BioXcel Therapeutics Inc (BTAI) 2021 Q3 法說會逐字稿

Good morning, and welcome to the BioXcel Therapeutics Third Quarter 2021 Financial Results Conference Call. (Operator Instructions)

Just to remind everyone, certain matters discussed in today's conference call and/or answers that may be given to questions asked are forward-looking statements subject to risks and uncertainties related to future events and/or future financial performance of the company. Actual results could differ materially from those anticipated in these forward-looking statements. Risk factors that may affect results are detailed in the company's most recent public filings with the U.S. Securities and Exchange Commission, including its quarterly report on Form 10-Q for the quarterly period ended September 30, 2021, which can be found at www.bioxceltherapeutics.com or on www.sec.gov.

As a reminder, today's conference is being recorded. Joining us on today's call are Dr. Vimal Mehta, Chief Executive Officer; Richard Steinhart, Chief Financial Officer; Vince O'Neill, Chief Medical Officer; Frank Yocca, Chief Scientific Officer; and Rob Risinger, Senior Vice President of Clinical Development. It is now my pleasure to turn the call over to Dr. Mehta, the CEO of BioXcel Therapeutics. Please go ahead.

Thank you, operator. Welcome, everyone, and thank you for joining our call today. We will update you on our financial performance and business highlights for the third quarter of 2021. As you know, BioXcel Therapeutics is a clinical-stage biopharmaceutical company utilizing artificial intelligence approaches to develop transformative medicines in neuroscience and immuno-oncology. It is a very exciting time for the company, and we are pleased to report tremendous progress in our neuroscience and immuno-oncology franchise as well as commercial and launch planning as we near our January 5 PDUFA date.

We have many accomplishments to discuss today. Let's start with our most advanced program in neuroscience, BXCL501 for the acute treatment of agitation associated with schizophrenia and bipolar disorders 1 and 2. As a reminder, this is our lead investigational candidate that we double out from first-in-human trials to FDA acceptance for our NDA filing in under 3 years. This speed is remarkable as we are not aware of any other AI-driven drug discovery and development company that has achieved these milestones as efficiently.

We are now less than 2 months away from potential approval and our commercial and launch readiness activities are advancing well. We have expanded our sales leadership, including onboarding a VP of Sales and Regional Sales Director. They have deep neuroscience expertise with multiple product launches in both institutional and outpatient settings and experience working for startups and large companies. We are also focused on recruitment for our sales team across key territories. We are finalizing our market access and pricing strategy through evidence-based market results for 501.

Through 2 strategic initiatives we are continuing to educate key audiences about our innovative product with no similar launch analogs. First, we have fully launched our disease education campaign, promoting awareness around the acute treatment of agitation in schizophrenia and bipolar disorder. This is a broad multichannel campaign that includes broadcast and product theater presentations by key thought leaders. The campaign is designed to educate health care providers on the full spectrum of signs, symptoms and levels of severity associated with agitation and the importance of pronged noninvasive treatment for patient with schizophrenia and bipolar disorders.

Second, our medical science liaison and medical managed care teams are actively engaged with health care providers at the institutional level and at conferences around the country. At several recent conferences, we had educational booths that effectively inform participants on how to assess agitation in its schizophrenia and bipolar patient and follow treatment guidelines. We will continue to actively participate at industry-leading conferences in the months ahead. Two strategic initiatives are continuously providing us with valuable insights for commercial launch while building important awareness of agitation associated with neuropsychiatric disorders.

We are excited about the possibility of bringing a potential new treatment option to the millions of patients struggling with acute agitation associated with schizophrenia and bipolar disorders. Equally significant, 501 has the potential to be the first innovative product, new therapy for these indications in more than a decade. Our neuroscience franchise is growing rapidly. In fact, we believe that 501's pending approval and commercialization is just the beginning. As you will recall, we have a 3 pillar portfolio expansion strategy for BXCL501. We intend to expand indications for 501, extend our geographic reach and grow the medical settings where our treatments are offered.

Let me quickly review our progress within each of these 3 pillars. First, reflecting our indication expansion pillars, 501 represents a pipeline within a product and we are advancing 501 across several indications. We plan to initiate a Phase III program evaluating 501 for the acute treatment of agitation in patients with Alzheimer's disease in Q4 of this year. This follows multiple meetings with the FDA and strategic considerations related to clinical, regulatory and commercial potential.

Alzheimer's disease is the most prevalent type of dementia in the U.S. For context, in Americans over 65 years old, Alzheimer's disease is expected to double over the next 20 years, increasing from 5.8 million in 2020 to 11.8 million in 2014. Up to 70% of those patients experience agitation with an estimated 100 million episodes of agitation in the U.S. every year. We believe 501 would mark the first orally available therapy, if approved, where there are currently no FDA-approved therapies. Given the unmet medical need in this area we intend to pursue BXCL501 in other dementia subtypes as part of our future development.

Beyond dementia, we are expanding 501 into new indications, including a Phase Ib/II trial evaluating 501 as an adjunctive treatment in major depressive disorder or MDD, a major public health burden with a high unmet need. It is estimated that 30 million or more Americans are currently on antidepressant, with 25% of those diagnosed remaining ill after starting treatment. Our team is preparing to submit an IND and we expect to initiate a clinical trial in the first half of 2022.

Second, as a part of our geographic expansion strategy, we expect to submit a marketing authorization application with the European Medicine Agency in the first half of 2022 for BXCL501. We believe the EU represents a sizable market opportunity similar to the U.S. The third pillar of our expansion strategy is to grow the 501 franchise across multiple treatment settings as part of our land and expand strategy. 501 has the potential to move into outpatient setting, which represents another large market opportunity. We are actively pursuing the development and expansion strategy for both our current and future indications.

Our AI platform continues to drive our innovation and has it's called the clinical progress of BXCL501 into MDD and the discovery of BXCL502. At R&D Day in September, we shared an in-depth look at how we apply this platform to accelerate our drug discovery and development efforts. We will continue to leverage our AI platform for building a sustainable R&D pipeline. We have already begun formulation and clinical development planning for BXCL502 for the chronic treatment of agitation and dementia. 502 is designed as a monotherapy and we believe there may be a potential benefit of combining 501 and 502 as the treatment of agitation in dementia.

Turning to our immuno-oncology franchise, we also made great strides progressing the BXCL501 program. As a reminder, 501 is an orally administered systemic activator of innate immunity candidates being developed for the treatment of aggressive forms of prostate cancer and advanced solid tumors. As further evidence of 701's broad potential in hard-to-treat tumors at ESMO in September, we presented positive interim data from our ongoing Phase Ib/II study of BXCL701 in combination with KEYTRUDA.

We demonstrated encouraging efficacy and a favorable safety profile in heavily pretreated metastatic castrate-resistant prostate cancer patients with adenocarcinoma. Building upon these results, we also announced the expansion of our de novo and treatment-emergent small cell neuroendocrine SCNC cohort. This is an area of high unmet medical needs with no current standard of care. We expect to present additional efficacy data from the MD Anderson led open-label Phase II basket trial of 701 and KEYTRUDA for advanced solid tumors in the first half of 2022. Last week, the Journal of Immunotherapy of Cancer reported data findings suggesting 701 may enhance immunotherapy efficacy in cold tumor types such as pancreatic cancer. These findings also highlight the importance -- potential importance of natural cells along with T cells in regulating pancreatic cancer tumor growth.

These encouraging results help validate our continued efforts to identify other cancer types that could benefit from 701's novel mechanism of action. We continue to optimize the potential of our immuno-oncology franchise as we advance multiple clinical strategies.

To summarize, this is a very exciting time for BioXcel Therapeutics as we are rapidly progressing both franchises and preparing for commercial launch. We believe that we are uniquely positioned to take advantage of market opportunities in the near and long term.

Now I would like to turn the call over to Richard, who will give a financial update. Richard?

Thank you, Vimal. I will now review our third quarter 2021 financial results. Research and development expenses were $11.9 million for the third quarter of 2021 as compared to $16.3 million for the same period in 2020. The decrease in expenses were primarily attributable to a reduction in our 501 clinical trial costs. These amounts were offset in part by an increase in clinical trial costs related to BXCL701. In addition, we experienced greater professional and consulting fees which were primarily related to the development of BXCL501. General and administrative expenses were $14.9 million for the third quarter of 2021 compared to $8.5 million for the same period in 2020.

The increase was primarily due to higher stock-based compensation and personnel costs due to continued expansion of our teams, increased marketing and commercial costs related to our preparation of the potential launch of BXCL501 in the U.S. as well as increased insurance, legal and professional fees. The company reported a net loss of $26.8 million for the third quarter of 2021 compared to a net loss of $24.8 million for the same period in 2020. As of September 30, 2021, cash and cash equivalents totaled approximately $252.9 million. Now I'd like to turn the call back to Vimal.

Thank you, Richard. We would now like to open the call for questions. Operator?

(Operator Instructions) Our first question is coming from the line of Gregory Harrison with Bank of America.

On the 501 review, have you started labeling discussions and what are your expectations or goals for the label and how do the different options there impact your commercial expectations for the drug?

We expect the labeling discussions to start soon. We've been addressing the information requests from the FDA and we are under the window where labeling discussions are expected shortly. There can be 2 scenarios. One is that we have no medical supervision and then it can go into the initial setting and/or in the outpatient setting or there is a medical supervision requirement and then launch will be in the institutional setting. So that's kind of a base case we are looking at and we have presented in our commercial day that for institutional setting we are ready to launch the product if that turns out to be the base case for our label.

Our next question is coming from the line of Robyn Karnauskas with Truist.

I guess I just had a question on the combination strategy 501, 502 you're starting the Phase I trial. Can you just talk a little bit about how you're thinking about development strategy for that? I know for depression, it can be very challenging and so when we think about Phase I, how are you designing the Phase I that you could really get a good sense on whether or not you'll see a signal if you go forward?

So thank you, Robyn, for asking the question. Our first plan for 502 is to do the formulation. We have recently identified that candidate. Once formulation has been completed, we're going to pursue that as a monotherapy. The purpose of any combination benefit can be that as you know, a lot of chronic therapies don't work for almost 6 weeks. They don't provide any benefit. But a combination with 501 can provide that extra benefit that drug can start working onset early as well as it can maintain, like provide the benefit for the chronic aspect of the agitation. So that's the thought process there but initially, we're going to start as a monotherapy.

And then just to sign for depression and also a 40-milligram update, when will we get the 40-milligram dose data?

So 40 microgram data for dementia, we've been completing that trial and doing some blinded analysis related to safety and other features and we will be utilizing all that data in selecting our 2 doses for our Phase III program and we'll report on that.

Our next question is coming from the line of Sumant Kulkarni with Canaccord.

I have a couple. Now that you're closer to your action date, are there any commercial variables that you feel might need more focus what you -- versus what you had announced in your commercial day in light of some of the changes that you've had at the top? And secondly, on the dementia data, could you give us some specifics on what exactly you've aligned with the FDA so far on starting a potential Phase III there?

For commercial our focus has been in building our sales organization as we have a strong commercial leadership team to continue with our launch preparations. And as I reported, that we have hired VP of Sales, regional sales directors and continuing to hire the sales team for those specific territories and regions where the sales we have hired regional directors. So that part of the process is progressing well and second piece related to that is finalizing our pricing strategy.

So we have done a lot of qualitative, quantitative research, evidence-based research to come up with a pricing strategy that will allow to capture the maximum potential of BXCL501. That encompass coming up with this strategy, that will be a back price. And once we have the back price, what depending on medical settings what discounting strategy will be. So all of that work has been going on, and it's near completion. So those are the 2 important pieces, which will come together by the end of the year to get us ready for our launch upon approval of the drug by FDA.

And regarding your second question about the dementia specifics, once we provide that we have initiated the trial, we will lay out the full Phase III program that we have aligned with the FDA. At a high level, I can say it's going to have a lot of components of tranquility because that data resulted in our breakthrough therapy designation. One thing you have noticed is that we have chosen to go initially with the Alzheimer's disease to keep the focus for strategic reasons and get to the Sendai in a pure population in Alzheimer's. So we will continue to provide as we outline our Phase III program, what the key elements of design features are in a few weeks.

Our next question is coming from Colin Bristow with UBS.

Just to build on your comments on the sales build-out, could you just quantify how many you have hired versus how many you ultimately expect to hire? And then where are you in the process of replacing Bill Kane? And then just as we think about the launch of 501, are you expecting to provide revenue guidance post-approval?

Thank you, Colin, for the question. Answering your question that the total number, if it is an institutional setting, we have guided that it will be about 75-sales member team. So currently, as I indicated, we have hired the sales management team and we are continuing to recruit the sales team. The regional sales managers are on board and they are defining their strategies and the territories that they want to focus in terms of bringing the sales teams on board and the timing for it.

As you know, our IDN is our key market. They are 57 IDNS, and they are the 2/3 of the overall market. So we are building a strategy, what will allow us to get the maximum coverage and how to ramp up the sales stream. In terms of bringing on a chief commercial officer, we currently are focused on approval as well as launch and we want to make sure that we can maintain the momentum with our current team and we are evaluating our options, what is a good timing to bring on the chief commercial officer on board and we will report on that.

And on the potential sales guidance post-approval?

So what we will be able to -- like once we have the approval and we have all our pricing strategy and all that formed up, we will provide a matrix what we can use for the launch and what the guidance will be over a period of time. At this point, we are working through all of that, and we will guide when we are in a position to provide the key launch metrics.

Our next question comes from the line of Ram Selvaraju with H.C. Wainwright.

Firstly, on the commercial side, I was wondering if you could provide us with some granularity regarding the factors driving what you expect from the perspective of market access. And in particular, the attitudes of various payers to coverage of 501? And secondly, if you could provide us with any commentary regarding gross to nets, discounting and rebating that you anticipate to be in place over the course of the initial months of the 501 launch, please?

Thank you for the question. Regarding your question about the discounting, only those discussions can start once we have the approval to sit down across with the peers. And they come up with the strategy first we need to come up with a VAT price and then the discounting strategy, and that will happen upon approval. Up till now, what we have is the evidence-based research market that has been conducted that what is the value proposition for the product, what is the optimal pricing and what pricing in different medical settings. So all that groundwork is being conducted.

And what is encouraging about the product is that product profile is very well received by the SCPs or any research we have done with the potential payers. Because it meets, as you know, 501 meets treatment guidelines. It has a very rapid onset of action, high response rates as well as durable responses and it's oral therapy. So we are very encouraged that for 501 value proposition in the marketplace is very strong. Now we will initiate these conversations once we have the approval of the drug, and we'll be able to provide more granularity on some of the questions you have asked.

Okay. That's helpful. Secondly, I was wondering if you could comment on kind of the timing and expectations regarding business development strategies around 501, particularly as this pertains to markets outside of the United States. And if you think that there's any positive read-through from the recent announcement of Pfizer's in-licensing of certain ex-U.S. rights pertaining to Nortech. And if you think that that might have some implications for what you ultimately intend to do with 501 down the road in order to optimize the value of the drug in ex-U.S. markets?

Great question, Ram. So we are initially focusing on Europe because that's where we are planning to file our MA application in first half of 2022. So answering your question, what will be the good timing for the BD strategy is 2022 to file our MA and then have a partner because then partner can get ready for the potential launch based on approval in 2023.

We continue to evaluate and we continue to receive requests for other geographies including Japan, China and other territories, and we evaluate those options. But currently, we are focused on getting ready for our launch and initiating the Phase III program in dementia. And second, from the business development perspective, we have prioritized Europe as our first territory or if we find a global partner who is interested in all other territories we will consider that as well.

And last question is, are you still contemplating a spin-out of 701 into a separate entity listed or not? And what are the factors potentially driving the timing of this? And when we might see it occur?

So we keep all our strategic options open for 701 which could involve licensing, partnering, co-commercialization, including the action you have outlined. We keep that and we'll continue to work with the Board what is the optimal option to maximize value for our shareholders. And at the same time, we are confiding that with some of the data that will be coming out for 701 from our 2 trials, prostate cancer trial that is we presented the data at ESMO and some of the data we'll be getting in our advanced tumor trial. So having the data and building a strategic option then we will provide clear direction what our plans are for 701 in 2022.

Our next question is coming from the line of Yatin Suneja with Guggenheim Securities.

This is Eddie on for Yatin. On the dementia study, if you don't get an outpatient label for the current NDA which I think is your current base case, what do you need to show in this additional Phase III to get that label change when you file for the SNDA? And then on the European side can you just talk a little bit more about how big that market is and how the standard of care, especially for mental health differs between the 2 regions? Like what are the additional challenges in that market?

For dementia, I'd just like to reiterate our tranquility trial was conducted in ALF, assisted living facility, which is as close to the community setting. So I will not compare our schizophrenia, bipolar, NDA comment that I made about the medical setting. So in dementia, we have already accounted for that. And once you see the Phase III program, you will see that we have taken into account the medical setting that we will be conducting the trial.

So we don't see that there will be a specific need for any of that in the dementia program, but that's why we took our time and interacting with the FDA and come up with a robust Phase III program. That will allow us to focus on completing our SNDA for dementia.

Coming back to Europe, Europe is a very different market. It's, I believe, more challenging, particularly for neuropsychiatric disorders. But the area we are focused with 501 agitation resulting from some of these diseases, there are no like standard of care that's optimal like U.S., so that meets treatment guidelines. So there is a huge unmet medical need. So we are filing the MA and it's encouraging that with scientific advice from the EMA agency, we can use the FDA package to file the MA.

In addition, the conversations we are having with the partners, they all see a huge potential in the indications we have focused for treatment of agitation. But the obvious challenges are the pricing, the obvious challenges are there are multiple countries that you have to work with. Those are the challenges for any product and we are very aware of that. And while selecting our partner, we are taking all that into account, who will be optimal partner to be able to launch these products successfully in Europe.

And just one final quick question. Can you confirm that all the 501 manufacturing sites have been inspected by the FDA up to this point?

What I can confirm is we don't expect any more inspections from the FDA, where we are in the process.

Our next question is coming from the line of Anita Dushyanth with Berenberg.

Firstly, I had a question on the FDA PDUFA date. Would the Agency currently sort of adjusting all the backlog of applications, how confident are you of sort of receiving the decision by January 5? Or is there a possibility of them coming with a decision earlier? Or how early are we likely to know if they were to extend that time line?

Thank you for the question. We would love to have a Christmas gift. So we can't predict when the approval will happen. But what we can tell is that process is progressing well and our team has multiple experiences of getting the NDA approval. And we feel very confident that we are at a good spot where we are in our review process.

Okay. That's helpful. And then I just had a quick question on the basket trial with MD Anderson. What sort of additional efficacy data do you expect to see from that study?

So let me pass the question to Vince.

Sure. So that study is continuing to enroll. We did announce several months ago now that both arms or each arm passed the efficacy bar to proceed to full enrollment. And so look to -- without committing to any particular scientific forum, look to a large general oncology conference for that readout next year.

We have no additional questions at this time. So I'd like to pass the floor back to management for any closing remarks.

Thank you, everyone, for joining us today. I look forward to connecting with many of you in the coming weeks and updating you on our continued progress. Have a great day.

Ladies and gentlemen, this does conclude today's teleconference. Once again, we thank you for your participation, and you may disconnect your lines at this time.