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

Ladies and gentlemen, the program is about to begin. Reminder that you can submit questions at any time via the ask questions tab on the webcast page. At this time, it is my pleasure to turn the program over to your host, Greg Harrison. You may begin.

Hi and welcome to the Bank of America SMID Biotech Virtual Conference. I'm Greg Harrison, one of the biotech analysts here at BofA. And today, I'm happy to introduce BioXcel Therapeutics, represented by Vimal Mehta, CEO; Matt Wiley, Chief Commercial Officer; and Rob Risinger, Chief Medical Officer. Thanks for joining us, everybody. And for those of you out there watching, if you want to send you questions, I'm happy to ask on your behalf. Vimal, would you like to start off with some opening remarks, and then we can jump into Q&A.

Thanks, Greg. Good afternoon, everyone. I'm Vimal Mehta, CEO of the company. We are very excited to be on this call today. It's a very exciting journey for the company. We have multiple data catalysts upcoming in first half of 2023, as well as we are, as you all know, in the middle of the launch for IGALMI which is progressing well, and we are excited about the momentum we are seeing in the marketplace. So we will cover all those topics. So on the IGALMI front, you will hear more from Matt Wiley, like how the launch is progressing. Overall, we continue to see the momentum, which we presented in our earnings call in the month of November, as well as at our Commercial Day. And both from the [CPs] as well as market reaction seems to be building up and as we have added more sales team. In terms of the innovation, company continues to execute on that, and our strategy has been land and expand. So with IGALMI, we are covering about 16 million episodes that are in the institutional setting, and that's our target with IGALMI. We continue to expand in 2 directions. One is to take the drug into the home setting and that's what we announced last week, SERENITY III and trial has begun and the data readout is expected in first half of 2023. TRANQUILITY 2 is in advanced stages of enrollment, and it's progressing well and we expect that data readout again in first half of 2023. So we have 2 pivotal data readouts in first half of 2023. In addition, we are completing our MDD Healthy Volunteer Study, and that data readout will be announced in early next year. And for our asset, BXCL701 for OnkosXcel, we have completed 28 evaluable patients in SCNC, which is small cell neuroendocrine cancer. And we'll be presenting the data in terms of the response rate, as well as durability. So it's a very exciting time for the company, and we are looking forward to 2023.

Yes, definitely an exciting time for you guys. Maybe we could start just with the IGALMI launch, maybe just an update of where you're at with the launch in terms of formulary access? And how we should expect that to unfold in coming quarters?

Yes. Thanks, Greg. The commercial launch is going quite well. As I mentioned during the Commercial Day and also during the last earnings call, we've had great momentum and great feedback from the market that's given us confidence to expand our sales team to 70 people. The formulary wins so far, we've reported out that we're over a dozen wins. That continued to grow, both since Commercial Day and since the earnings call. So we feel very confident in our ability to continue to get P&T wins. And then ultimately, that will translate into revenue. And certainly, after a P&T win, the revenue does come and then pretty quickly habit gets established, and we're seeing that in practice. The metric by which we communicated previously, we have roughly 21% of the hospitals that we were focused on with the original 26 now in process -- in the P&T process scheduled to vote sometime over the next quarter, 1.5 quarters. And we have an additional 350 or so P&Ts in process for Tier 2 hospitals, which are also scheduled over the next quarter or so. And we would expect that with the deployment of our additional 44 representatives that these metrics would continue to improve over the course of Q1 and certainly in the first half of next year.

Okay. That's helpful. Now as you get added to formularies, what are your expectations for usage and the general ramp-up within an individual hospital.

Sure. I mean, so one of the things that we presented at the Commercial Day was market research that we had done with physician expectations of when they would use IGALMI post formulary approval. And what we found in that research is roughly 1/3 expected to try IGALMI within the first 6 months and then the majority would try within the first year. And we're seeing that in practice. I mean post formulary approval wins in some of the early hospitals where we got them right after trade launch, we're seeing that ramp up accordingly. Where the ceiling is, I think, is really dependent on the utilization feedback. But so far, feedback has been quite positive. So we would expect that the ceiling is pretty high.

That makes sense. Now when you talk about at-home setting, what are the expectations there as far as process for getting the label expanded? And then how should we be thinking about that market opportunity relative to your current IGALMI label?

Well, I'll let Rob speak to the label expansion process. But as to the opportunity, there are 16 million episodes of agitation in bipolar and schizophrenia in the institutional setting. The at-home setting adds an additional 23 million episodes. And one of the things we found in our market research is that these patients are experiencing 10 episodes or so that they're self-managing, meaning that they're using either exercise or medication, alcohol, illicit drugs to manage those episodes, which tells us, a, that they recognize when they're having these episodes and then b, they're trying to do something about it. And when presented with the concept of BXCL501 they react favorably to it, and expected that they would want to use a drug like this. Maybe you can talk to the label expansion.

So we have a single study SERENITY III which should suffice for us to expand the label to at-home use. SERENITY III is a 2-part study. It is pivotal. The FDA is agreeing upon this design and the ability for us to show both efficacy, specifically in the first part of the study is being done virtually identically to the SERENITY I and II trials, the pivotal trials that gained approval. The first part will demonstrate the efficacy versus placebo in patients with either bipolar disorders, 1 or 2 schizophrenia, schizoaffective disorder. And that is done in a supervised setting -- medically supervised setting just like SERENITY I and II because you have to have a radar there to do a PEC score. So we expect to separate from placebo by 3, 4 points. This is a clinically meaningful difference for a 60-microgram dose. It's a 200-patient trial part 1 and as you know, it has initiated. Part 2 of that study is at-home use. So it's a 60-microgram dose. Patients are literally given the dose to take at home when they become agitated. And both the patient is rating how they feel or adverse events and reporting these as well as a reliable informant, meaning not KGB, but an informant for us is usually a spouse, a wife or husband or a child is also there to say, yes, this is working and they didn't have this or that adverse event or they did have something arise. And then they come back to the clinic, and they're seeing an investigator. That's a 3-month segment of time that we're allowing patients to take this home. They're being dosed. We're tracking that. That will then go in the label. That's the additional information on safety in the label, it will be virtually identical to what we currently have. But because of the lower dose, we do expect it to be safer in the sense of same lines of AEs, which is lower, much lower incidents for 50-microgram dose.

Okay. That's helpful. Now how does the launch here when you're talking about the at-home setting differ from the current launch that you're undertaking in these patients?

Well, so Greg, we're in the middle of building out our market entry strategy and we'll communicate that out in 2023. But suffice to say that the agitation typically will start in the home setting and then progress and elevate to the point of escalation where it needs to go to the emergency department. So we would expect that in many ways, we're going to be able to intervene with these patients before they actually have to go to the hospital and we can deescalate them in a more meaningful way at home. So that's one aspect. The other thing is that launching in the institution, we're engaging with both emergency department personnel, but also psychiatry and psychiatry will build a very nice bridge between the commercial efforts that we've already begun in a hospital setting and in the community. So we believe that we have a very good conduit to get to a better community uptake as the pursue of the hospital launch.

Got it. And among the patients who have been receiving IGALMI in the hospital setting, what sort of early feedback are you getting on your end for patients who have actually used the drug in the real world?

Well, I'll let Rob speak to a specific case. The feedback has been quite good on a number of different measures. The drug is behaving the way we anticipated it would, and we're seeing the requisite throughput improvements that we also expected, but maybe you can talk about specific case.

So a very large hospital in a very large city in the West Coast decided they're going to try it out. So they order it, they said they tried this out. And of course, like most physicians, they tried in the worst of the worst. So this is a very severely agitated patient. In fact, they were in 4-point restraints. So they were shackled at wrists and ankles, all 4 limbs to a gurney. And they released one arm, the patient was given the film, patient took the film themselves. And within 20 minutes, the patient was out of 4-point restraints and 2 hours later was discharged. They were decidedly impressed with the clinical results and so we received this comment directly. They were just really impressed that they were able to turn a patient around with clearly severe agitation so quickly. They really didn't expect this, and it was a very positive surprise for them.

That's great to hear. Now when it comes to people on my side trying to make forecasts and figure out what the commercial aspects of the launch are -- what should -- how should we be doing that in terms of metrics that are relevant that can help us track the launch and that you guys could be providing?

So I think there are 4 metrics, obviously, that are going to be meaningful. First and foremost is we want to open the doors with our GPO contracts. And right now, we're about 50% of our commercial target beds are under contract. We expect that to continue to improve as we engage with the GPOs. The others are formulary in process, formulary wins and revenue. And I think between those 4 metrics, you should have a pretty good line of sight on how we're progressing commercially. The leading indicator is obviously are going to be formulary process and P&T wins. And that should be a prelude to what I spoke about earlier is the uptake expectations thereafter. And that's certainly going to be represented by revenue.

Got it. Okay. Let's switch gears now and talk about what could be a larger opportunity, which is Alzheimer's. What are your expectations in this indication, maybe start off with data, what would you like to see in TRANQUILITY II and it would give you more confidence that it will be affected in this population as well?

So we expect to see what we already demonstrated in TRANQUILITY I in terms of the difference in the change from baseline in PEC score, the positive negative symptom excitatory component. We expect a 3 to 4-point change from baseline out at 2 hours, our primary efficacy endpoint. And we believe that will also show, as we showed in TRANQUILITY I, a clinically meaningful change and so again, it's the same patient population. It's same changes. We powered the study appropriately and so we're really replicating what we've already seen for TRANQUILITY II.

Great. Yes. Definitely, at least from what I hear from the -- expectations are that it's a pretty low-risk trial relatively. But how do you define the market in Alzheimer's, for agitation, and which patients do you think could be best suited for this sort of a treatment?

So clinically, I'll say you can slice and dice the population in a number of ways. You can define it by mini-mental state exam. You can define it by how severe the agitation is or even how frequent they have episodes of agitation. What we've been demonstrating both in Tranquility I, we hope to replicate in TRANQUILITY II is that we can treat an acute episode of agitation, especially these moderate to severe episodes whenever they occur. The population is huge. We know that these patients escalate care, so a patient with more severe agitation who's literally living at home, maybe with family members, must go to assisted living for their behavior to be managed. And then agitation again, is the principal reason for escalating another level of care, let's say, from an assisted living situation, which is at home, it's department, it's townhouse or condo to the point where they're in what they're now called memory care centers or skilled nursing. We used to call them nursing homes, but I guess that had such a bad connotation because nobody wants their mother or grandmother to be placed in a nursing home. So we've changed the verbiage and we now have a sort of spectrum of care. But agitation is key not so much to the level of dementia as is key to these escalating levels of care. So it's really important that we get this and help the spectrum of agitation that occurs across the spectrum of dementia, especially all virus type dementia being the most prevalent. It's a huge medical problem. I'll let Matt speak to...

There's 100 million episodes a year in Alzheimer's dementia market. So it's a very large market. Very underserved. Early market research shows the unmet need is very clear. And we feel like we're well positioned to handle these episodes when they occur. And there's quite a bit of opportunity across the spectrum of agitation in this population.

How do you think about when a patient is taking IGALMI at home and how is the access to it. How does that impact the commercial ceiling for the drug in that patients could be taking it at lower stages of agitation or beginning stages before it were serious enough to progress to where you're at now in a hospital. What does that do for the maybe usage per patient aspect?

Well, I mean, so what you're describing is that it would be taken all along the continuum of severity, which is what we would want and expect. Right now, roughly 20% of the Alzheimer dementia patients wind up in the emergency department for their agitation, which actually is another bridge to the market in the ALF setting or nursing home setting. But we would anticipate that we can actually help the burden of the health system generally by treating these patients and changing the site of care from the emergency department from the hospital into the at-home setting. So we would welcome the opportunity to help these patients early on and maybe prevent them from having to go into the second care that is not with their family.

Great. Okay. And then maybe we can talk a little bit about IGALMI and depression. How are you guys thinking about that as an indication, very different from current depression treatments. Where do you think it could fit in? And what benefits could it provide that are sort of an unmet need right now.

So in terms of depression, we know that the gold standard measure of depression for regulatory purposes is the Hamilton Depression Rating Scale. And as you look at the total scale, 6 of the 19, we'll say, different numbers of items, but basically, 18, 19 items, more than half of them are related to symptoms that we know IGALMI can treat. So symptoms like anxiety, symptoms like sleeplessness and insomnia and restlessness and irritability, these are all components of agitation, obviously. So although we haven't tested this per se in patients with simple MDD, we have tested this in patients who are agitated with bipolar depression. We've demonstrated these effects. And so the study we're currently doing is a daily dosing study. We're giving patients -- these are healthy volunteers, 1 and 2 doses. We're testing the range of doses and the safety across a range of potential doses. In addition, our final panel will be testing the highest dose that is well tolerated in conjunction with the serotonin and norepinephrine reuptake inhibitor. So think Prozac and Effexor for example. And this will form the platform that we can then demonstrate and proof of concept, if used in major depression.

Okay. That makes sense. And then the -- I want to make sure and touch on OnkosXcel, BXCL701. You've shown some very good data there and in a moderate amount of patients. Where does that program go from here? And how do you get to the finish line with 701?

That's a great question, Greg. We will be -- we are in the middle of -- we have completed the enrollment, and we are in the middle of [indiscernible]. It will be in the middle of like database cleanup and locking the database and then announcing the data. So we expect all of that to happen in the month of January. That data so far, that has been presented, we had about 30% response rate and 9 months of durability, which is really good for these patients who does not benefit from current immunotherapy like under 5% or 3%. So that kind of response rate is encouraging, as well as the durability of response rate is really good. Using that data, we are developing our strategy. Now what would it take from this point onward to get to the NDA, like what kind of a strategy we can develop, and we will discuss with The Street our strategy as we start getting alignment with the FDA that what do we need to do to get to the NDA. That's our goal. That how to bring this drug to the patient as fast as possible in a high unmet need area where there is no current approved therapy in small cell neuroendocrine cancer. What are we trying to prove? We are trying to prove that using 701, which is activator of innate immunity, it's orally available. We have 800 patient data. We have already demonstrated human proof of concept. We have published a mechanism in [Jitsi] with our collaborator. So we have a lot of information that already has been accumulated. So now we will use all of that to see how we can advance the program as well as how we can do human proof of concept in other tumor types. So as you can imagine, there are other similar type of cell types or other cold tumors where 701 can benefit these patients. So it can be a platform for combining with KEYTRUDA and turning the cold tumor to hot and providing a potential therapy to these patients where there is a very high unmet medical need. Our strategy for OnkosXcel is clear that we want to continue to build on 701 success. We are also building a sustainable pipeline outside 701, which is 702 using our AI platform. And also, we are exploring both our strategic options in terms of partnering or financing for OnkosXcel so that OnkosXcel has its own dedicated team, dedicated capital to do just to 701 the value it can create for our stakeholders.

Okay. That's helpful. That makes a lot of sense. Well, we only have a couple of minutes left. So I wanted to throw out the strategic question. You showcased the potential of your AI platform with getting IGALMI approved, finding 701 and that looks like there could be a good drug there. Where do you go from here with the AI platform? And maybe in terms of indications that you could focus on initially? And then just broader, where do you see the platform going in the future?

In terms of the AI, we believe that we have made a lot of progress in terms of creating an AI ecosystem within the BioXcel Therapeutics. We have generated our -- we call it as an AI platform version 2.0 and we continue to add various things that we need to make it effective for neuroscience or immuno-oncology. So this last 4, 5 years have been very helpful. We continue to have our partnership with our parent company, where the [EvolveWare] was used to discover 501 and 701. So we continue to build on those successes. In terms of our therapeutic area of focus for neuroscience, we are focusing on stress-related axis. So agitation is one of those symptoms. There are other symptoms like that. So that's the area we have chosen in terms of the neuropsychiatry. But we also see huge unmet need in neuro-rare diseases. And we see that AI platform can help build certain understanding to identify unique assets that -- and unique area where there is a high unmet medical need to come up with transformative therapies. So those are -- will continue to be our areas. As you already know, we have 502 identified. We have talked about it. We will be discussing more the plans for 502, how it can augment our pipeline, but we continue to discover 503, 504. And one of the things we are trying to evaluate internally, strategically is what is our optimal strategy because our -- once we start focusing on an area or discovery of a new agent is 3 to 6 months, and it takes another 6 months to validate that through the preclinical, as well as translational models. So we can produce a lot of asset, and we are trying to see how we can come up with this strategy that will allow us to execute on these assets in parallel. So we will be discussing more of that in the future.

Very exciting. Well, with that, we've come to the end of our time here. So I'd like to thank Vimal, Rob and Matt for joining us and everyone out there for watching as well. Take care everyone.

Thank you for hosting us, Greg, and thanks, everyone for joining us today.