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

Great. Welcome, everyone, and welcome, especially to the team from BioXcel Therapeutics. Today, we have Vimal Mehta, CEO; Rob Risinger, CMO; and then we've got Matt Wiley, Chief Commercial Officer. So thanks to all of you for joining, and thanks to everyone who's joining us here and on the webcast.

Maybe just to start, could you level set with a brief overview of the company with perhaps a particular focus on what you see as key value drivers over the next 12 to 24 months?

Great. Thank you, Corinne, for hosting us, and good afternoon, everyone. BioXcel Therapeutics is a biopharmaceutical company developing innovative medicines in neuroscience and immuno-oncology using artificial intelligence-based platform. In terms of where we are, we've been now, like a public company for over 5 years, and we have an approved drug, IGALMI, that got approved last year, and now we are in the commercialization phase. And I know Matt will be providing the update on that how things are progressing. In addition to that, our strategy always has been land and expand. And in that respect, IGALMI is approved for acute treatment of agitation resulting from schizophrenia, bipolar 1 and 2 for mild, moderate and aggressive form of the -- severe form of the agitation. So it covers all those 3 spectrum. But it is being used or launched in an institutional setting where these patients show up. So they come and they get treated there. Now we are continuously working on expanding the indication for a home setting. So for that, we had a SERENITY III data readout. And now we know the safety of the 60 micrograms which is half the dose of the approved drug, and we know how to dial into the efficacy. So we'll be starting a part 2 of the SERENITY III program, and that's one of the big value drivers because strategically, it makes all the sense that we now capture the market that is in the home setting because already, we are in a commercial setting where it's being used to treat the patients that are in the institutional setting. With just a lower dose, we'll go in the home setting. So quite highly derisked from that perspective because safety is the key for drug going home and we achieved a good safety margin between the 120, which is already approved in the institutional setting and the safety data we got. The other large opportunity, as all of you know, is Alzheimer's-related agitation and we have a data readout coming up. It's on track. I just want to reiterate that data readout is on track for June. And that's a very large opportunity again. So if you think of the Alzheimer's delayed agitation, in our estimate, it's about 100 million episodes. So 16 million episodes in the institutional setting, home setting gives us another 23 million and which keeps on expanding as our commercial team is doing more market research because there has never been a drug approved for home setting for agitation. So 40 million there, 100 million in Alzheimer's. And as I mentioned, data readout is expected this month, that can give us a very broad platform in agitation, and we can cover millions of patients using this drug. In addition, we have a 502 program that we will like to bring this up to the clinic, and that was also identified using our AI-based platform. And you will hear about the update on the 502. In addition to that, we have the oncology asset, which is BXCL701 that now we have created a subsidiary, OnkosXcel, and it's the activator of innate immunity that is combined with KEYTRUDA for small cell neuroendocrine cancer. And we are expecting to initiate a Phase IIb potential registration trial for 701. So that kind of is a quick overview and the 2 key catalysts are taking the drug in the home setting and then expanding the indication outside current schizophrenia, bipolar 1 and 2.

Great. Maybe we'll start with the commercial progress. IGALMI was approved just over a year ago for the treatment of agitation in schizophrenia and bipolar like you mentioned. How would you characterize the hospital launch to date? And what are some of the key metrics you're tracking?

So it's going as expected. Hospital launches are a little bit different than retail and community setting because you have to unlock access in each individual hospital or hospital system before you can actually drive demand in those hospitals. So that process is ongoing. To date, we've unlocked over 130 hospital formularies with 600 in process. Those are the key metrics that we thought -- that we track and communicate out. The revenue typically follows that by a couple of months.

Okay. Given the infrastructure is still underway, I guess, when would you anticipate seeing an inflection of sales? And do you think the shape will look like an inflection? Or will it be more of a slow build over time?

It should be an inflection, and here's why. We launched into the trade in July of last year with 26 representatives. And primarily, we did that to assess how we could access hospitals live in the post-COVID world where we're able to get in and then actually see clinicians face to face. And what we found is we were able to access over 80% of our target universe for those 26 reps by the end of last year, and the majority of that was face-to-face. There's high interest in the drug and so we made the decision and we actually pulled forward the decision to expand to 70 reps. And so the typical review cycle for PMT to add the drug to formulary is 6 to 12 months. And so the original 26 representatives are in that window now. We're just exiting that window by the end of this month. And then the additional 44 reps are entering that window. They have probably about mid-month this month and certainly through the end of the year. So we'll see an inflection in hospitals scheduled to vote and we'll also see an inflection in revenue behind that.

Great. So based on the current trajectory and what you mentioned with respect to the 600 hospitals with votes scheduled, how many hospitals do you think could be -- could have formulary decisions by year-end?

Well, we haven't guided on the number of formularies we expect to vote and matriculate by the end of the year. But given the fact that this -- we've hastened the pace of formularies in process, and we'll continue to see that, I feel very positive that not only are we going to see an inflection in approvals, but we'll continue to see additional hospitals raise their hand to vote on IGALMI.

And then, I guess, among those that have added IGALMI, what can you share qualitatively or quantitatively about the pace of adoption among the kind of early adopters as it relates to the P&T decisions?

So during our last earnings call, we actually added a slide to our IR deck that showed the uptake curve of 5 hospitals that had put IGALMI on formulary. What we did is we assess from their first order through 6 months what that uptake curve looks like in the addressable market within the hospital. So every one of our target hospitals has, on average, about 4,000 agitation episodes per year. So what we saw in these top 5 hospitals is that we penetrated that entire annual number by about 4.3% or if you take a semi-annual number, we've penetrated the market by 8.6%. That's a pretty good uptake in a very short period of time. So once we get on formulary, once we get the drug into the pyxis, et cetera, and we get our first use. We tend to see an inflection that looks a little bit more like a retail launch than it does a hospital launch. So once we clear all the hurdles for access, physicians seem to like it.

Great. As you think about the commercial infrastructure you currently have in place, do you think it's sufficient to support the launch as you move into this next phase?

Absolutely. Yes. So between the corporate account director team that covers the IDNs and our reps who cover the 1,700 targets, that represents 75% of the TAM. So we think that we're very well-positioned to pull it through. That's what this team does after we get access, they know how to drive demand.

Great. Maybe we'll shift gears here to some of the clinical programs. You recently reported the SERENITY III study. It didn't meet the primary endpoint, but you still see a path forward. So maybe you could tell us a little bit more about what you saw and what you think the next steps [ will be ] today?

Sure. So the endpoint was missed at 0.07 to 2 hours, and that was a group mean change from baseline on the total PEC score. What we saw actually was a proportion of patients who respond and I don't mean just a little bit of response. They had 40% reduction or greater and that was the majority of patients. It's a simple majority, slightly over 50% at 2 hours. But that's the way you need to think about response, especially when we're taking these doses now at home, we chose to test the 60-microgram dose because it's exactly 1/2 of the lowest approved dose and demonstrating that a 60-microgram dose has a robust response in half of the patients means we're at a sort of cusp. So at 60 micrograms, that's certainly a dose in the safety data that is very comparable to placebo in terms of safety. And so that's the door, the second door that you have to get through with the FDA is safety and especially at home. We needed to demonstrate a safety profile that was robust, and we have that for a 60-microgram dose. So we're not at all, if you will, displeased with this. In fact, the 60-microgram dose is able to be repeated. We have FDA agreement on this. And so at home, for the 50% or around 50% who respond, they don't need another dose, but they could take another dose of 60-microgram if they need it at home. In addition, we're doing the PK/PD modeling. This is the standard approach. When you submit your NDA. We have PK/PD modeling around both efficacy and safety. So we can now select the dose, so that we could test both the 60 and a dose in between 60 and 120. For example, it could be 80. That has a sort of optimal response, more than 50% respond and also optimal safety. So safety that's close to 60 and a margin that's even better safety than 120. So those 2 doses could be tested at home.

Great. And so how do you plan to test them? I know you made some updates to part 2 of the study. So could you walk us through what part 2 looks like or your plans for part 2 now?

Yes. So we already have the capacity to test 60 and another 60 if necessary at home. We're conducting that trial that is likely to start up. We are obtaining the PK/PD modeling for both efficacy and safety, and we're going to take that as well to the FDA. That sort of greases the skids to an approval in the sense that we can align with the FDA on both the efficacy and safety that they may want to see, realize it's a different endpoint at home. So at home, the endpoint is going to be a global improvement that is rated, not just by the patient, but principally an informant. So an informant means spouse, a caregiver or even a child of the patient, and it's a very simple scale. It's not present, mild, moderate, severe. And so we're testing that. We'll be able to demonstrate that they're able to rate that. After all, these informants are the ones who literally suffer the ills of the patient becoming agitated. And so we're monitoring that. It is a 3-month trial in part 2, so whenever they become agitated, they'll be able to take a dose and we'll see the results. The important aspect of the at-home trial is the principal and primary endpoint will be safety. The FDA wants to -- the FDA knows the drug works, they've approved it. So it's not so much efficacy that they're interested in at home, they really want to show safety. So that's the primary endpoint for Part 2. Anything that's directional and we'll be able to power it as well, but anything that's directional that points towards efficacy in part 2 is a win for us, and the FDA will then both in part on the PK/PD and what we'll demonstrate especially in terms of safety, that is the green light to submit the NDA.

Great. In terms of part 2 of the study, I guess, how are you thinking about powering now that you've added this additional efficacy, maybe not added is the right word, but how are you thinking about the powering of that study from here?

Well, so again, it's a little bit strange because normally, you would power your primary. And in this case, it's safety. And so it will depend on the discussion with the FDA, if there is an actual bar that they want. We don't believe there is a bar and they never said we couldn't, for example, give 120 micrograms at home. And so we're really going to be talking about the subtleties with the FDA, with the PK/PD modeling for both -- to optimize the intersection of both efficacy and safety, and then we can talk about powering the part 2.

Great. I guess what's the latest you've heard from the FDA? Or when can you meet with them again to get signed off on this trial design with the modest updates you talked about?

Well, the FDA typically takes more than 60 days to meet with them. Once we have the PK/PD modeling in another couple of weeks, then we can request the meeting. So it may take a couple of months to actually have the meeting. But this is not slowing us down in terms of conducting that part 2. They may add in or fold in additional measures or additional doses. But we have the infrastructure in place to go ahead and begin.

Great. So maybe play that forward for us. How should we think about the timing of part 2? When can you start? And I guess, from there, when would we anticipate data?

We'll be able to provide more definitive guidance. It is a 3-month trial for any individual patient. And so our last patient in will then give us the time line for the last patient out and, typically, it's 3 months after that. So it will be close, but we'll provide guidance once we have the accrual curves and the acceleration of enrollment.

Yes. So I guess, as you mentioned, safety is the key part of the study. How are you thinking about what an appropriate or sufficient safety profile would be during that trial? And also, how are you thinking about the number of doses a patient might need during the period of time they're on study?

Again, the FDA will be very much interested in how frequently they have episodes of agitation. Our marketing research has some information about that. And the FDA really simply wants to see the quantitative data, how many times were they dosed, how many times did they take the dose over that 3-month period. It's not so much a bar, it's simply a description for them.

Great. Pending successful data, how do you envision the commercial opportunity for this? Maybe we'll start with that.

So Alzheimer's dementia patients are managed by 76,000 physicians in the United States. But when we actually distill that to those that are either making the initial diagnosis or making treatment decisions, that universe shrinks to about 30,000. If you take your top 5 deciles, so your top 50% of patients that are being managed by that 30,000 group, it distills down about 7,600 physicians. So we haven't made a decision on what a deployment might look like for Alzheimer's dementia, but we certainly know the market and know which physicians we would need to access.

Understood. And I guess it sounds like you haven't decided, but probably a sales force expansion would be necessary to start getting to that home setting?

So yes, so if you think about the bipolar schizophrenia market, there are -- those patients are typically either diagnosed or treatment decisions are made by psychiatrists. We've identified roughly 8,100 of those, so you could theoretically have a sales team that covers both the specialists that manage the Alzheimer's dementia patients and also the psychiatrists that manage the bipolar schizophrenia patients. And for 8,100 targets in psychiatry, you're looking at a sales expansion of maybe 50 to 70 for those specialists of interest to us in that top 5 deciles. We're adding another maybe 3,600 docs, so you might be adding another 20 to 30 FTEs against that. And again, we have optionality in how we build that out.

Okay. Helpful. Maybe we'll shift gears to TRANQUILITY. Let's start, the data is coming any day now. How do you frame a success scenario for those first Phase III results there?

So we are on track to announce the data from the TRANQUILITY as we have said in this quarter, so that is on track. I will let Rob describe what the bar for TRANQUILITY is. But anything that what we signed, TRANQUILITY won. Like you get a statistical significance even with 1 dose and then you have a reasonable safety and tolerability profile, that will be what FDA will be looking. If you think about the space for acute agitation, there is no drug approved. They approved chronic agitation drug, which is antipsychotic, and they have black box warning, but that got approved because there's such a high unmet need for these patients and it's such large health care burden as well as burden for the families. And this is the reason these patients end up in ALS and nursing home. It's not because of their cognition. Some of the drugs that got approved recently or getting approved will help patients with their slowing down recognition, but still they will have the psychosis, agitation episodes and they need to be managed these episodes because somebody gets hurt if these agitation happens and they're not managed. So Rob, you want to add anything on the bar?

Yes, I think the bar is, in some sense, pretty low. We did power the study to separate for each dose versus placebo. Some people have asked us, why 0.025? This is now the standard way the FDA would like to analyze when you're testing 2 hypotheses individually. So one hypothesis is the low dose versus placebo, the other is the high dose. So each dose is being tested at 0.025. We split that 0.05, if you will, 1/2. So demonstrating efficacy of one or the other dose, presumably at least the high dose, enables us to move forward. The real bar is the safety. We demonstrate safety similar to what we had in the Tranquility I, it's a full go. And by full go, what I mean is I'm going to show this to the FDA, and we're going to argue with them about what else they need because we're demonstrating efficacy. We've demonstrated 60 safety in the SERENITY III study. We now are demonstrating safety and efficacy of both of these doses in Alzheimer's. What else would they like to see? And I think the bar in terms of safety, although nobody wants grandma to fall, it is true that patients with agitation fall. It is literally a risk factor for all of the scales that hospitals, nursing homes, assisted living, they assess patients about what is the risk of fall and they do fall frequently. The biggest -- one of the biggest factors is agitation. It is psychomotor agitation after all. So we're capturing all of this and being able to demonstrate safety in the face of an increased risk. If we show efficacy, we're actually diminishing risk.

Another thing I'd like to add what Rob said. If you think of the whole market, dementia market agitation, chronic is in the later stages of the dementia. So Matt can provide more context to it, but in our estimates 15% to 20% net chronic. We are covering the spectrum of 70% to 80% is acute. And these patients are already on 10 to 12 drugs. And there's no need to load them with another medication if it's not needed. So 501 will serve a very big market need. And as all of you know, for chronic, we have another mechanism, 502 that we are exploring. We do believe that the real market. And both markets, the acute as well as chronic will coexist. Even if you have a chronic drug, it's kind of preventing your episodes from happening, and it takes 6 weeks or whatever time period is required. Here, the patient gets treated as and when it happens. And there will be breakthrough episodes even if you are on a chronic medication. So 501 will play it. So do you want to add anything, Matt on that?

No, I think that's right. I mean right now, the chronic patients are being managed with antipsychotics. And that represents about close to 20% of the market. And those patients still have breakthrough episodes today. So we feel that BXCL501 will have application in all parts of the market.

Great. One of the things that's come up particularly in the past couple of weeks is just the dosing. It's slower in TRANQUILITY than it was in the SERENITY studies. So can you walk us through the decision there and why you still have confidence in the lower doses?

So the doses that we chose, the 40 and 60 demonstrated efficacy across multiple measures, not just the primary change from baseline, and that's essentially the proof in the pudding. That is what the study is powered for, efficacy. And the PK is a sort of reassurance. At least in our hands, we realize this is an elderly population. Just to be included in the trials, you have to be 65 and older and, in general, they're much older. They're closer to 80 than they are to 65. And so there's very little in the literature that you can literally cite. But studies that have looked at PK, those with the older population start to see differences in the elderly and that's clearly in our data set. We have filings for patents and both with the form and formulation, but also the PK and exposure in the elderly, which demonstrates that we have greater exposure in the elderly for the same dose than that same dose in younger patients. So we have a lot of confidence in being able to demonstrate both efficacy and safety.

Okay. You mentioned fall because you think that's a safety concern people bring up a lot. As you think about like what's tolerable in this population, how do you think about a bar threshold for what would be fine?

I think there's a misconception that we're practicing anesthesia with a film. And when we dose these patients, they calm down. And the fact that we're treating psychomotor agitation, they're less likely to trip on the carpet. They're less likely to run into the wall. They're less likely to fall as a result. It's not -- to the extent that we're diminishing the risk of fall, it's a significant problem in the population. But if we're treating one of the core causes of falls, I think that's essentially what we'll be able to demonstrate.

Okay. So then as you think about the 12-week period that the study will encompass, how are you -- what do you anticipate with respect to the number of episodes during that period of time?

So each patient is able to be dosed up to 29 times and we have a range. I'm blinded to what any particular individual had, but we have a range of doses all the way out to 29. Now most patients don't need 29 doses in 3 months, at least in the assisted living setting. So we'll be able to describe in the top line data, the range of doses, the range of frequency and also something about the continued efficacy over that 3-month period.

Okay. Understood. You mentioned this, so I'd like to follow up on the patients that are treated with chronic therapy, do we have a sense for what their rate of breakthrough agitation emphasis is?

I don't know that much is known about that, and this is in part why the FDA wanted us to study at 3-month period. They know that patients with chronic agitation have these sort of breakthrough episodes. They do throw plates, they do kick and bite, and they have severe agitation that needs to be treated even when they're on a chronic therapy. And so they did want us to study this over a period of time.

Understood. In terms of at-home use, you're obviously sitting in assisted living facilities. You have a nursing home study potentially later this year. For at-home use, does SERENITY III cover it? Or will you need to do additional work for at-home use for patients with Alzheimer's agitation?

Well, so patients in the TRANQUILITY II study and the TRANQUILITY 1 were dosed in their home. Now they're in town houses, condos, apartments, they are at a level where they're able to do their own shopping. They can cook for themselves unsupervised. And so it is an at-home setting. It's not a grandma at home with their child or being taken care of. They've typically had some episodes of agitation or need more constant check-ins than what's able to be provided by the family. And that's why they end up in assisted living. So that's a discussion we're going to have with the FDA. This is as close to literally at home as you can imagine.

Okay. In terms of TRANQUILITY III, I guess, can you provide a status update there? Where are we on that study?

So we finished the TRANQUILITY II obviously, and those sites have been shifted now to TRANQUILITY III. Our focus has been primarily sequential, so finished TRANQUILITY II, now moved to TRANQUILITY III and so we'll be able to provide a better guidance on that. The TRANQUILITY III study was started, and there are some sites that are only doing TRANQUILITY III and now we have a larger number of sites to enroll even more quickly in TRANQUILITY III.

And remind us if there's any differences between the TRANQUILITY II and TRANQUILITY III studies that we should keep in mind.

Yes. So the TRANQUILITY III study is moderate to severe dementia. So for example, the MMSE, there is no lower bound, it goes down to 0. And so this is a more severely demented population by mini mental state exam. And we do believe there will be a much higher frequency of episodes in the population in the skilled nursing and sometimes called memory care or rehab units or nursing homes. So this is a slightly different setting. They are monitored. They do require assistance, at least moderate or significant assistance with activities of daily life. So it is a different population. They tend to be a little bit more frail.

Given those differences, is there anything you're monitoring or think could translate into clinical efficacy or safety?

But we're monitoring identically to TRANQUILITY II. And so we don't think there will be a shift, if you will, in the safety. We simply have to demonstrate a similar safety to the TRANQUILITY II and, of course, similar efficacy.

Okay. We started to talk about this a little bit before. So could you frame the commercial book? Maybe let's start with the commercial opportunity, and then we'll talk about the infrastructure necessary to support it.

I totally jumped ahead -- so I mean Alzheimer's dementia is as it progresses in severity, you also see a corresponding increase in the number of episodes and the severity of those episodes. So when you get out into the nursing facilities, the long-term care facilities and opportunity. There are many more episodes. I think that's predominantly where you see the chronic agitation opportunity, the at-home settings and the ALS opportunities where your mild, moderate Alzheimer's dementia typically resides. And I think that's where we have an opportunity to stop the progression of -- or at least slow down the progression of these episodes going from site of care to site of care. Keep in mind, too, that roughly 20% of this market winds up in the emergency department for one reason or another when they're agitated. And so as Rob said, oftentimes, because of psychomotor agitation, they hurt themselves and wind up in the emergency department where we already have a footprint. So there is a logical bridge from what we're doing in the hospital today to both of our markets outside. And Alzheimer's dementia is not excluded from that. That certainly is a nice bridge with brand recognition to move back out in the community setting.

Got it. In terms of the price of the drug today, do you anticipate any changes as you move into these additional settings?

So we did extensive pricing research in all these settings prior to setting the WAC price for IGALMI today. And we know that we could leverage the 105 per film in these markets. Of course, when we did the research, we didn't have the advantage of knowing exactly how many episodes they would have per month, payers will look at that. And so we'll continue to sharpen the pencil. We do have opportunity if we wanted to, to have a differential price that we could do that, different class of trade and different SKU. But right now, we have the operating assumption that we have flat pricing across all indications.

Great. As you think about the specific challenges, the hospital launch versus these more retail launches, how do you think about the shape of the potential launch curve?

Well, it's very different. I mean your traditional retail launch curve is really a 5-year ramp to peak. And there are a lot of reasons for that. I mean, while you're securing access, you can still synthetically grant access to these patients so they can get drug. So you'll see an inflection in Rx is much different than you'll see units in demand in a hospital setting. Hospitals can take a little bit longer than 5 years ramp to peak. And so we would expect that these markets, both in community bipolar schizophrenia and also Alzheimer's dementia to react and perform like most retail launches would.

Great. Maybe shifting gears again, cash position. How do you think about your current cash runway? And what is incumbent in that?

That's a good question. As of last reporting period, our cash is about $165 million. In addition to that, we have a strategic financing with Oaktree and Qatar Investment Authority that gives us access to another $155 million. In addition to the revenues being generated from the IGALMI, that gives us a runway into 2025. And so far, what we have not explored is the partnering. After Alzheimer's data, it would make sense to look into the partnering because we are right now into U.S. And ex U.S. are completely available, we haven't done. So that can bring non-dilutive funding, and we will be looking at all possible options to make sure that we have the cash and at the same time, how to get to the profitability.

When you speak to partnering, are you talking specifically about regional partnerships or...

We will be looking at more as a single partner for Japan and Europe or Japan and Europe separately, and then they can take care of the rest of the geography, but not do too much regional partnering, at least that will be the thinking. Because we will need a single partner who will commit to schizophrenia, bipolar, both for institutional or home setting and it will be ideal that they can commercialize Alzheimer's. So we will look for a strategic point.

Great. So it sounds like you have thoughts around a couple of non-dilutive sources of financing. What about the capital markets? How are you thinking about that?

That option is always available to us. So there are 3 ways: capital markets, doing a debt and royalty, which we have already done and the partner. So those are the 3 ways to keep the company capitalized.

Great. I think that basically brings me to the end of time and the end of my questions. Thanks so much to all of you for joining us, and thanks everyone who's joining us here and at home.

Thank you for the opportunity.