Earnings Call: Q3 2018

Nov 9, 2018

Good day, and welcome to the BioXcel Therapeutics Third Quarter 2018 Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Lee Ross. Please go ahead. Thanks, Leanne, and good morning, and once again, welcome to the BioXcel Therapeutics Third Quarter 2018 Financial Results Conference Call. Just to remind everyone, certain matters discussed on today's call or answers that may be given to questions asked include forward looking statements that are subject to risks and uncertainties relating to future events and or the future financial performance of the company. Our actual results could differ materially from those anticipated in such 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, which can be found on our website, bioexceltherapeutics.com or on www.sec.gov. Please note the company is under no obligation to update any forward looking statements discussed today, and investors are cautioned not to place undue reliance on such statements. Joining me today from management are Vimal Mehta, Chief Executive Officer of BioXcel Therapeutics Richard Steinhardt, Chief Financial Officer Vince O'Neill, Chief Medical Officer and Frank Jaka, Chief Scientific Officer. With that said, it's my pleasure to turn the call over to the company's Chief Executive Officer, Doctor. Vimal Mehta. Vimal? Thanks, Lee. Good morning, everyone, and thank you for joining our conference call to discuss BioXcel Therapeutics' financial results for the Q3 of 2018. Over the past several months, we have made significant progress in developing both our clinical assets BXCL501 and BXCL701, our emerging pipeline candidates, establishing clinical partnerships and strengthening our operational capability. I would like to start by highlighting the progress we have made in our neuroscience program with BXCL501. BXCL501 is a potential 1st in class drug that directly targets a causal mechanism of agitation and is under development for acute treatment of mild to moderate acute agitation resulting from schizophrenia, bipolar and Alzheimer's disease. The sublingual cell film formulation of BXCL501 is believed to have a rapid onset of action and provide ease of administration in agitated patients. Along with its robust safety and pharmacokinetic profile established through use in millions of patients and in over 130 clinical trials, Dex is the most selective alpha-two adrenergic agonist available. It produces an arousable sedation and has a calming effect on agitated patients. In the U. S, we believe as many as 5,000,000 patients with Alzheimer's disease, schizophrenia and bipolar disorder experience agitation. Approximately 1,200,000 of these patients experience mild to moderate agitation and represent a potential patient population for treatment with CXCL501. With Aducel, the first approved inhaled antipsychotic treatment for acute agitation as a reference drug, we believe we have a well characterized regulatory pathway for BXCL501 via FDA's 505B2 pathway along with potential favorable reimbursement. We recently held our pre investigation new drug IND meeting with FDA and received valuable guidance on the development of BXCL501. Following the approval of our IND, we plan to initiate a first in human pharmacokinetic bioavailability and safety study of the sublingual thin film formulation of that prior to year end. The aim of this trial is to define the optimal dose of the sublingual film and collect relevant data to move it into Phase 2 pre registration trial. The data from this trial is expected to be available in the first half of twenty nineteen. We are pleased to report that we have completed manufacturing of our proprietary sublingual thin film formulation of dexmedetine and it is available for clinical studies. Additionally, we appointed a clinical research organization to support the company in conducting and managing the pharmacokinetic and safety clinical study. Previously, we announced positive results from our Phase 1b trial evaluating intravenously administered Dex in June. Findings from the study demonstrated that the selective dose and exposure levels of IV Dex had a calming effect in healthy subjects without clinically meaningful changes in blood pressure or heart rate and the drug was well tolerated. Through this trial, we were able to develop a dosing strategy for the sublingual thin film formulation of BXCL501. As an extension of this Phase 1b study, we are evaluating the dose and exposure levels in schizophrenia and senile dementia of the Alzheimer's type LCAT patients who support the further development of BXCL501 in relevant disease pathology. We expect to report data from these studies of IV Dex before the end of this year. Additionally, in order to support the global clinical development of our neuroscience program, especially BXCL501, we formed a world class neuroscience clinical advisory board. The founding members of the CAB include Professor Sheldon Frescon, Professor Steven Marder, Doctor. George Grossberg and Professor Alan Breyer. We are looking forward to working with the CAB and receiving their valuable guidance on clinical development, regulatory and medical affairs as well as the commercialization strategy for BXCL501 and other emerging neuroscience program. Let's turn to our 2nd clinical program, BXCL701. BXCL701 is an orally available systemic innate immune activator. With dual mechanism of action, it has demonstrated single activity in melanoma with an established safety profile from 700 healthy subjects and cancer patients. Designed to directly stimulate innate immune systems, targets fibroblast activating protein, FAP, and acts as an immune evasion inhibitor. Preclinical combination data evaluating BXCL701, a checkpoint and other immuno called deagent has demonstrated encouraging antitumor activity in multiple tumor types and formation of functional immunological memory. BXCL701's primary mechanism action has been highlighted in multiple peer reviewed journals, including Nature Medicine, providing an important validation of the scientific rationale behind BXCL701. We have specifically chosen treatment emergent neuroendocrine prostate cancer, cNEPC, and pancreatic cancer as our lead target indication based on bioxa BXCL701 dual mechanism of action and a strong underlying biologic rationale. Additionally, based on results from preclinical studies, the combination of BXCL701 with IO agent produces a synergistic anticancer effect by elevating the infiltration of tumor killing cells, NK cells and neutrophils, while blocking immune suppressive cells. Thus, we believe BXCL701 potential to turn cold tumors into HOT in combination with IO agent can make tNEPC and pancreatic tumors more responsive offering us a potentially viable therapeutic strategy. We recently received FDA acceptance of the IND application with amicus for BXCL701 in combination with pembrolizumab, KEYTRUDA for the treatment of tNEPC. The Phase 1b 2 study is expected to enroll up to 40 patients at multiple trial sites. The goal of this single arm SIMON 2 stage open label study is to examine the safety pharmacokinetic antitumor activity of the combination of BXCL701 and pembrolizumab in TNBC patients with efficacy endpoint of objective response rate. We also have completed the CMC development of for BXCL701 with adequate drug supply to conduct upcoming clinical trials as well as other studies with potential partners. We have also selected a leading clinical research organization to support the company in conducting and managing clinical studies. We anticipate initiation of this trial by year end and expect to report data throughout 2019. In addition, we expanded our existing immuno oncology research collaboration with Nektar Therapeutics into a clinical collaboration to further explore the potential of our BXCL701 in combination with Nektar's NKTR-two fourteen, a CD122 biased agonist and a checkpoint inhibitor. The focus of this new clinical collaboration is on developing the triple combination of BXCL701, Nektar Therapeutics NKTR-two fourteen and a checkpoint inhibitor for the treatment of pancreatic cancer. Both companies will share the cost of clinical trials. The trial assessing the triple combination in pancreatic cancer is expected to be initiated in early 20 19. Today, we are presenting promising preclinical data along with Nektar on the triple combination of BXCL701, Nektar214 and a checkpoint inhibitor across multiple tumor types at the 2018 Society For Immunotherapy of Cancer Annual Meeting. Findings from this preclinical study have demonstrated robust anti tumor activity, resulting in complete tumor regression in multiple tumor models and generation of functional immunological memory, highlighting the utility of the triple combination as a potential therapy for pancreatic cancer and other indications. In the Q3, we also established an industry leading immuno oncology clinical advisory board to support the global development of BXCL701 and our emerging immuno oncology program. The inaugural members of the immuno oncology cab were Doctor. Louise Weiner, Doctor. Daniel Van Hoef, Doctor. Eric Small and Doctor. Emmanuel Antoranakis. These esteemed experts in the field of oncology will guide our team in advancing our IO program through clinical development to improve patient outcomes. I would also like to point out that we are employing approaches to derisk clinical development of our lead candidates through patient selection optimization, translational research and predictive biomarker discovery, utilizing our artificial intelligence approaches and platform, Our exclusive AI partnership with BIAXCL Corporation gives us the ability to continue to identify additional indication expansion opportunities for both PXCL501 and 701 in terms of new indications and additional geographies for development. Our goal is to establish a global footprint by filing IND and clinical trial applications for additional indications in multiple emerging pipeline through the addition of novel candidates in neuroscience and immuno oncology. We are excited about the potential of our lead program and our emerging pipeline hold just as much promise. On the operational side, we centered our management team with the appointment of Doctor. Chetan Lathia as Senior Vice President and Head of Translational Medicine, Clinical Pharmacology and Regulatory Affairs and David Hanley as Vice President and Head of Global Pharmaceutical Development and Operations. Doctor. Latya will be responsible for supporting the advancement of company's pipeline programs from a clinical pharmacology and regulatory perspective, while Doctor. Henley will oversee the pharmaceutical development and global operational initiatives associated with our drug product. We have thoroughly utilized we have thoughtfully utilized a portion of the capital from our IPO to advance the clinical development of our lead program, BXCL501 and 701, as well as solidify our leadership team. We expect cash burn to increase through the remainder of the year and in 2019 based on the increase in number of clinical studies in both our programs. As an organization, we believe we have made substantial progress over the last several months and we are now well positioned to achieve our clinical and operational objectives in the coming quarters. BioCell Therapeutics is committed to to create significant value for our shareholders. With that, I would like to turn the call over to Richard to discuss our financial results. Thank you, Mimal. And once again, thank you for all joining us this morning and welcome to our shareholders. The proceeds from our initial public offering from March of 2018 gave us the necessary capital to advance the clinical development of BXCL501701, including initiation of multiple studies in each program in the coming weeks. For the Q3 of 2018, we reported a net loss of approximately $4,900,000 compared to a net loss of $900,000 for the Q3 of 2017. Research and development expenses totaled $3,800,000 for the Q3 of 2018 compared to approximately $600,000 for the same period in 2017. The increase in research and development expenses reflect increased development activities in both the BXCL501 and BXCL701 programs, including increased personnel costs, professional fees, clinical trial costs and manufacturing costs. General and administrative expenses in the Q3 of 2018 were approximately 1,300,000 dollars compared with approximately $300,000 for the Q3 of 2017. The increase was primarily due to additional payroll and payroll related expenses, professional fees and costs associated with operating as a public company. We had cash and cash equivalents of 47,100,000 That concludes the financial review. And I'd like to turn it back over to Vimal for any closing comments. Thanks, Richard. I'd like to thank everyone for joining the call and would like to open it up for any questions. Thank And we'll take our first question from Geoff Meacham with Barclays. Hey guys, thanks for the question and congrats on all the pipeline progress. Okay. Vimal, I know you don't want to get specific. I know you don't want to get specific, but for 501, were there any surprises in your FDA meeting in terms of the feedback or the development path? And for the PK study of 501, what would you view as an ideal profile? And I have one follow-up. So, our goal with the pre IND meeting was very simple to get FDA buy in on our like overall development plan. And we focused on 2 areas, which is schizophrenia and bipolar and Alzheimer's. And what we understood and I can be very specific, but in general, we understood that FDA was very encouraging for both indications because there is no systemic therapy currently available for this acute treatment of agitation. Overall also, we saw the acceptance of the strategy that we have outlined that we will do with the film like now with multiple doses. We will do the pharmacokinetics bioavailability study and a safety study in using different dose strengths of the film. And then using that data, we can proceed forward with Phase 2Phase 3 registration trial in 2019. Okay. And then on the PK profile, what would you say for 501 would be an ideal profile? I know it's you obviously have to run a bridging study at some point with the PK from the IV, but looking forward to the data coming up, what are your expectations? So, I will I have Frank here. I will pass this question to Frank. Frank? Yes, Jeff. So we think we understand what concentration, plasma concentrations we need to get our effect. So what we're looking for in terms of the PK profile is something that we can achieve like a Cmax around somewhere between 20 to 30 minutes, so that we can get a rapid onset of effect and achieve those dose ranges where in these smaller IV studies, we're seeing the activity of the drug producing these RAS scores that would fit in terms of reducing agitation. And we'll take our next question from Carter Gould with UBS Financial. This is Andrea on for Carter. Thanks for taking our questions. I've got a couple here on 501. So from the point when you have the 501 PK data in hand, can you talk a little bit more about projected timelines and stage gates to the registrational studies approval? And then how should we be thinking about the duration of the 501 studies relative to IV Dex one? Sure. So let me address for the BACL-five zero one lagunofilm trial plan. We are expecting to initiate our pharmacokinetic safety study this year upon approval of the IND. We already had the pre IND meeting with the FDA. We have the CMC for the film, multiple doses already prepared, available for clinical studies. We have a CRO who is right now will be helping us conduct the study. So all pieces are in place. It's a matter of just obtaining the IND approval from FDA and the studies will start this year. These studies tend to be short studies like they are not that long because you can finish these studies in a short time. So, we expect the results to come out in first half of twenty nineteen. And using that data, we go back to the FDA with a fuller plan and a defined indication, whether it's schizophrenia, bipolar or Alzheimer's or both, and get their approval to initiate Phase 2, Phase 3 studies. Those studies from our experience, previous experience, we know at least for schizophrenia and bipolar, they require about 9 to 12 months. So, if we have the approval from the FDA in first half of twenty nineteen, then those studies will go up to early or first half of twenty twenty and then we'll be ready to file an NDA. Our goal and hope is that we should be able to file an NDA if possible by 2020 and that's what we are targeting. Great. Thank you. And we'll take our next question from Do Kim with BMO Capital Markets. Hi, there. This is Keith Tapper on for Do Kim. I had a few questions about 701. So the IND for 701 is to treat NEPC. Could you talk a little bit about the study design and what that might look like being that it's a treatment emergent disease in terms of exclusion criteria for background treatment or anything like that and how that might affect measuring the outcome? Thanks for your question. I will pass it on to Vince, who is our Chief Medical Officer. Sure. Thanks, Damal. So the study as we previously had a combination approach with Keytruda and we chose Keytruda based really on the fact that we already have some data from the KEYNOTE-one hundred and ninety nine study and how KEYTRUDA works or its efficacy or indeed lack thereof in this patient population. So that's the combination approach. It's a 2 stage Simon design, so 15 patients plus approximately 15. And it will be preceded by a safety run-in or escalation prior to that. So fundamentally, the primary endpoint is based on response rate. And we can do that because NEPC, unlike classic adenocarcinoma of prostate, typically results in measurable disease, typically results in the visceral mets, for example. So that's the general approach to this study. Does that answer your question? It does. In terms of, I guess, any exclusion criteria, is there like a certain line of treatment that, because it generally results from previous chemotherapy. So is there a certain standardization of lines of treatment prior being involved in the study? Sure. So clearly, by definition, as you've just said, this is a treatment emerging disease. So by definition, patients had to have received androgen deprivation therapy and in addition, one line of chemotherapy. So those are the inclusions. Okay. That's very helpful. Thank you. And we'll take our next question from Sumant Kulkarni with Canaccord. Thanks for taking my questions. I have one. It's actually a big picture question, but has a very specific focus to it. We had the recent ESMO conference where we saw a lot products coming out, combo products in immuno oncology not doing as well as people might have hoped. So, given yours is an organization that relies on artificial intelligence, how quickly can you adapt if your product which also involves a combo, you might find some new intelligence based off of your approach. Is that a valid way of looking at things? How nimble can you be? So, that's a great question. We always use our like AI and machine learning platform whenever we are even going to any conference. We have done this for conference that's happening in Washington DC, Society of Immunotherapy. So, we use that to understand what the overall landscape looks like. And I call that as a machine created report. And our scientists, our team that is at the LTC this week, they utilized that report to understand the overall landscape to understand particularly the combination landscape and then understanding and drilling it down to what other combinations are going on. At a very high level, if we look at the immuno oncology, primarily it is combination of adaptive agent, which can change the microenvironment using adaptive immune approaches. I think where biaxial therapeutic separates itself is in the innate immunity. I think and I am not aware of that we are the only company which has an orally available systemic innate immunity activator and we have for this agent 700 patient data. So, our belief right from the beginning has been that to be able to get responses, the kind of responses you are looking and particularly in hard to treat tumors like neuroendocrine prostate cancer and pancreatic tumors, you need to combine an innate immunity agent, which is BXCL701 with other agents and we have chosen right now NKTR-two fourteen. We continue to explore more and a checkpoint inhibitor. Combination of these 3, basically innate immunity activator does the early surveillance of the immune system. It kind of wants the adaptive immunity agent and the professional killer cells, which are the T cells, they are already pre warned by the time like you using and activating the innate immunity plus PD-one can take out the brake. So, I think overall, we strongly believe that going forward, you will see more and more innate immunity activation as a strategy employed by other companies as well. And I think we are ahead, particularly in terms of the systemic agent for innate immunity. Thanks for that. And it appears that there are no further questions in the queue at this time. I'd like to turn things back over to Vimal Mehta for any additional or closing remarks. I'd like to thank everyone for joining us today And also excellent questions, I think they are very relevant. We continue to feel very excited about what we have been able to accomplish and what is ahead of the company in Q4 2018 and throughout 2019. Thank you very much. And that does conclude today's conference. Thank you for your participation. You may now disconnect.