute treatment. And if it is even subchronic, like 2x a week, then you can control it because as you know, all elderly people are on so many other drugs. And adding on other combination of those drugs that are being developed for chronic, it will be relevant when somebody is getting that agitation on a daily basis or multiple times. And then it will make sense to put them on the chronic. So the way we look at the opportunity is both 501 and any drug that will get developed in chronic agitation will be very complementary. It will help build the market. It will create awareness with the community across. So it's a very positive thing for patients that if either or both drugs can succeed because they are serving different manifestations of the disease. So we think that particularly chronic agitation drug can reduce number of episodes, but it's not taking away all the edge, still patient will be agitated. So acute agitation drug like 501 can play a very important role. All patients don't respond to chronic agitation. So those what are left over, they will always need help. And also, it takes long time for any chronic agitation to work, so patient needs help during that time. So what we see is a very complementary role of 501 and market opportunity is so large that we think that we have a big space to occupy. So we are super excited. We are in the process of right now, our Phase Ib/II trial, and we are looking forward to completion of that trial. The purpose of that trial is very simple that can we identify effective and tolerable dose because these patients are frail, and we had the IV Dex data in which we saw patient responding in Alzheimer's. So we are very encouraged with that data, and we are utilizing those exposure levels in deciding our doses. In addition to that, like, we want to identify -- we are using 3 exploratory endpoints currently. That would be ideal. In fact is the right instrument we can use to measure agitation as we did in schizophrenia and bipolar. We are using Pittsburgh Agitation Scale, and we are also using modified Cohen-Mansfield Agitation Scale. And we want to take this data to the FDA. That's why we are generating this data and then have a meaningful conversation with them that how we can take 501 into the late-stage clinical trial and ultimately to the registration.

Got it. That's helpful. And you touched on this a little bit, but as you move 501 into different indications, are there any reasons you might move away from the PANSS-EC component and to a different primary endpoint for additional Phase III trials that are upcoming?

Right. Right. A very relevant question. It's a continuation of the previous -- indeed. I think as you look at these diseases, one is that what can you use to measure and build your confidence? Another one is what you can use to get the approval. So PANSS Excited Component was easy because there was a regulatory precedence with the FDA in schizophrenia and bipolar. So we chose that and FDA agreed with us that like you could use that. In dementia, for chronic agitation, developers of those had gone to FDA to build an endpoint, which was Cohen-Mansfield Agitation Scale. There is nothing -- no scale available for dementia. As I indicated, we are testing 3, and then we're going to take the data to the FDA. For delirium, it will be a separate situation. Normally, different scales are used and one of the scales used is Richmond Agitation and Sedation Scale and it's a subsection of the confusion assessment method of the ICU, which is also called as CAM ICU. So I think depending on the patient and depending on the precedence in the literature, key opinion leaders view, what scale will be accepted we will use and define that scale. In opioid withdrawal, it's slightly different because its schizophrenia and bipolar type of a situation where scale is already agreed or there has been a drug that has been approved using the scale which is SOWS scale, which is a withdrawal symptom scale, it's based on the patient's input and there is a COWS scale, which is a physician-based scale, again, a withdrawal symptom scale. So we have done IV Dex study in opioid withdrawal ourselves and we saw all 10 patients responding to it. So we will be easily able to use one of those scales as we finish our Phase Ib/II study and have end of Phase II meeting with the FDA. So coming back, I think it's a disease-specific which scale we can use from the registration regulatory standpoint.

Got it. And just thinking about the patent protection, as 501 is a sublingual formulation of generic IV Dex. Can you give us additional color on the IP that will prohibit another competitor from entering the space?

Sure. Sure. That's a very relevant question. And it is very fundamental to our business model because we are looking for drugs that have gone to the Phase I or beyond. And if it is still in Phase II, there may be a composition of matter and we can license. But if it is gone to marketed drugs and all that, most likely patent protection will be finished. So here in 501, specifically, we have developed a very strong multipronged strategy to maintain our market exclusivity. Our patent is expected to last 2039-'40. Our first patent in strategy is to protect product -- patent production for the film formulation. We have a very new novel film formulation where we have done micro dosing, because we are using very small doses of the film and it's a new architecture. So we have filed for that patent. In addition, we continue to file patents, which are related to the claims based on PK data, including the exposure level in each specific patient population, whether it's schizophrenia, bipolar or dementia, these doses are going to differ. So we are protecting that as data gets generated. And also, finally, we are also pursuing broad claims for method of treating agitation using Dex and sublingual delivery as its mechanism. So overall, I think it's a comprehensive strategy. We believe it will provide us a market exclusivity until 2039-'40, if any of these patents are issued.

Vimal, this is Geoff again. I just wanted to ask you, maybe bigger picture, how you think about the commercial opportunity, clearly. You have data coming up, but I wanted to ask you, just help us frame the market and how you think it could evolve over time from a commercial perspective?

Sure. Sure. So agitation, the 5 indications we are focused on. There are basically about 20 million people at risk of agitation and then about 10 million people experience agitation. That's divided between schizophrenia and bipolar, about 3 million patients, 4 million is in the dementia bucket, and then there are patients, about a couple of million patients who suffer from opioid withdrawal symptoms and delirium is in very early stage, we have done assessment, but it's a very large opportunity. So that's how we think about these commercial opportunities. So it's a large, but at the same time we have done a lot more work internally how we can basically capture the opportunity because we are an innovator company, and we want to transition into a commercial organization or integrate the commercial. So we are in the process of hiring a Chief Commercial Officer, who is expected to join us prior to the SERENITY data readout. And he has the relevant experience, both from in neuroscience perspective, launching those products as well as hospital-based products. So we are very excited when we can bring this Chief Commercial Officer and introduce him to The Street. So he will lay out the strategy. But at a very high level, the way we think is that schizophrenia/bipolar will require an institutional-based sales force. So that could be of the order of 75 to 100. So that's how we are thinking for our first NDA in terms of the commercial opportunity, and I will be happy to elaborate what the synergies are in these indications. We do see lot of synergies because institutional sales force can cover delirium. It can cover any agitational patient that comes to the ER. For nursing homes and opioid withdrawal, it will be a separate strategy.

Yes, that would be helpful. Well, I want to ask you first, any updates on your search for a Chief Commercial Officer? And when you think about the value of knowing the payer and the kind of the cost landscape, how much do you think that's going to inform the pace of the launch versus, obviously, the profile of the drug, which should be pretty good?

All right. So I think we have started already doing some payer research and talking to different stakeholders so that when Chief Commercial Officer comes on board he has some market insights to build his strategy. We know that there was a drug additive that was approved for $150 per episode. So that kind of sets a benchmark 7, 8 years back that what you can expect in terms of the conversation. I'm not saying 501 will be $150, but that can -- we see that as a floor. And once our Phase III data is out and we know exactly the claims we can get and what the profile is, have these conversations, we think, in particularly ER, it's a huge value. Because if you don't -- if patient gets to stay too long in an ER setting, they are occupying the space that doesn't become available for other patients. And also, if they are more groggy or they're highly sedated or they have some cognitive issues then you have to keep them in the hospital setting because we put them on benzodiazepines or antipsychotic drugs. So there is a -- and obviously, you don't have to prepare for a syringe to calm these patients down, film is much more easy. So there are a lot of differentiated features that are built in, in our drug, and we feel very good that like it will have good acceptance. We've spoken with over 500 physicians to understand how would they consider profile of 501, which data we will share once our Chief Commercial Officer is on board. So I think I would say, so far, the work that has been done is very encouraging towards the commercial launch of the product.

Vimal, this is Scott again. When you think -- when you obtain these Phase III trial results, have you thought about potentially doing additional studies that are head-to-head versus some of the standard of care that's out there to kind of differentiate 501 as the "gold" standard? And if so, how quickly could we expect the trial like this to turn around and what the primary endpoints might be?

So that's a very relevant question. I think the way we look at our launches, it will be initially hospital-based in the ER setting. There are about 6,000 hospitals or so. But out of that 1,400 or so, 1,500 hospitals, you can get 70 to 75 coverage like with your sales force. And that's how we are kind of initially laying out what will be required. So we feel that our product is very differentiated. But your question is very relevant. If there are some hurdles or we need to make this as a gold standard, we will look into Phase IIIb/IV trials designed to differentiate from the standard of care or anything that is out there. As you saw in our Phase III trials, it was 750 patients 2 trials in 2 different indications, 3 arms, like 2 doses and placebo. We were able to finish that trial in 3 to 4 months because there were so many patients who are in need of it. And all the patients in our trial took the film on their own with the help of a health care provider. So we will first bank on launching it based on the profile. If we need to add on the Phase IIIb/IV trials, it won't be a big burden to add on and prove it, the value of the drug if that's what we need to do. So those decisions we will make as we proceed forward with the launch and we get more feedback.

Got it. And maybe just switching for a minute to 701, to touch on that. You're going after difficult indications that have historically been tough to crack with therapies on the market. So do you think this stacks the deck against 701? Or does it provide a low barrier for success that allows 701 to show some efficacy there?

Great question. If you think about 701, it's an orally available innate immune activator, which bridges the innate and adaptive systems via its unique and first-in-class mechanism as a DPP 8/9 indicator. If we have chosen any other indication in the beginning, it will be hard to compete. Our immunotherapy area is so riddled with so many trials and so many indications. Our overarching strategy was that 701, if we can demonstrate that it can work in cold tumors that paves the path for some of the hot tumors or [ look on to ]. So we've been targeting to enhance activity of the checkpoints in hot tumors, reverse resistance in tumors where checkpoints have failed and expand activity into the cold tumor. So that's the strategy we have adopted. The 2 indications you talked about, both are top like tNEPC as well as pancreatic, but we had very good rationales, underlying science and preclinical data and other things in our triple combination where we had seen complete regression of tumors and formation of memory T-cells that tumor didn't grow with the inoculation. So there was a quite a bit of excitement from our partners also, so we have Pfizer and Merck who are providing a value map for triple combination and Nektar, which is regulated IL-2. So I believe that overall it's a diversified strategy, but at the same time if you think of tNEPC and pancreatic bar, in both [ courses ] are very low. So if you go for some other tumor, your bar, basic is 25% to 30% in most of the tumor types, here it could be 15%, so bar is low, but at the same time challenge in this is high and we thought that if we can make an impact it can be pretty transformatory for these patients and overall from a capital perspective we have been very like capital efficient, we have sponsored tNEPC, pancreatic we are sharing 50% cost with Nektar, and Pfizer and Nektar are providing the drug for the trial, and MD Anderson led trial, like these are ISP, so we separated the capital allocation. So we believe overall based on the capital we had and what we needed to prove, we have a built a strong strategy. There is a good rational to expand this into AML because 701 has been shown to have activity as well as with some CAR-T to transition into solid tumors because CAR-T is only working in hematological malignancies. So overall we feel that we have put together effective capital efficient strategy to identify the signal with 701.

Got it. And we have a little bit of time left. So I just wanted to ask, we're asking a lot of the companies what their kind of thoughts are on the longer-term impacts of COVID? So is there anything with your line of business that you think will change in the way that you do business in the coming months or over the next 12 months?

So it's a very relevant question. And we, as a company as well as we as a country and the world is certainly dealing with this. The first thing when COVID happened, first thing we did was the risk assessment and identify key risks that can be material and impactful. And then we tried to develop a plan and strategy as we learn new things, how to mitigate that. So I think there could be a certain situation if there is a relapse of COVID-19 that can have issues on some of the trials that we conduct or we -- which are ongoing or we are planning to initiate. It can have impact on how fast FDA can respond because what they are dealing with, so it can have impact on NDA submission potentially. But I think the way things have been, at least for the last couple of months, we have been very fortunate. We have not been impacted. And if they continue to improve, I think, we think that we'll be able to manage the situation. But I think bottom line is to us [indiscernible] update that. And another thing we had to do was learn how to build a virtual operational model. Because we used to be 12 people in one room and making critical business decisions. Now we are in virtual room, and we are making those decisions. So that was a big adjustment. Beyond that, I don't think we -- I feel at least that we had any problem with the execution. And I find even investor interaction very efficient because you don't have to worry about going to one geography and meeting few investors. Now you can meet globally sitting through the virtual mechanism. So overall, some good, but there are some challenges that we have to deal with.

Okay. Well, with that, we're out of time. So thanks, Vimal. We really appreciate it, and thanks for everybody for joining the webcast today. Have a good day, everybody.

Thanks, Geoff and Scott, for hosting me today. I appreciate that.