Earnings Call: Q2 2021

Aug 10, 2021

Good morning, and welcome to the BioXcel Therapeutics Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen only mode. After the presentation, there will be a question and answer session. 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 that are subject to risks and uncertainties related 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 public filings with the U. S. Securities and Exchange Commission, including its quarterly report on Form 10 Q for the quarterly period ended June 30, 2021, which can be found on its website at www.bioexceltherapeutics.com or on www.sec.gov. As a reminder, today's conference is being recorded. Joining us on today's call are Doctor. Jim O'Mehta, Chief Executive Officer Richard Steinhart, Chief Financial Officer Will Kane, Chief Commercial Officer Doctor. Brent O'Neill, Chief Medical Officer Doctor. Frank Yachen, Chief Scientific Officer and Doctor. Rob Rissinger, Senior Vice President of Clinical Development. It is now my pleasure to turn the call over to Doctor. Mehta, CEO of BioScout. Thank you, sir. Please go ahead. Thank you, operator. Welcome everyone and thank you for joining our call today. We had a very exciting and productive Q2 as we continue to execute on our key initiatives that we believe will deliver long term value to patients, healthcare providers and our shareholders. As many of you are familiar, we are a clinical stage biopharmaceutical company utilizing artificial intelligence approaches to develop transformative medicines in neuroscience and immuno oncology. Our 2 most advanced programs are GXCL501, our neuroscience investigational candidate that is being developed for the treatment of agitation and BXCL701, our immuno oncology investigational candidate which is the enabler for the treatment of aggressive forms of prostate cancer and advanced folliclib. I will begin today's call with an overview of the progress we have made with our neuroscience program and plan to expand into additional neuropsychiatric disorders. In just over 2.5 years, we were able to go from conducting our 1st in human trial with HCL501 to receiving FDA acceptance of our NDA filing for the treatment of acute agitation, Thanks to the hard work of the entire BioCell team, we were able to successfully conduct a total of 7 clinical trials in over 800 patients across a range of disorders, laying a robust clinical foundation for our C501 program. This is in alignment with our 3 pillars growth strategy for our neuroscience franchise, which is designed to expand follow on indications including dementia across multiple treatment settings and our global reach. I'm pleased to report that we continued to successfully execute on these key initiatives and have made important progress across our clinical, regulatory and commercial objectives for our lead program, DxDF501. With regards to clinical progress, we continue to advance our plans for expanding the use of 501 into additional indications. We remain on track to commence the Phase 3 program of TXL-five zero one with a key treatment of agitation associated with dementia in the Q4 of this year, which has been granted Break Through Therapy Designation by Diabetes. Agitation associated with dementia, including Alzheimer's disease, is a significant market opportunity as the need for better treatment options is immense. We also plan to report top line data from our ongoing 14 microgram dose Phase II triplicity trial of BXCL501 in treatment with dementia during the Q4 of 2021. In May, we received FDA acceptance for the filing of our NDA for the XC501 with a PDUFA action tick of January 5, 2022 for the acute treatment of agitation associated with schizophrenia and bipolar disorder. This acceptance marks important progress towards our goal of providing a new treatment option to the millions of patients struggling with acute education. If approved, it would be the 1st major medical advancement for these 2 indications in almost 8 decades. In addition, we initiated a pediatric study for 501 for the acute treatment of agitation associated with schizophrenia and bipolar disorder. While the FDA reviews our application, we are executing on our comprehensive commercial readiness strategy to ensure that if we receive FDA approval, we are well positioned to bring TxL501 to patients and healthcare providers across the U. S. Our key initiatives in the last quarter included the deployment of our medical science liaison and medical managed care teams who are continuing to engage in scientific and medical to medical exchange, the healthcare professionals and care, respectively, to provide team insights to support commercial strategy. In May, data from the Synergy Phase 3 trials were presented at the American Psychiatric Association Annual Meeting and at the International the Medical Conference during the second half of this year. In late June, we held a commercial day where our team shared market insights, commercial opportunity and highlighting launch readiness plans. In preparation for go to market strategy, we have augmented commercial teams with several key hires and are further refining the designs of our sales force and market access strategy. We are advancing our strategic initiatives for geography. Extension, our plans are underway for a marketing authorization application with the European Medicines Agency of BXCL501 for the acute treatment of agitation associated with schizophrenia and bipolar disorder 1 mg. We believe the European market represents a sizable opportunity similar to the U. S, which we estimate is 9,000,000 patients and approximately 40,000,000 pediatric patient episodes per year. All of this work will serve as a solid foundation for the commercial launch of additional follow on indications paving the way for further growth opportunities in our neuroscience treatment. We remain confident in BXCL501 potential across multiple indications where there is a significant need for new innovative treatment options. We continue to leverage our AI technology and our proprietary clinical data to strategically expand market opportunity across a broad spectrum of neuropsychiatric disorders where VXCL501 can become a valuable therapeutic option. In the fall of this year, we plan to host an R and D Day to provide an update on our BXCL501 program, pipeline within a product and additional neuroscience pipeline candidates. We look forward to providing more information in the coming weeks. Looking beyond our neuroscience program, our Phase IIIb study for cast hair resistant prostate cancer with BXCL501 is nearing completion and a more complete efficacy update from the Phase 2 portion of the trial is expected in the Q1 of this year. Based on these results, we plan to design our next phase of the CRCD program and leverage DxGN-seven zero one's novel mechanism in our immuno oncology franchise. As we move into the second half of this year, we look forward to further building on the important progress we have discussed today and continue to drive forward sustainable growth strategies for our business. Now, I would like to turn the call over to Mr. Harshal, who will give a financial update. Thank you, Vimal. I would now like to review our potential results for the Q2 2021. Research and development expenses were $13,500,000 during the Q2 of 2021 as compared to $17,900,000 for the same period in 2020. Decreased expenses were primarily attributable to a reduction in clinical trial costs before our Serenity trials. These amounts were offset in part by an increase in personnel and related costs necessary to enlarge our development and medical teams. In addition, we experienced increased professional fees related primarily to toxicology studies as well as increased regulatory and consulting fees all related to DXCL501. General and administrative expenses 1. General and administrative expenses were $14,100,000 for the Q2 of 2021 as compared to $3,500,000 for the same period in 2020. The increase was primarily due to the overall growth of the company, including higher personnel costs and stock based compensation. In addition, we experienced increased costs related to legal, professional and insurance fees and expenses related to the potential commercial launch of DXCL501 in the U. S. The company reported a net loss of $27,600,000 for the Q2 of 2021 compared to a net loss of $21,400,000 for the same period in 2020. The Q2 of 2021 results include approximately $6,800,000 in non cash stock based compensation costs compared to non cash stock based compensation of $2,000,000 for the same period in 2020. As of June 30, 2021, cash and cash equivalents totaled approximately $273,100,000 Now I'd like to turn the call back to Vimal for any further Our first question comes from the line of Geoff Meacham with Bank of America. Please proceed with your question. This is Greg Herrickman on for Jeff. Thanks for taking our questions. So looking to the upcoming readout of 701, what does efficacy profile, would you expect to see that would give you confidence both in moving the program forward through the clinic as well as in the commercial potential of the asset? Thank you, Greg, for the question. I will turn the question to Vin. Thanks, Elszweil. We're looking really for a 20% response rate roughly. That would probably be very relevant for adenocarcinoma CRTC and arguably a slightly lower response rate, so mid teens may be relevant in any PC. And I say that based on the fact that both of these flavors of castrate resistant disease are essentially unmet medical needs. Bear in mind, our patient population has failed three lines of systemic therapy. That's helpful. Thanks. Our next question comes from the line of Ram Selvaraju with H. C. Wainwright. Please proceed with your question. Hi. Thanks very much for taking my question. Can you give us an update on the availability of what you deem to be qualified sales personnel to enable you to appropriately support the GXL501 launch? And relative to those comments earlier on the call regarding the European opportunity and opportunities in other ex U. S. Territories for 501, Can you perhaps give us an overview of your partnering strategy, your overall commercial outreach strategy as it pertains to those seasons in particular to numerate for us, which territory beyond the U. S. And Europe might potentially be the most efficient commercial opportunity for 501? Thanks, Ram. So I will just take the first question about like on the partnering. As we have indicated that we plan to find a partner in Europe for co development and co commercialization of BXL-five zero one. And as I mentioned that we are plans are underway to file an MA. So things are progressing well on both fronts. With that, I will pass it on to Will to answer your first part of the question. Will? Thank you, Stephen. Good morning, Ram. Relative to the build out of the sales force, as you've indicated, our timing is to hire sales leadership in the Q3 and then plan for hiring sales force in the Q4, obviously, dependent upon the progression of the NDA review and labeling negotiations. I'm happy to report that we recently hired our Head of Sales, our VP of Sales, who brings with him significant consultative experience in the hospital setting and clearly a large network of individuals that he has already reached out to. So we feel from that perspective, we're in a very good position. Plus, we have a solid plan in place with a recruiting firm in order to access top talent, and that's what we'll be initiating after we bring on the sales leadership team to be in that process. So I think we're right on plan as we have always indicated. Okay, great. And then just with respect to the most earlier comments regarding the broad benefit of our clients pipeline, Can you maybe elaborate for us what general indications or sub indications within neuroscience you intend to focus on most if you're going to primarily prioritize neuropsychiatry related indications versus neurodegeneration or if you're going to give equal weight to both? So BXK-five zero one as you know is a pipeline within a product. We continue to focus on clinical execution. In terms of our additional pipelines that we are using our AI platform to identify additional pipeline candidates. Our strategy is to focus on stress related access. So initially, we are focusing on the adverse effect of disorders. And as we move along, our platform is very much applicable to other disease areas as you said, neurodegenerative rare diseases. And we believe that will be our next progression. But our next candidate that we're trying to discuss in R and D will be in the newer packet space. Thank you. Thank you. Our next question comes from the line of Greg Sivanovich with Goldman Sachs. Please proceed with your question. Hi, team. This is Anna on for Gregg Sivanovich. Thanks for taking our question. Just one for us. Could you please help us frame the 40 microgram data and what you expect to see and how should we think about that in the context of potentially getting a label that's, for at home use? Thank you. Great question. 40 microgram cohort was initiated to build additional optionality in our regimen. So we already have 30 60 micrograms which were showing good application as well as 60 profile. And we wanted to make sure that in dementia our opportunity lies in the acute to intermittent chronic and also it lies in K11ergicone and in the home setting. The data from 40 microgram will inform us what is the efficacy and safety injection and we continue to do blinded analysis of the safety in the midpoint of our 30 microgram dosing. And this will also inform us what doses will take forward in our Phase 6 program that we plan to start in Q4 of 2021. So this 40 micrograms goal with additional optionality to what we currently have, 13 Our next question comes from the line of Shadi Senesha with Guggenheim. Please proceed with your question. This is Eddie on for Yatin. Just 2 for me. How are you thinking about enrollment in the dementia study? Do you think you'll need a percentage of patients with Alzheimer's or as well as type of dementia to match the real, real numbers, like how are you proposing to the FDA to avoid any type of analysis, certainly? And then for Will, are there any acute drugs that are administered in a similar setting to other one that might be able to track and then extend the next year? Thanks. For our dementia program, we are very cognizant that what kind of analysis we will need to present to get ASCENDIA approval. And that is basically what we are working with FDA. And if we have in our Alzheimer's population, we think it will be the major population in dementia and that was almost 85% in our transfusion trial. If we have if you have a decision segment, we can would be at a broader level or we need to be more straight into the sub price. And having alignment with FDA, we will make a choice in the decision what trial or what the price again should be to achieve those goals. And then Eddie, on the second question relative to the recently approved drugs that may be useful as comps. And as we talked about, as we indicated on the commercial day presentation, there is a specific drug that we believe is a true comp for 501. 501 is bringing an innovative new approach to the treatment of education in patients where there has been 1 for a while. I think the more relevant way to look at it is by setting. And in the hospital setting, which is where we will land, obviously, with the first indication, It is the hospital that kind of controls formulary access, and payers usually refer to them in terms of their decisions there. Hospitals have their own processes, as we indicated, relative to timing and capacity needed within an institution. So we're clearly aware of those, and so we'll be building a deeper understanding of those among target hospitals. And then adoption in hospitals just tends to be a little bit slower, right? There's a little more inertia we need to and we've worked through. But as we've indicated, we believe we have a paradigm changing treatment and a valuable new option for hospitals to consider. And the feedback so far has been very favorable. So we're very motivated that we will be able to drive this steadily forward. In addition, I would just add that our medical science liaison continue to generate additional market insights and they always bring in it that there is opportunity in pre ED settings like PM agency department, like the center setting which are in facility. Hospitals, it could be group homes, it could be like EMS, and you might know some of the drugs are used in those settings before patients are born. If you need to evaluate whatever we are learning from the market is shaping our commercial strategy. And once we have done complete work, which is expected in next several months, to provide an update. Thank you. Our next question comes from the line of Keval Kulkarni with Canaccord. Please proceed with your question. Good morning. Thanks for taking my question. I have just one. We've seen the FDA become more unpredictable with pending NDA just ahead of action. In that context, could you remind us as to how confident you may be about telephone clearance approval requirements for the subliminal system with the site inspection so that you can receive approval in a timely fashion? And when do you expect labeling discussions to be in the procurement already? The pre approval inspection, we continue to do like in a mock exercising using the 3rd party. And our manufacturer is based in Pennsylvania. We continue to monitor that if FDA will do an on-site visit and depending on the pandemic situation will it be a virtual. So we are prepared for both situations Plan A and Plan B. But about your second question, can you just please remind me what was the second part of the question? Related to the preapproval of the discussions, have labeling discussions started or when do you expect them to start? We expect the labeling discussions to begin towards the end of this year. Thank you. Our next question comes from the line of Anita Desjardins with Berenberg Capital Markets. Please proceed with your question. Good morning. Thanks for taking my question. Just on I was wondering like when Tylenol is initially introduced in the hospital setting, but eventually even expanded for other treatment and that's where they could be admitted at home. Could you sort of describe the market size and opportunity for that? Thanks for the question, Anita. So as we've indicated previously, our strategy is one of landing and extending. And so the hospital becomes our primary start. But as Simmel indicated, we have to widen that to understand opportunity that may present itself ultimately based on the label we receive and the handling of that label to promote in various settings. So we will continue to look at that, but our base, if you will, out of the gate will be the hospital setting. Beyond that, as we've indicated, there is significant opportunity in bipolar disorder patients in the community. They many oftentimes experience agitation at home and that is in many ways self treated or treated with enzalazine before it rises to the level where it needs to be treated in an emergency department setting. And so we believe over time there's an opportunity to help those patients. And there's a study out of Europe that was conducted by Robert, which indicated that, that opportunity presents itself in terms of their agitation. And then relative to the dementia market, which we've indicated, that is a very large market, with currently 6,000,000 Alzheimer's patients in the U. S, that's expected to double over the next 20 years. There's a high rate of agitation in those patients, and they obviously are cared for across treatment settings, not only in nursing homes, but assisted living facilities and obviously at home. And given the rise in the size of that population, the home setting will become increasingly important. So the whole plan is to enable helping the patients with 501 and that's what the clinical development plan is looking to do. And from a marketing perspective and a commercial perspective, we will build accordingly to capitalize on those opportunities. Thanks. That was helpful. And just one more. Also, like how do you sort of plan to allocate those resources between 501 and then potentially just on that in the other indications and then the early stage 701 candidate? So, strategically, we have, like, an immediate choice to continue to build our neuroscience franchise and continue to we want that to be fixed in 5 years down the road, we are a leader in neuropsychiatric and immunodication neuroroid diseases. That's what our vision of the company we are building. Regarding the 701, now we will have data in Q3 timeframe this year and that will provide a good confidence in our human proof of So that's what this mechanism and that's what exactly we are trying to do because it's the activator of immunogenicity and we are testing it. For the 1st time a combination of orally available such as advanced agent in combination with Kizuna. Once we achieve that, we will seek strategic options, what will be best in the interest of our shareholders. We continue to evaluate various options that will make sense for the business. Our next question comes from the line of Hamir Devani with Rx Securities. Please proceed with your question. Hi, everyone. Thanks for taking my question. It's just could you just remind me what the status is of MD Anderson study with 701? Sure. So I think as we've previously announced, probably, the arms of the study have moved from Phase 1 to Phase 2. And that study will now complete or proceed to completion, I should say. And just a reminder, it's a Gliesion cell design, so fairly small sample size, 15 approximately continues in each sample. Just to follow-up, when would you expect us to see any data from that study? Yes. So we determined this is an IST, and obviously, we're not in charge of the enrollment of the study. We would expect to see enrollment probably complete by a ton of the year approximately. Again, just to say we don't have any control over the trial, But that's how MD Anderson has positioned it to work. Thank you. There are no further questions at this time. I would now like to hand the call back over to Dimmo Mehta for any closing comments. Thank you, everyone, for joining us today. I'm looking forward to connecting with many of you at upcoming conferences this call. In the meantime, if you have any questions, please feel free to reach out to a great day.