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

Welcome to the final day of the Bank of America Healthcare Conference. My name is Greg Harrison. I'm one of the biotech analysts here at BofA. It's my pleasure today to introduce Vimal Mehta, Chief Executive Officer of BioXcel Therapeutics; Matt Wiley, Chief Commercial Officer; and Vince O'Neill, Chief Medical Officer. Vimal, would you like to start off with some opening comments and then we can get into the Q&A?

Sure. Good morning, everyone, and thank you, Greg, for hosting us here today. BioXcel Therapeutics is a biopharma company using AI platform to develop transformative medicines in neuroscience as well as in immuno-oncology. It has been a very transformative year already, 2022, with the approval of our first drug product. We have 2 lead candidate, BXCL501, which is for acute treatment of agitation resulting from various neuropsychiatric conditions, as well as BXCL701, which is an activator of innate immunity and we believe with the most advanced systemic, orally available activator in the clinic. In terms of our key milestones for 2022, we got approval last month for our product IGALMI for acute treatment of agitation related to schizophrenia, bipolar I or bipolar II in adults. In addition, we believe that this is a disruptive platform, and we are fully ready for the launch. So Matt will discuss more about our preparation for the launch. We have initiated 2 pivotal trials in one of our largest indication, which is Alzheimer's-related agitation. There are about 100 million episodes there. And also, we have initiated a trial in MDD for using 501 as the adjunctive treatment. And as you all know, there are about 300 million prescriptions every year for depression. So our market opportunity with 501 is really large. We are very pleased that we have succeeded in our first NDA, and we're building our momentum for sNDA, follow-on sNDAs. In terms of strategic financing, we executed on that last month. So we brought in 2 partners, Oaktree and Qatar Investment Authority. They have -- it's a $260 million financing deal, and we can access already with the IGALMI approval, $100 million; $70 million in debt, $30 million in royalty payments. So we are accessing that. In addition, we announced the formation of OnkosXcel to provide a dedicated focus for our oncology program, which we believe is very promising, BXCL701 innate immunity activator. So those are the strategic reasons for forming the OnkosXcel, but at the same time, BioXcel Therapeutics, we want to build our vision of creating an AI-enabled neuroscience company. So that's what we are trying to achieve. We will be making some forward-looking statements. And with that, I will turn it back to Greg for Q&A.

Great. Thank you, Vimal. Maybe let's start with the launch of IGALMI, recently approved and you're in the preparation for the launch process. Maybe you could give us a status update and where you're at now and what remains to be done?

Sure. So first of all, the preparation and planning for launch has transpired over the last 2 years. I couldn't be more pleased with where we are in our preparation and early execution of that plan. So the market access team has been out engaging directly with GPOs, IDNs and hospital systems of interest. Since we announced our WAC price on Monday, they now can talk more specifically about the economics in terms of those contracts. As you know, the contracts can take 6 to 9 months to execute, but we feel that we've gotten a really good start on that process. The sales team has been onboarded and is currently in training. We have our launch meeting next week, and they'll be out in the field actively promoting on the 23rd. This is a highly experienced team. This is a team that has more than 21 years of experience in pharma, over 14 in the hospital environment and each has, on average, 8 product launches in their history. So this is an experienced team and one that's highly credentialed coming in. We feel it's the right team to navigate the P&T process and formulated process in the hospital. And it's not just training them on whom to call on, but also what they will be saying in the field. So some of what we've seen in our market research on our marketing platform has been very encouraging. Typically, when you are looking at intent to use, you'd look at metrics predicated on our product profile, which we did. And we saw about a 20% intent to use or preference share. But when we share the marketing platform, the messages that our sales team will be out communicating, we saw that preference share double with 40%. So that's not market share. But as we think of the way most market research is done, if you at least get close to double of that market share, predicated on how we're going to be communicating the message, I think that's an important factor. So we're very pleased with how things are going. We're very pleased what our reps are going to be saying and look forward to the 23rd.

Great. So maybe we could talk a little bit about the initial strategy for bringing IGALMI into different patient settings. Where do you see it being administered primarily now and then in the future as you expand on that?

Sure. So I'll kind of back up. There are 25 million agitation episodes in bipolar and schizophrenia annually. About 17 million of those present in the institution setting. So that aligns very nicely with our label. We have a broad label for schizophrenia, bipolar I, bipolar II, all aspects of severity. So mild, moderate, severe. So we believe that with our deployment to 1,700 hospitals, we capture about 80% of that institutional volume. And that's a great place to start. As we think of the additional 1/3 of patients outside of the hospital setting, in the community setting, certainly, there's work to do with the FDA to remove the HCP monitoring language from our label. But as we progress on those plans, we would be able to then unlock the value of the additional third patients in that setting.

Great. What needs to happen to remove that language from the label? And how does use in that unsupervised setting differ as far as achieving market penetration and frequency of use and those sort of aspects?

So I can take, Greg, the first part of the question, what is needed. So the reason we got the label -- we are very, first of all, very pleased with the label. It's as broad as it could have been based on our clinical plan. We've got all the 3 indications. We got both of these approved. We got like a full spectrum of agitation: mild, moderate and severe. And in addition, we can do the retreatment. The label is very broad. The only reason there is a under the supervision is because that's how the trial was conducted, our SERENITY I and II. And it was so important to keep these patients in because they are agitated. If you let them go, you can never measure the vitals on them. So we had to keep them in for 24 hours. So FDA gave us everything what we demonstrated in our Phase III trial. Now the question coming back to is when this can be removed. We see 2 avenues. One is as IGALMI experience will build in the marketplace like now with the physicians as well as with the patients. And second is having a conversation with the FDA that what would they like to see to -- so that it can go into the community setting. I'd just like to add that if you think about our Alzheimer's program that is already in ALF and residential setting, so FDA has already agreed to that, if you think of our MDD program, that will be in the community setting where we just started the dose-ranging study. So we will engage with the FDA and see how we can expand this need. Matt, do you want to answer the second part?

Yes. I would say one of the most important parts of bridging to the community setting is what we do in the institution. So as we're engaging different stakeholders, certainly, the psychiatrists have a high interest in IGALMI and they're going to get some early experience. They tend to practice in multiple settings. So they may practice in an office setting, in the community as well as in the institution. So getting that experience in the institution will help us build the market in the community space. The payer environment is different. So we would be working directly with the payers, PBMs to ensure that there's good access. But what we found in our early market research on price is that we would find ourselves in a favorable position even at the current [ pack ].

Got it. So you did announce the price earlier this week, $105 a dose. Can you comment on the strategy? And what factors led you to choose that price?

Yes. So there are several factors that went into that decision. First of all, we spent 8 months, we evaluated multiple patient settings. We even evaluated downstream potential indications to come up with this price. It's qualitative and quantitative research. And what we found, first of all, is that we wanted to have the broadest access possible for our patient population. That was one of the key parameters that we wanted to achieve. The second thing is we also considered how the P&T might view the redosing phenomenon that's in our label. So 15% of our patients were redosed. And so we had to consider that. The third factor is gross net preservation. So as we learned in our market research, there's a specific net to institution expectation. So should we have taken price higher, we might have had to discount back to meet some of those expectations, which would have eroded some of the GTN value. And then finally, we want to consider all of the downstream indications and whether or not setting a price today would have implication on our ability to enter those markets. And what we found there is we're going to have really good flexibility for future indications. So we feel really good about the price point of $105 and think the market will react very favorably to it.

Great. Now when it comes to the competition and other options for these patients, a lot of those are generic and going to be at a much lower price. So how do you position your argument for use of IGALMI relative to those options? And what are you doing to demonstrate the value to the overall system from using something that may be more expensive upfront but could save cost down the road?

Yes. So first of all, the way that the hospitals are reimbursed is predicated on either an ambulatory payment classification or a DRG. And so that's -- the cost of the drug is bundled into that. And that's going to be a factor that they're going to consider at P&T. Some of the drugs that are used for these patients are in the range of $30 to $50. And so that's the net to hospital cost. We're not going to be grossly out of balance when it comes to the net to hospital cost for IGALMI. So the price point, yes, as a brand is going to be higher. But there are certain things that are also going to be considered in that APC reimbursement or the DRG reimbursement. For instance, how long are those patients occupying a bed or a room in the emergency department? Do they have to be cared for overnight and discharged a day or 2 later, and so that's going to occupy a bed on the psych ward. Those are all considerations, and we think our value proposition in an onset of action at 20 minutes and the ability to continually communicate with these patients so they're not knocked out is an advantage and may help with discharge timing. We are doing work to -- through our medical affairs team to ensure that we answer some of those time and motion questions and HEOR questions. But so far in our research, most administrators at the hospital seem to understand that pretty implicitly.

Great.

I would just like to add to what Matt said. There's no commercial precedent for a product like IGALMI in these settings because neurocyte products have not been launched in this kind of a setting where these patients end up in the emergency room. So that's part of the reason we are doing it. The second part is that the treatment guidelines say that it's a verbal deescalation and followed by an oral treatment. So IGALMI meets all those requirements. And there is a mandate in all the hospitals that the health care providers are not put at risk. When you talk about current option, the only option is injectable. And if you inject, you have -- it's a pretty traumatic experience for a patient to get injected with haloperidol. So all those things, what we have heard from the SCP, the overall value proposition of IGALMI is meeting all those requirements. So I would really encourage everybody to think about the overall value proposition that IGALMI brings to the system. And one of the -- I talked to a lot of head of psychiatry and they said one of the biggest driver in each hospital is that they want to keep their health care providers safe. And they don't want patients who stay tranquilized in the ER for -- which could be average 10, can be 16 hours. That also is cost. So I think it's not only the cost of the drug, it's a lot more than that in the system. So IGALMI, that's why I say, can be a very disruptive platform.

Great. That's really helpful. So you mentioned this is kind of a unique launch. There aren't a lot of good analogues. So what are some of the metrics we should expect to help us understand the progress of the launch as it progresses?

So first, I completely understand why we're asked that question often. And because you can't really manage what you don't measure. And certainly, we have KPIs internally that we're going to -- that we view as very important to measure our success, and we want to be as transparent as possible with those metrics to the investor community. Some of the things that we'll be tracking early. GPO contracting is going to be paramount. So we're going to be tracking that, and we'll communicate those as we sign those contracts. Any of the IDN systems that we contract with, those -- and not all of them will require a contract but those that we do, we'd want to be able to communicate that. P&T formulary -- P&T and formulary process are also important metrics. So P&T committees that have added IGALMI to the agenda would be a metric that we track internally, and then also formulary acceptance of IGALMI would be vitally important. All of these metrics are early indicators of future demand. And so that's, I think, what we could expect early on. And then as we get further into market, some of those other demand metrics like hospital ordering patterns, reordering patterns would be some of the things we might communicate as well.

Great. And then what is the strategy for commercializing IGALMI outside of the U.S.?

So we now got the approval. We are very pleased. We know what our label is. So the way we look at outside is a pretty large opportunity, particularly in 2 territories. One is Europe and another one in Japan. So we are evaluating that. And we are seeing that like in terms of our initial strategy outside U.S., we will focus on those 2, even though there are a lot of other territory. And for Europe, we have an MA like that we will be filing. And for Japan, we will be evaluating what it should be our market entry strategy. As all of you know, the Alzheimer's population is growing in both geography, and in Japan, particularly, there will be almost 4.8 million patients by 2026. So it's a pretty large growth in those areas. So all the systems, whether U.S., Europe or Japan, they need to manage these Alzheimer’s patients. So we'll take a little bit holistic approach to it now because we know IGALMI has been approved. We know what our label is and what strategies we adopt, whatever we have learned within the years.

Great. Maybe we can switch gears and talk about some of the other indications that you're pursuing for 501. You recently initiated dosing in the TRANQUILITY trial in Alzheimer's. What are your expectations from this indication and the opportunity there for IGALMI?

So as all of you know, Alzheimer's-related agitation is a big societal issue. It's important for patients as well as families. And it is one of the #1 reasons that patients happen to go from home to ALF or nursing facilities as -- because their agitation cannot be managed. So I look at it -- this Alzheimer's as a whole societal issue and we have to solve this problem. And I think 501 data that we have from the TRANQUILITY is quite compelling or robust in terms of the efficacy, safety and tolerability. And we have dose-dependent responses for 30, 40 and 60-microgram doses, and we have selected 2 doses, 40 and 60, and 30 is in our arsenal as well. 100 million episodes happen only in U.S., and Alzheimer’s population is going to double in U.S. from 5.8 million to 11.8 million. It's an enormous opportunity, an enormous unmet medical need. We have designed our trial to cover that opportunity. So as Alzheimer's progresses, the frequency of education changes. So initially, it is episodic. From episodic, it can become chronic intermittent. So what I mean by that is if you're having 3 episodes a month, you can have 3 episodes a week. And then ultimately, it becomes chronic when it's in a very, very late stage of the disease. So we are trying to capture the full spectrum related to the Alzheimer's-related agitation. So we have 2 trials ongoing. One is in the ALF when the dementia for the Alzheimer is in more mild state and their frequency may not be that much, which we are conducting the trial. We initiated that trial. We are already at first patient dose. and it's progressing very rapidly, and we plan to announce our data in Q4 or early next year. The second part of the trial is in the nursing home. These are the patients who have more moderate or more severe agitation, and they get more episodes, frequency of episode is different. So that's what we are capturing with our second Phase III trial. So overall, like trial design is done so that we can get the label for episodic as well as chronic intermittent. And that's what we are trying to do. And we are moving as fast as we can to build our case for the supplemental sNDA.

Great. And then you're also pursuing major depressive disorder. What would a trial there look like for 501?

So for major depressive disorder, let me just put a little color around it, how did we arrive at it. This indication was not part of our original indication. And when we analyzed about 1,000 patient data we collected in our SERENITY trial, our Phase III trial, in TRANQUILITY trial, which is Alzheimer's as well as some of the opioid withdrawal work we did, we found a common thread that 501 impacts certain factors like anxiety, sleep architecture, irritability. And these are the very heavily weighted factors in the Ham-D scale. So we talked to the expert and said, this is the properties we're seeing in clinic and how can we come up with a design that will allow us to prove its utility? So 501 will be used as an adjunctive treatment with the current standard of care, SSRIs and SNRIs. So our first trial is designed to do the dose-ranging study, which already started. So we'll do it in healthy volunteers and then in the depressed patients. Once we have identified the dose and that -- then we will design a human proof-of-concept trial where there will be 501 in combination with current standard of care, or just the standard of care to show that 501 does cause the accelerant effect that we are looking in the first and second week. So this trial will be -- are expected to be 501 given over a period of 4 to 6 weeks. That work is under progress. But one of the most important features of this trial is, it will be conducted in a community setting. So you can see, we are executing on our 3-pillar strategy, continue to expand indications, continue to expand geography and continue to expand on our medical set.

Okay. And how should we think about that market opportunity within MDD? And do you have any sense of what percentage of current patients need something beyond what they're getting from standard of care?

So what we have understood and we continue to map market opportunity is really large, because anybody who goes on antidepressant, that a large percent of the patient, the antidepressant don't work for the first 4 to 6 weeks. Either patients are very anxious, they are not sleeping or they are suicidal, in fact. So there is a lot of opportunity in case we can have a rapid-acting antidepressant. Basically, that's what 501 is trying to do here, [ moving ] the current standard of care. So it's a very large opportunity. Matt and his team will continue to do the work and see what our -- and will be target population that we will be targeting. And that's how the clinical trial will be [indiscernible].

Great. Let's talk a little bit about 701 and OnkosXcel. Maybe we could start with your thoughts on the advantage of creating OnkosXcel to focus on your oncology treatments.

So let me comment on the strategic aspect and then I will pass it on to Vince. Strategically, it made sense. We have set out a vision to be [ AM and well ] like in a neuroscience company. And 501 is moving so fast within a 3.5 years of having first-in-human all the way to NDA approval and now we are turning and transitioning into a commercial company. So sometimes 701 does not get the attention it needs. By creating a dedicated unit, OnkosXcel, it will bring that focus. And I think -- I truly believe laser-focused and flawless execution is needed. And then if you put the right kind of teams and right kind of objectives, you achieve those goals. So with that in mind to bring flexibility for OnkosXcel, at the same time, continue to execute on the BioXcel Therapeutics vision, we form the OnkosXcel. And we'll provide an update in second half what options we have at our disposal. With that, I will pass it on to Vince.

Thanks, Vimal. So again, I fully agree, and the intent is really to create a dedicated group of people fully focused on executing on the clinical trials that we have ongoing right now. So obviously, as you go up the reporting tree, let's say, that becomes shared resources. So G&A would be a perfect example. But on the clinical side, clinical operations, clinical science, those are dedicated people with deep oncology experience bringing in the studies.

Great. And then you've shown some impressive data so far with 701 in some difficult tumor types. What is the path from here to -- towards an eventual approval?

So I think the near-term focus is clear, and that is to bring in the data from the ongoing study, so complete enrollment, particular emphasis, I think, on any PC, right? Because we feel the data there are really particularly compelling. And again, you mentioned the recent data. So ASCO GU, we presented data response rates in the 30% range. And I think that's unprecedented in this really hard-to-treat tumor. So we will complete enrollment for that - it's really 2 studies within 1 prostate trial, but that particular cohort, Q4 of this year. So that's the intent. We've also recently, in the last few months, announced first dosing of first patient in the randomized component of the adenocarcinoma cohorts. So the randomization is the combo of 701 plus KEYTRUDA, of course, versus 701 alone to garner some data of what 701 can do by itself. So that's really for regulatory considerations. Yes.

And then where else can you go within oncology beyond these initial tumor types, either with 701 as that concept is approved, or even beyond if we should expect additional programs to come from the AI engine?

Sure. So I'll start off by saying, so 701 is obviously an innate immune activator, but it's highly differentiated, right? So as Vimal has already said, it's orally available. So that does make us very different from the vast majority of the other assets in this area, this class. And the drug has single-agent activity. That's not common for innate immune activators, right? We know now and we spent probably 18 months optimizing the dose and schedule of the drug. But in combination with KEYTRUDA, the side effect profile is generally acceptable. And then lastly, as we said, we presented essentially proof-of-concept data at ASCO GU this year. I'm particularly encouraged by any PC data. As I've already said, prostate is really a paradigm for cold tumors. And cold tumors are the hard problem in oncology. It's been very difficult to generate combo data with checkpoints that's efficacious. So LAG-3 will be a good example, TIGIT probably not so much. We heard about that just yesterday, and that's the second big Phase III study that's failed here. So I think 2 points to -- maybe 3 points to take from that. One, obviously, when a pivotal study fails, we're all in the business of developing better treatments for patients, and that's a pity, right? But again, it's difficult to generate positive data with combination. 701 has exactly done that with KEYTRUDA. And lastly, most of those combinations today have been in the hot tumor setting. Again, the hard problem within I-O is cold tumors, and that's exactly what we're going after.

Great. Well, with our remaining time, let's maybe just turn to the AI platform overall. You've been pretty impressive in showing the speed of development with IGALMI coming out of the platform. Where should we expect future programs to focus coming out of the AI platform?

That's a great question, Greg, and one of my favorite questions. So AI is very -- it's in our DNA. If you look at our BTAI symbol, NASDAQ symbol, AI is coming from there. So we want to continue to use AI across the spectrum in drug discovery, development, translation work clinic and now in commercial. Matt hasn't started talking about it, but we will be using the AI in those areas. In terms of where we are adding, so we have made a commitment to symptoms-based approach in neuroscience. And that's where we have 501, it's a pipeline within a product. In addition, we have R&D pipeline where too we're doing formulation work as well as some translational work. So that will build -- augment our -- strategically, our franchise, agitation franchise. And then we are also exploring other areas like neuro. So those are the -- it's a part of our plan vision to convert BioXcel Therapeutics into AI-enabled leading neuroscience company. So AI platform will play a very pivotal role in meeting our vision.

Great. Well, with that, our time here is up, but I'd like to thank BioXcel for joining us today and all of you in the audience for joining us as well.