BioXcel Therapeutics Inc (BTAI) 2018 Q4 法說會逐字稿

Good day, and welcome to the BioXcel Therapeutics Fourth Quarter and Full Year 2018 Results Conference Call and Audio Webcast.

Today's conference is being recorded.

At this time, I'd like to turn the conference over to Carol Ruth of The Ruth Group.

Please go ahead.

Thank you, operator.

Just to remind everyone, certain matters discussed on today's conference call or answers that may be given to questions asked are forward-looking statements that are subject to risks and uncertainties relating to future events and/or the future financial performance of the company.

Actual results could differ materially from those anticipated in these forward-looking statements.

The risk factors that may affect results are detailed in the company's most recent filings with the U.S. Securities and Exchange Commission, which can be found on our website at www.bioxceltherapeutics.com or on www.sec.gov.

Please note that the company is under no obligation to update any forward-looking statements discussed today, and investors are cautioned not to place undue reliance on these statements.

With me today are Vimal Mehta, Chief Executive Officer of BioXcel Therapeutics; Richard Steinhart, Chief Financial Officer; Vince O'Neill, Chief Medical Officer; and Frank Yocca, Chief Scientific Officer.

With that said, it is my pleasure to turn the call over to the company's CEO, Vimal Mehta.

Vimal?

Thanks, Carol.

Good morning, everyone, and thank you for joining our conference call to discuss BioXcel Therapeutics' financial results and business highlights for 2018.

2018 was a year of numerous achievements.

We became a publicly traded company with the completion of our IPO in March.

We have advanced the development of both our lead programs, BXCL501 and BXCL701.

We have forged new partnerships to facilitate BXCL701 development, and we have significantly built out our team and infrastructure with the addition of talented individuals into roles that will be crucial as we grow the company.

Overall, we are very well positioned for success in the coming years, and I'm pleased to report that the momentum with which we closed 2018 has carried over into the new year.

I would like to start by highlighting the progress we have made in our lead neuroscience program, BXCL501.

BXCL501 is a potential first-in-class drug, a proprietary sublingual film formulation of dexmedetomidine or Dex.

Dex is a selective alpha2A adrenergic agonist that directly targets the causal mechanism of agitation.

It has a robust safety and pharmacokinetic profile established over 130 clinical trials.

These properties support the development of BXCL501 for a key treatment of agitation in schizophrenia, bipolar, senile dementia of the Alzheimer's type and other indications.

In December, we announced that the FDA accepted our IND application for BXCL501, our proprietary thin-film formulation of Dex.

This first-in-human pharmacokinetic bioavailability and safety study of BXCL501 has since been initiated and the first cohort of patients was dosed in late December.

As of today, we have dosed multiple cohorts and remain on track to report top line data from the study in the first half of 2019.

With respect to development plans, we expect that the result of the Phase I study in healthy volunteers will enable us to launch a Phase II/III registration study in the second half of 2019 and to potentially file our first NDA in 2020.

Also, in December, we announced that BXCL501 was granted fast track designation by the FDA.

This designation provides a number of benefits, including more frequent meetings and more frequent written communication with the FDA and expedited regulatory review.

Over the last several months, we have completed 3 human POC clinical studies of intravenously administered Dex, which have provided validation for the development of BXCL501 in the treatment of acute agitation.

These studies conducted in patients suffering from schizophrenia, SDAT and opioid withdrawal symptoms, respectively, each study met its primary endpoint with high response rates.

Each of these studies allowed us to gain valuable insight into the dosing and the exposure level to support BXCL501's further development.

Importantly, the result of the opioid withdrawal study, which observed all 10 subjects receiving Dex responded to treatment with no placebo responses.

We are encouraged that -- which has encouraged us to explore the expansion of our BXCL501 program to include its use as a treatment for opioid withdrawal symptom.

This is a vast and significantly underserved patient population.

With respect to chemistry, manufacturing and control, CMC, we successfully produced clinical supply materials at multiple dose strengths.

Our proprietary film formulation has performed well in both preclinical and early clinical works, and we are on track for a scale-up and production of commercial products for our planned registration trial.

In the U.S., we believe as many as 5 million patients with Alzheimer's disease, schizophrenia and bipolar disorders experience agitation.

Approximately 1.2 million of these patients experience mild to moderate agitation and represent a potential patient population for treatment with BXCL501.

With ADASUVE, the first approved noninjectable antipsychotic treatment for acute agitation as a reference drug, we believe we have a well-characterized regulatory and reimbursable path for BXCL501 via the FDA's 505(b)(2) pathway.

Now I'd like to turn to our second clinical program, BXCL701.

BXCL701 is an orally available systemic innate-immune activator with dual mechanism of action.

It has demonstrated single-agent activity in melanoma with an established safety profile from 700 healthy subjects and cancer patients.

Designed to directly stimulate the innate and adaptive immune system, BXCL701 works by inhibiting dipeptidyl peptidase DPP 8 and 9.

Additionally, BXCL701 targets fibroblast activation protein, FAP, and acts as an immune evasion inhibitor.

BXCL701, in combination with a checkpoint inhibitor and other immuno-oncology agents, has demonstrated encouraging anti-tumor activity in multiple tumor models and formation of functional immunological memory.

The combination of BXCL701 with I-O agents produces a synergistic anti-cancer effect by alleviating the infiltration of tumor-killing T cells, NK cells and neutrophils while blocking immunosuppressive cells.

Thus, we believe BXCL701's potential to turn cold tumors into hot tumors in combination with other I-O agents can make tNEPC and pancreatic tumors more responsive, offering us a robust therapeutic strategy.

The BXCL program had 2 IND applications accepted in the last several months.

The first study which we announced in November is the combination of BXCL701 with pembrolizumab, also known as Keytruda, for the treatment of neuroendocrine prostate cancer.

Our first clinical site has been activated and patient recruitment is ongoing.

As it is an open-label study, we expect to report data throughout the year.

The second IND is for a mechanistic study of BXCL701 as a treatment for metastatic pancreatic cancer.

This study, which is expected to enroll 10 patients, is designed to provide further insight into BioXcel 701's MOA, circulating cytokine and allow us to examine immune cell infiltration and activation.

We expect the results from the study will support the further development of the triple combination of BXCL701, NKTR-214 and avelumab in pancreatic cancer.

Speaking of the triple combination, earlier this week, we announced the extension of our clinical development partnership with Nektar Therapeutics to include Pfizer and Merck KGaA, Darmstadt, Germany and the use of avelumab as a checkpoint inhibitor in this study.

Under the agreement, Pfizer and Merck KGaA will provide avelumab and Nektar will provide NKTR-214.

We will initiate and manage the clinical program with development cost shared equally between BioXcel Therapeutics and Nektar.

We recently received pre-IND positive feedback from FDA on the proposed trial design.

We anticipate submitting the IND for this triple combination study in the near future.

Working with such industry leaders as Pfizer, Merck KGaA and Nektar provides a tremendous validation for our BXCL701 program, and the opportunity to leverage their broad clinical and regulatory expertise will be invaluable as we advance the program.

We are continuing to explore additional combination therapy approaches beyond tNEPC and pancreatic cancer as we believe that BXCL701 has significant potential as a treatment for other types of cancers.

In fact, a recently completed preclinical study of BXCL701 and an OX40 agonist was accepted as a late-breaking abstract at the American Association of Cancer Research Annual Meeting.

These data were highly encouraging and support our belief in the broader 701 opportunity.

In addition to the significant progress we have made advancing our lead program in neuroscience and immuno-oncology, we have also invested significantly in building out our team and infrastructure.

Throughout 2018, we made a number of key hires and have grown to a team of 20 strong across a variety of disciplines and 13 world-class clinical advisers.

We are currently in discussion with a number of highly qualified Board candidates and anticipate appointing a new Board member in the near future, who we believe will bring added value to our Board.

Overall, we are proud of all that we have accomplished since completing our IPO last year.

We have matured as an organization, advanced our lead clinical programs, achieved important validations of our AI-based approach to drug development and positioned BTI for growth and success in the years to come.

With that, I would like to turn the call over to Richard.

Thanks, Vimal.

Once again, thank you all for joining us this morning, and welcome to our shareholders.

The proceeds from our initial public offering from March 2018 gave us the necessary capital to advance the clinical development of BXCL501 and BXCL701.

For the fourth quarter of 2018, we recorded a net loss of $7.1 million compared to a net loss of $2.5 million for the fourth quarter of 2017.

Research and development expenses totaled $6 million for the quarter compared to approximately $1.4 million for the same period in 2017.

The increase in research and development expense reflects increased development activities in both of our BXCL501 and 701 programs, including increased personnel costs, professional fees, clinical trials and manufacturing costs.

General and administrative expenses in the fourth quarter of 2018 were approximately $1.3 million compared to about $1.1 million for the fourth quarter of 2017.

The increase was primarily due to additional payroll-related expenses, professional fees and costs associated with operating as a public company.

With regard to the full year 2018, BTI reported a loss of $19.3 million compared to a loss of $4.5 million for the full year in 2017.

Research and development expenses were $14.5 million for the full year 2018 as compared to $2.7 million for the same period in 2017.

General and administrative expenses were $5.4 million for the year 2018 as compared to $1.8 million for the same period in 2017.

We had cash and cash equivalents of $42.6 million as of December 31, 2018, and this reflects the proceeds from our IPO.

That concludes the financial review.

I'd like to turn it back over to Vimal for any closing comments.

Thank you all for joining us today.

We will open the call for any questions now.

(Operator Instructions) And our first question will come from Geoff Meacham with Barclays.

This is Scott on for Geoff.

For the 701 asset, I was wondering, with regards to the triple combo, can you give us the rationale for choosing Bavencio versus other checkpoint inhibitors?

And then for both 501 and 701, heretofore, what additional combo therapies or expanded indications are you exploring?

So I will pass this question to Vince O'Neill who is our Chief Medical Officer.

Sure.

Thanks, Vimal.

So I think 2 or 3 reasons why we chose avelumab.

First, it's an approved checkpoint.

I think that's actually useful and important.

And two, it has a large, fairly large safety database behind it to date.

And three, the preclinical models were supported.

So we have 3 good reasons for going in that direction.

And then for both 501 and 701, the additional combo therapies or expanded indications you're exploring?

So 501, as we indicated, that besides schizophrenia, bipolar and Alzheimer's, we demonstrated that the mechanism works equally well in opioid withdrawal symptoms.

So that's another indication.

And there is already a validation in hyperactive delirium that this -- Dex results in calming of the patients.

So there are multiple opportunities.

Beyond that, I will pass it on to Frank Yocca to expand on it.

Thanks, Vimal.

As Vimal mentioned, the basis for expanding 501's use in different indications stems from its mechanism, which is hyperarousal.

So we know that hyperarousal is playing a role, a significant role in opioid withdrawal with the increase in activity of the locus coeruleus.

But the other area that Vimal mentioned was hyperactive delirium.

This is a major problem with patients who undergo anesthesia, and then removing them from the ICU and giving an opportunity to get the drug in a fashion different than an IV formulation really has key upside that we believe that we can take advantage of.

And Vince will complete what kind of other combination thought process we have.

Sure.

So I think we've said before, 701, because it's orally available and because of its point of action so it's essentially an innate immune activator and also inhibits immune evasion, it's highly combinable.

And so we're currently in discussions right now with combining with other I-O modalities.

I think that makes clear sense.

And also, potentially other indications, as you alluded to in your question.

So obviously, the 2 company's sponsored efforts are in classic cold tumors.

I think it may make sense to look at other indications potentially that are mild or moderately immune sensitive.

So we will announce those in due course, but those discussions are ongoing right now.

I think that's the thought process behind what we're doing.

Our next question will come from Carter Gould with UBS.

This is Andrea on for Carter.

Does the opioid withdrawal data impact your filing strategies for 501, if at all?

Put another way, are you still prioritizing pivotals in schizophrenia and dementia for this 2020 filing?

Or is there a possibility you'll run a pivotal on opioid disorder in tandem?

That's a great question.

We are waiting for our PK bioavailability data from our film.

Once we have done the full analysis of the data and we understand our dose exposure level from our IV Dex, then the company will make the decision that which indications to prioritize.

More currently, what we know and what we have seen is schizo and bipolar are indications in which clinical, regulatory and reimbursability path is very well established, so that indication may get the priority because all the pieces that are required to get to the NDA are well-established.

Great.

And just as a follow-up, how are you defining the commercial opportunity in opioid use disorder?

To that end, how are you thinking about the addressable population and duration of treatment where the BXCL501 could get slotted in the treatment paradigm?

I think opioid withdrawal symptoms, what we know of, is a pretty large commercial opportunity and there was recently, this year, drug approved, lofexidine, which has a similar mechanism like our molecule does, but obviously, we have a more potent and have ease of delivery and the relevant properties in our molecule to treat these patients.

We are kind of in a -- currently in the process of working through the commercial opportunity more broadly, how big the market is, and that will be factored into our decision what will become our second and third indication.

And next, we will hear from Do Kim with BMO Capital Markets.

This is Keith Tapper on for Do Kim.

I just have one about 501 and the arousable sedation.

I'm just trying to get a sense of how you're thinking about a floor in terms of agitation severity.

Is that going to be something defined as disease-specific?

Or is it, like, person-to-person?

And as you're expanding to opioid withdrawal, would you expand to something less severe but more common like anxiety?

This is Frank.

So the way we look at it, really, is that the drug, because of its non -- the noninvasiveness of it, we're targeting the mild-to-moderate, but there is a chance because of the way psychiatrists approach agitation where they try to de-escalate the situation verbally, there's a good chance that it could be used also in more extensive agitation.

So to answer your question, I think it really goes from patient to patient, if you will, and with opiate -- your second question?

Sure.

The second question was just it's great you're expanding to opioid withdrawal, but would you consider expanding to a more common, less severe indication, like anxiety, replacing benzos or something like that?

Well, that's an interesting question.

But the way we're positioning 501 at the moment is that in acute treatment.

So to treat anxiety or things of that nature would require chronic treatment.

And that takes the drug into a very, very different development plan where we don't necessarily have the kind of tox coverage that we have for the acute setting.

(Operator Instructions) We will now go to Ram Selvaraju with H.C. Wainwright.

Congratulations on all the progress so far.

First question is for Frank.

I just wanted to get a sense of what you think the likely timing would be for reaching top line data from the envisaged Phase II/III program with BXCL501.

Assuming that that gets started in the second half of this year, could we expect data from that trial before the end of this year?

Or would you expect it to take a bit longer?

And if you could maybe provide any additional details on what you expect the scope and design of that study to be as you see it at this point.

So Ram, we don't -- we expect the data to read out in 2020.

And we have an idea of what the trials will look like.

As Vimal mentioned, the reason for going, say, for example, in the area of schizophrenia and bipolar is that there is a well-played, well-trodden path towards development.

And also agreed with our pre-IND meeting with the FDA that we really need 1 trial in schizophrenia, 1 Phase III trial in schizophrenia, 1 Phase II/III trial in bipolar to get the drug approved.

So with the film coming of age now where we can use it and with the studies that we have planned, we see 2020 as a time when we would announce those data, when those studies will be completed.

And remember that these are very fast studies, they're very quick to do, and we really believe in our time frame and when we can deliver.

So normally, Ram, this is Vimal, these studies take 6 to 8 months in the previous experience we have seen in the company.

So even if we take 9-month time period, we still feel very comfortable that these trials will begin in the second half of this year, and we'll be able to finish it in 2020 to file our NDA by the end of 2020.

Okay, great.

And then a couple other quick follow-ups.

Again, for Frank, do you expect 501 to be combinable with naloxone in treatment of opioid withdrawal?

Is the overall aim -- and I think this builds on another question that was asked earlier, to replace lofexidine?

And then I was also hoping you could comment on the specific advantage that 501 might have over some of these existing opioid withdrawal treatment modalities because of the formulation and the route of administration.

So your first question's a really good one.

You can envision, say, for example, a combo with some type of either opiate antagonist or weak opiate agonist to try to precipitate the withdrawal faster, to get -- I mean, the bottom line here is that patients cannot enter rehab unless they're off drugs.

So the idea would be to get them to that point as quickly as possible.

And the potential for a combination could do that.

And your second question, I'm sorry, Ram, again, your second question?

This was, do you expect to replace lofexidine?

Or is this likely to be considered complementary to lofexidine?

Well, when you look at the properties of dexmedetomidine, it's really the most potent and the most, in terms of its interaction with the receptor, probably the fullest antagonist.

So it has very powerful properties.

We believe that those properties really are the ones that are important for the withdrawal phenomenon.

And given the way we administer the drug, when you look at withdrawal symptoms, a lot of it is gastric, there's a lot of vomiting, things that go on when these patients are in withdrawal.

The fact that our drug can be given sublingually and get absorbed so rapidly -- we're actually looking at developing this drug and making it a best-in-class drug for this area.

Okay, that's very, very helpful.

And then just a couple of points on 701.

I wanted to know -- maybe, Vince, you could comment on these items, what do you consider or what do you think regulators are likely to consider the most critical endpoint in tNEPC when you look at, for example, establishing proof of concept?

And then this is maybe a question that I think we've talked about a little before informally, applicability of 701 within the prostate cancer setting in earlier stage treatment and potentially broader populations versus tNEPC?

And also, if you could maybe comment on, in light of the combination study that you're expecting to run in pancreatic cancer, the Nature paper that was recently published talking about the potential role of IL-6 in metastasis of pancreatic cancer and the possibility of IL-6 blockade being an appropriate therapeutic strategy and whether you think this might potentially have implications or ramifications for future 701 combination regimen development, in the context of pancreatic cancer specifically.

Thanks, Ram.

I'll take your last question first because that's actually the only one I can remember.

I'll ask you to repeat the other 2 in a second.

But you're absolutely right.

So anti-IL-6 as a potential strategy going forward, combination strategy is something we are actively discussing in-house.

And as you've just alluded to, there's been clearly a high-quality publication pointing in that direction.

So I don't want to say too much here and now, but I -- that is something that we're actively looking at.

I think the rationale is very strong for that, and thanks for bringing it up.

Could you possibly repeat your first and second questions, I'm sorry?

Yes, the others were relating to specifically 701's applicability in the prostate cancer setting.

Firstly, if you could comment on what we should be looking for as the critical endpoint in the proof of concept assessment of 701 in tNEPC?

And then if you could maybe comment briefly on potential applicability of 701 in prostate cancer beyond tNEPC?

Right.

So I think those are the first.

So as you'll know, the primary endpoint of the POC study is objective response rate.

Now we can use ORR in NEPC because it's highly metastatic, unlike classic adenocarcinoma of the prostate.

I think that's an acceptable surrogate.

I think if you made the comparison between NEPC and small cell, for example, agents that have a very good objective response rate impact, often -- not always, but often translate into the hard endpoints that the agency is interested in, which is overall survival.

So this is a later stage disease.

So I think OS is probably going to be on the table as a discussion point with the agency.

But I think, ORR, as a surrogate, is perfectly acceptable.

So I hope that addresses your point.

In terms of moving into earlier lines of therapy, again, a topic of active discussion just now, including with our PI actually who raised that very point, so these are people -- UCSF, of course, as you know, Eric Small and Rahul Aggarwal.

So again, it's a topic of active discussion right now, and we'll get back to you on that one.

Okay.

Great.

And then a very quick one for Richard.

Can you just give us an idea of what you expect stock-based compensation to look like for 2019?

And if we should be considering 2018 as an appropriate sort of comparable frame for that?

Yes, that's a good question, Ram.

I think '18 is probably a pretty good surrogate.

I think we're probably at a pretty good steady-state in terms of what the expense in that noncash compensation will be.

So I think you could model it using '18, maybe slightly higher.

And our next question will come from Sumant Kulkarni with Canaccord.

This is on 501, it seems like given that there is a pathway already in some of your earliest announced indications, you might pick those.

But just in case you go with opioid withdrawal, given the data at the time, what do you think that will entail in terms of infrastructure build, because that might mean a different market which can be approached differently?

And what would that mean for cash use going forward?

Sumant, you asked a very good question that we internally are debating within the management team and with the Board, that how many indication we can prosecute in parallel as a company and what we have built.

Currently, as you know, we have 2 programs, 501, and that's moving at a very rapid pace from one phase to another.

And then conducting -- we think that the organization currently, we have designed the organization to conduct 1 pivotal study, followed by another one for 501 and two human POC studies for the 701.

So that's what our current infrastructure and capital can afford, and we will continue to see how the results pan out and evolve our strategy going forward.

And with no further questions, I'd like to turn the call back over to Dr. Mehta for any additional or closing remarks.

I would like to thank everyone who joined the call and all the questions from everyone, and we look forward to a very exciting 2019 and providing update in our next quarterly call.

Thank you all.

And once again, that does conclude our call for today.

Thank you for your participation.

You may now disconnect.