Good morning and welcome to the BioXcel Therapeutics Third Quarter 2020 Financial Results Conference Call. At this time all participants are in a listen-only mode.

Just to remind everyone certain matters discussed in today's conference call and our 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 the 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 quarter -- excuse me, for the quarterly period ended September 30, 2020, which can be found on its website www.bioxceltherapeutics.com or on www.sec.gov. A question and answer session will follow the formal presentation. As a reminder, this call is being recorded.

It's now my pleasure to turn the call over to Vimal Mehta, CEO. Please go ahead..

Thank you, operator. Good morning, everyone. And thank you for joining our conference call to discuss BioXcel Therapeutics financial results and business highlights for the third quarter of 2020. We appreciate everyone's time and attention.

Joining me on the call today are Richard Steinhart, Chief Financial Officer; Will Kane, Chief Commercial Officer; Vince O'Neill, Chief Medical Officer; Reina Benabou, Chief Development Officer; Frank Yocca, Chief Scientific Officer; and Robert Risinger, Senior Vice President of Clinical Development.

As the COVID-19 pandemic continues to create uncertainty in the world, I am very proud of our team for their commitment, collaboration and drive, as we make significant progress on the clinical, commercial and corporate front. During this challenging time, most importantly, we remain dedicated to serving and protecting the health of our community.

I will begin today's calls by discussing our lead clinical candidate BXCL501. As a reminder, 501 is a proprietary orally dissolving sublingual thin film of that meta media for the treatment of agitation across numerous neuropsychiatric disorders, and opiate withdrawal symptoms.

Earlier this year, we announced positive top-line data from our pivotal serenity trials for the acute treatment of agitation in patients with schizophrenia and bipolar 1 and 2 disorders, which demonstrated BXCL501's ability to quickly and safely calm patients without excessive sedation. Last month, we had our pre-NDA meeting with the FDA.

Based on the outcome of our discussion, we have initiated rolling submission and are on track to submit a complete application to the FDA in the first quarter of 2021.

We continue to expand our leadership team and our core medical and commercial teams in order to build the corporate framework needed for the potential commercial launch of BXCL501 upon approval by the FDA.

Turning to our clinical development program, we recently completed a crossover bioequivalence study in healthy volunteers that assess the bioequivalence of BXCL501 administered sublingually or buccally meaning between the lower lip and gum.

This data from this trial supported the bioequivalence of 501 following sublingual or buccal delivery of the thin film and will be included in our NDA submission. The ability to administer 501, either sublingually or buccally further shows the ease of our new products.

An FDA approval of 501 for the acute treatment of agitation in patient with schizophrenia and bipolar disorders would represent a giant step forward in our long term vision of establishing a leading neuroscience franchise. To this end, we are well on our way exploring this candidate in multiple follow-on indications.

Moving to the TRANQUILITY study our Phase 1B2 trial for the acute treatment of agitation in patients suffering from dementia with the purpose of the study to identify the most effective and tolerable doses in this elderly patient population.

We will review the findings from the child and either report topline results later this quarter or if needed proceed to an additional dose cohort. As you know, there are no FDA-approved treatments of agitation associated with dementia and current off-label treatments have black box warning.

As a reminder, we have received Fast Track designation for this indication, which will help facilitate the development of BXCL501 in dementia with the FDA.

Turning to the release study, our Phase 1B2 trial of BXCL501 for the treatment of opiate withdrawal symptoms, this study is progressing well and we remain on track to report offline results in the first quarter of 2021.

With opioid abuse cases on the rise, we believe BXCL501 has a potential ability to mitigate the debilitating withdrawal symptoms by reducing the individual's hyperarousal resulting in an easier recovery period and decreasing the rate of relapse.

In addition, we recently received FDA clearance for our IND application for the acute treatment of agitation associated with delirium, a potential fifth indication for this candidate.

Delirium can be caused by multiple underlying diseases, including COVID-19 and presents itself across multiple medical settings, including ICUs, medical, and surgical wards, and emergency rooms. We are preparing to initiate a Phase 2 trial in ICU patients with agitation associated with delirium, including COVID-19 patients in the coming months.

As you can see, we remain committed to exploring the full potential of BXCL501 as a treatment for acute episodes of agitation in schizophrenia and bipolar disorders, and dementia. We are advancing our programs in subchronic treatment for opioid withdrawal symptoms, and agitation associated with delirium.

We plan to evaluate 501 as a chronic treatment for managing agitation in dementia patients. We truly believe 501 can be effective therapy for the millions of individuals suffering from agitation, many of whom do not have any viable treatment options.

Now, I would like to turn the conversation to our immune-oncology clinical candidate BXCL701 an orally available systemic innate immunity activator.

This week we along with our collaborator, MD Anderson presented two posters on safety and initial efficacy from both ongoing combination trials of BXCL701 and KEYTRUDA at the Society of Immunotherapy of Cancer Annual Meeting or SITC.

In the ongoing Phase 1B2 trial in advanced prostate cancer and the MD Anderson lead Phase 2 basket trial we observe encouraging anti-tumor activity in both cold and hot tumors, supporting BXCL701's mechanism of action and ability to stimulate both the innate and acquired immune system and augment responses in combination with checkpoint inhibitors.

All in all, we believe BXCL701 is one of the most advanced cancer treatments in development designed to enhance innate immunity. We look forward to continuing to advance 701 with plans to provide additional efficacy data from both sides. As you can see, we have continued to execute on all fronts.

To support these increased activities, we raise gross proceeds of approximately $200 million in a public offering in July, providing BioXcel a cash runway well into 2022 to achieve our upcoming clinical, regulatory, operational and commercial milestone. With that, I would like to turn the call over to our CFO, Richard Steinhart, Richard..

Thanks, Vimal. Once again, thank you all for joining us this morning. BTAI reported a net loss of $24.8 million for the third quarter of 2020, compared to a net loss of $9 million for the same period in 2019.

The third quarter of 2020 results include approximately $5.3 million in non-cash stock-based compensation compared to approximately $800,000 for the same period in 2019. Research and Development expenses were $16.3 million for the third quarter of 2020 compared to $7.1 million for the same period in 2019.

The increase was generally attributable to increased clinical trial costs, and professional research costs related to the acceleration of the company's research and development activities, primarily related to its SERENITY 1 and 2 trials, as well as increased costs associated with its TRANQUILITY and release trials.

These amounts were partially offset by reduced costs related to the BXCL701 pancreatic cancer trials. Personnel costs also increased primarily related to the growth of BTAI's clinical team as the company continues to expand its clinical programs and in preparation of the potential commercial launch of BXCL501 in the U.S.

Noncash stock-based compensation also increased as a result of the additional personnel combined with increased grant date fair values arising from higher market prices of the company's common stock. General and administrative expenses were $8.5 million for the third quarter of 2020, compared to $2 million for the same period in 2019.

The increase was primarily due to increased non-cash stock-based compensation and personnel costs related to the growth of BTAI's operations combined with increased grant date fair values arising from higher market prices of the company's common stock.

Professional fees also increase, which is primarily attributable to increased corporate legal and Investor Relations fees combined with increased insurance premiums. Total operating expenses for the third quarter of 2020 were approximately $24.8 million compared to total operating expenses of approximately $9.1 million for the same period in 2019.

As of September 30, 2020, cash and cash equivalents totaled approximately $233.4 million. That concludes the Financial Review of our third quarter. Now, I'd like to turn the call back to Vimal for any further comments.

Vimal?.

Thanks, Richard. We would now like to open the call to questions.

Operator?.

Thank you. [Operator Instructions] Our first question comes from the line of Geoff Meacham with Bank of America. Please proceed with your question..

Hey, guys. Thanks a lot for the question. Appreciate it. Just had a couple actually on 501.

Maybe for Vimal or for Will I just wanted to maybe get an update about how the commercial preparations are going just for the launch and what efforts do you guys need to make at this point to educate physicians on the profile and maybe talk through the generic -- the availability of generic options, and maybe what kind of backdrop that provides? Then just as it relates to the regulatory just wanted to get a high level, whatever color you can give us on the pre-NDA meeting, and maybe any points or any updates that you think you'd have to make with respect to the overall -- the totality of the development program.

Thank you..

Thanks, Geoff. I will pass it on to Will to cover the commercial question, and then will take on the end..

Thanks, Vimal. Good morning, Geoff, and thanks for the question. So I'm very pleased with the progress that we are making relative to preparation for commercial launch. As we've talked about in previous calls, we have started adding core leadership to the commercial organization including Head of Marketing.

We recently brought on head of commercial operations, and are narrowing in ahead of market access. We're building out the teams. We're well on our way, not only to staffing but we've embarked on a bolus of market research to help inform our launch strategy, etcetera so that we'll be ready when the time comes.

In addition collaborating with Raina and the medical affairs team, we've moved to add field medical leadership to the company, including a head of our MSL team and our MSL team.

They will be building out their teams and as we've talked about previously, we intend to deploy them in the first quarter of 2021 so that they can begin interacting with key opinion leaders and other key clinicians and healthcare providers to begin the process of educating on agitation and being able to answer questions, etcetera relative to the 501 clinical data to date.

So we're well on our way and things are progressing very nicely. Specific to your question on the marketplace and generic options. So as I mentioned, we've done a good bit of market research to date, we have more to go. But the feedback is not inconsistent with what we thought.

The clinical profile of the drug actually is very well received by both clinicians and pharmacists.

Yes, they acknowledge that their current treatment of standard of care is generics but they also point out the limitations which we've highlighted many times with those treatments, such as their tolerability and safety concerns, etcetera and, of course, the nature of injections, which is really not countered to the relationship than the treatment paradigm that they would like to use so they have another treatment option.

The oral thin film, as you know, should facilitate the opportunity to engage these clinicians to consider 501 as a viable treatment option for patients with mild to moderate agitation. There are a significant number of those, as we talked about as well. So I'll turn it over to Vimal for the regulatory question..

So regarding our pre-NDA meeting, FDA agreed to a rolling submission, and we have already submitted some of the first package and we are on track to submit a complete application in 2021.

Primarily some of the things that need to be put together is CMC package, which is related to the 12-months stability of the film as well as some of the clinical analysis and subgroup analyses that we'll be presenting. So all in all, overall, we feel that we are in a good position to submit our NDA and is on track for Q1 2021..

Okay, great. Thanks, guys..

Thank you. Our next question is coming from the line of Greg [ph] with Goldman Sachs. Please proceed with your question..

Hi, good morning. Thanks for taking the time.

Could you maybe walk us through for the dementia study what you might be looking for from the 90-dose and then you know what you might expect to see in higher doses you're testing if you end up going there?.

Thank you for the question. So the primary outcome of the TRANQUILITY study is really looking at the safety and tolerability profile. This is what we have been looking throughout the clinical trials.

So at the end, we're going to review the study findings and either report top-line results this quarter, or if necessary, we will proceed to another dose cohort giving the results on the safety and tolerability..

And Greg, I will just add to what Reina said that we will look at also the PK data exposure data and any data we can glean about the efficacy from the blinded data and triangulate all that information to make our decision on the 90 microgram dose or if needed, go to another dose cohort..

Okay, thanks very much..

Thank you. Our next question comes from the line of Robyn Karnauskas with Truist Securities, please proceed with your question..

Hi, good morning, and congrats on the progress. So I have two questions. First, congrats on and more IP.

I'd like you to maybe outline for us if you can, I don't know if you can, what additional IP we should expect in the next 12 to 18 months that might really solidify your position to protect against any generic? Second for deliance, it's a newer market for all of us.

Can you walk us through how many films do you think patients might take? How diverse is this market? In other words, how variable are patients and how much film might each patient take? Help us understand how to model that market. Thank you..

Thanks, Robyn. We'll handle this question in two parts. I will take the IP question and Will will take the second question. Regarding the IP, we are very excited that we got our patent issued in October. That's our first patent on BXCL501, related to the composition of the film, and it's used in agitation.

So that's our first strategy and that pattern will provide us market exclusivity until 2039.

In addition, the overarching strategy of the company has been to look at the exposure levels that we are experiencing in each trial, whether it's schizophrenia, bipolar patients or dementia patients or opioids, and coming up with different dose ranges at which these patients will be created.

As you can understand that in acute agitation scenario versus subchronic, the dose requirements are different and also in a chronic situation, those requirements will be different. So we are patenting those exposure levels also. So that's our second part of the strategy besides our film patent.

In addition, we continue -- we have already filed patents related to method of use for dexmedetomidine, particularly for treatment of agitation so there is a broad IP strategy around to maintain the market exclusivity for our different indication, as well as for the whole franchise.

We have almost a dozen patents, familiar pattern that are in progress and being prosecuted for BXCL501. With that, I will pass it on to Will and Reina to provide color on the delirium both on the medical setting as well as a commercial setting..

Sure, thanks, Vimal, and good morning, Robyn. Thanks for the question. So as we discussed in our view, the commercial potential for 501 as a treatment for agitation and delirium is significant, especially when you consider that there are no approved treatment options for agitation associated with this condition.

According to the American delirium society, and other more than 7 million hospitalized patients every year, that suffer from delirium, and the majority of them actually do experience agitation as part of their episode. We're focused on multiple settings in the hospitals.

We talked about the ICU, which is where Reina's Phase 2 study will be conducted, but also medical and surgical wards where we believe the opportunity is equally if not a little more significant for the product. And of course, in emergency departments.

Relative to the number of films, the way I think about it, and the way I think we'll learn more about it through the trial is that an average episode of delirium can last three to five days. And in any given day, there could be multiple films used. The trial is designed to test that. So I can't give you an exact number.

But it could be certainly greater than one or two, which we would expect to be the case in the emergency department to maybe three to four in the medical and surgical wards and ICU settings, but that will be informed by the trial.

Reina?.

Thank you, Will. Absolutely right, we are putting together this Phase 2 trial, which is a multicenter randomized, adaptive sequentially ascending dose-finding design.

And we selected our doses based on the robust data from SERENITY but also from a wealth of literature data on dexmedetomidine in agitated delirium, culminating with a classical paper that really showed the tremendous efficacy even in halibel resistant patients.

So that we're going to evaluate those doses the 120, 180, 240 and 300 milligrams, and we're going to evaluate also, with a PK data and with also some preliminary efficacy data associated with a rat scale.

Well, then our goal is really to find the best efficacious and tolerable dose to move to then another Phase 2 trials and discuss in very close alignment with the FDA, how we're going to do that. And this is where we're going to decide which our doses are going to be..

And just default and be clear. So at what point -- in other trials, you've not been able to read out except for maybe opioid withdrawal where you're dosing more frequently.

In this study, would you be able to give more than one film over a certain period of time or in the safety, would you be able to give more than one film over a certain period of time? Because that'd be different than other agitation trials outside of opioid withdrawal..

Exactly, Robyn. So as Will said, the average duration of delirium is between three to five days. So that is why in our Phase 2 trial we're trying to evaluate the optimal starting dose, so the patient would likely have a good reduction in the right scale with a first dose, and then he will take other doses in a period of two to four hours.

Then that will lead the patient into a calming zone during that period of 24 hours, three days or even five days. This is what we're shooting for..

So Robyn, I can add. In terms of the frequency of dosing that will be determined through the trial. But coming back to your question, can we dose more than one film in a day? Yes, we can dose multiple films in a day. That's how the trial is designed..

Great. Last question, sorry for so many. So when you're thinking about dementia for the next study, since that's your Phase 1, is that something you would also explore? Because with dementia, obviously, people can have episodic experiences that are lasting more than one day.

Would you incorporate the ability for more than one dose? Because that would again be different than what you've done in the past for pivotal.

Is this for the next step for dementia is the question?.

TRANQUILITY study the foundation study, and once we have the unblinding and we have the data in front of us that will inform us what dozing can be used. What you are referring is can be used more than one dose, repeat dosing. And we will find out through this study.

In addition, we will get a very good understanding and we will get informed how we can use it in an episodic setting when somebody has agitation and they need treatment immediately, how it can be used in a chronic setting. We have stated that we plan to move 501 into the chronic setting.

So can it be used daily or can it be used alternating? All of that will be informed by the results we'll get from the TRANQUILITY study. In addition, we are developing Apple Watch to catch agitation in very early stages and what doses will be required for that.

So I think we are getting very close on TRANQUILLITY and once the TRANQUILITY data card has been rolled out that will inform on all of those what decisions we can make and then we will be able to discuss that with the treat more broadly..

Great, thank you..

Thank you. Our next question comes from the line of Yatin Suneja with Guggenheim Partners. Please proceed with your question..

Hey, guys, thank you for taking my question. I have a quick one on TRANQUILITY and then on 701.

So when you said you could go for additional dose could you actually go down on the dose? Then if you go down on the dose, will you be able to expand the 90 microgram arm or not? It's not clear to us whether the expansion will happen if downtime trade versus an uptight traction, which you did when the 60 micrograms was expanded.

And then I'll ask you about the second one after this..

Thanks for the question, Yatin. I think the data from 90 microgram will inform what the next dose cohort needs to be whether we go up in terms of the titration or we go down.

The PK data exposure data will inform us that what exposure levels we are getting so it's really going to be a triangulation of exposure data tolerability data, and what scale we need to take to the FDA, to convince them to go to the next stage of the development. That's our goal.

So at this point in time, both scenarios are very well possible whether to go up or down on the dose cohort..

Okay. And then on 701, we saw the data, can you maybe talk about how the expansion phase of those trials are going to work out? It seems like there were PR in different types of different tumor types especially in the MD Anderson study.

So as you expand, are you going to be enriching for those two tumor types where you saw PR, and then who makes that decision given that this is, I think, an MD Anderson conducted study? Then on the safety side, what sort of modification you are implementing as it relates to the hypertension? Thank you..

Vince, you want to take that question?.

Sure, thanks, Vimal. Good morning. So I'll take it from the prostate study first. That's the easiest one to answer. So obviously there are two cohorts there and Cohort 1 is adenocarcinoma castrate-resistant disease and cohort 2 is NAPC. So those are pure or pure, if you will patient sub-segments or subgroups and the MD Anderson, you're absolutely right.

This is a basket trial. I think going forward having seen activity, as you just said, and if you look at the waterfall plot that does quite nicely illustrate that point.

What would typically happen in a study like this is that yes, where the activity has been seen, the investigator would tend to enrich, it's not a hard and fast rule, but we tend to enrich for those types of patients going forward. And we anticipate that's what will happen here. You're absolutely right. This is an IST. It's MD Anderson study.

They hold the IND. They are the decision-makers on the trial but I would anticipate that happening going forward, you're absolutely right. On you're on your second point, sorry, on the safety and risk mitigation, and so on.

So again, I would make the point that based on the data we've presented, we are seeing on target toxicity that was expected, that's been seen with other agents that also activate the innate immune system. So some of the cytokines have seen similar safety profiles by specific for seeing similar safety profiles.

Again, they have introduced 50 mitigation plan that essentially increase or better the tolerability, and we are doing something very, very similar currently.

The actual detail and it really shouldn't be any mystery, it comes down to a closer follow-up, closer monitoring of patients within the first week because really, these events are all occurring within the first week to detail the granularity. We will present that as we give you in a few months' time. So hopefully that answers your question..

Let me just add a little bit more color to what Vince said at the overarching. This is one of the most advanced innate immunity activator, which is systemic. And we are trying to find the efficacy signal in both cold and hot tumors.

So both the studies that are ongoing gives us what the agents' activities, and it will allow us to develop our more advanced development plans, and appropriability part. All of that work will be done once we have these two trials completed..

Thank you..

Thank you. Our next question comes from the line of Sumant Kulkarni with Canaccord. Please proceed with your question..

Morning. I have three questions actually. The first one is on TRANQUILITY.

If you do decide to go to another cohort, how can you help frame what that means for investors because the only real conclusion that might be able to be drawn is that the prior highest dose is safe enough for you to be comfortable to proceed? So any thoughts on how the company might be able to take an interim look at efficacy in the fourth quarter as you move on to the next dose? That's the first question..

Rob, do you want to take that question? Sure. Thanks.

Sure. Thanks, Vimal. You're pretty much right. As we escalate the dose, we are dose-escalating, essentially based on safety and so when a dose is safe and well-tolerated, we escalate to the next higher planned dose level..

On the reverse, if we see that peak exposure levels, and we think that we need to go down on the dose, we'll consider that as well. But I think after 90 microgram dose, conclusion is done, that's the best way to put it.

Then these decisions will be made and then we can either announced the top-line data or inform that we are moving to another dose cohort..

Got it. Then I'll ask the next two questions upfront.

So if you move to chronic treatment of agitation and dementia, can you comment on the potential for any cognitive upsides or downsides of decks in the geriatric patient population? And on 701, there were some very intriguing data sets recently, now that the triple combo is not proceeding, what are your priorities for your next indication other than prostate cancer?.

I can try that. We will divide the question into two and Frank and Rob will answer the first question and then Vince will take on the 701 question..

Sumant, with regard to your question on chronic usage and cognition, I would hazard a guess to say that I'm not sure that the drug would enhance cognition, but I don't think it would deter it either. So I think it would have a neutral effect as opposed to some of the other drugs that are being used.

And of course, the use of benzodiazepines in this population. This is something where you do get a negative cognitive effect. So that's what I would be thinking upfront..

Vince, do you want to take the second question?.

Sure. Good morning, Sumant. I think the question was, where do we go after this boiling it down? So we certainly had some discussions with our advisors and our collaborators and we have some initial thoughts about it. We haven't made any public statements yet. I think you're probably -- you will be on the right track if you view it in the following way.

We've clearly and this would be a standard approach, of course, we would be thinking of pursuing indications in the tumor types where we're seeing activity.

I think we would need a bit more information on that, a bit more data but it is worth noting that uvula [ph] melanoma is an extremely difficult cancer to treat, pleomorphic sarcoma, similarly to both orphans are also orphans about high-end medical needs. And from a development point of view, there's probably quite a straightforward approach there.

So again, this is under discussion just now. I think we'll make a definitive statement subsequently, but that would be the initial thinking..

Got it. Thank you..

Thank you. Our next question comes from the line of Ram Selvaraju with H.C. Wainwright. Pleased proceed with your question. Ram, your line is live, you may proceed with your questions. We move on to our next question, which is coming from a line of Samir Devani with RX Securities. Please proceed with your question..

Hi, everyone. Thanks for taking my questions. I've just got a couple. The first one just following your pre-NDA meeting, I wonder if you just can comment on your confidence potentially in getting priority review. The second question is just on 701, some very encouraging data there.

I just wondered if you could elaborate on the responses in the prostate cancer study in the responses you've seen? Can you comment on whether they are in the NPC group or the adenocarcinoma group? Thanks..

So I will take the first question, Samir. Thank you for asking the question. In pre-NDA, once we submit full application, after 74 days we will learn from the FDA whether priority review has been accepted. If that is the case, then we could get approval of the drug four approximately four months earlier than the standard review.

Our medical and commercial teams both are preparing for both scenarios. If it turns out to be that we'll get the approval early, we'll be ready to do the commercial launch. For your question related to the 701, I will pass it on to Vince.

Vince?.

Sure, thanks, Vimal. Good morning. On the prostate side, just to be clear, what we're presenting or we have presented is really a complete and final Phase 1B safety experience with associated efficacy of activity. So the efficacy portion is well underway and we will give an update as we said towards end of the year.

To answer your question directly, of the 12 patients actually 13 the 12 were valuable and detailed in the poster, but half of those were adenocarcinoma CRPC and the other half were neuroendocrine disease and the very deep 85% reduction in PSA with some minor shrinkage and CT scan that was in an ad nor patient.

So that's the direct answer to your question..

Great, thanks very much..

Thank you. It appears we have no additional questions at this time. So I'd like to pass the floor back to management for closing comments..

Before we conclude, I want to thank everybody for joining us today. As you have heard throughout the call, BioXcel has made significant progress, advancing both BXCL501 and BXCL701 this quarter. And we look forward to providing results from the ongoing trials as well as updates on our other upcoming key milestones over the next several months.

Have a great day and please reach out to us if you have any additional questions. Thank you..

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