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Operator
Good morning and welcome to the BioAccel Therapeutics third quarter 2021 financial results conference call. At this time, all participants are in a listen-only mode. If during the conference you require operator assistance, please press star zero on your telephone keypad. After the presentation, there will be a question and answer session. If you would like to register a question, you may press star one on your telephone keypad. Just to remind everyone, certain matters discussed in today's conference call and or answers that may be given to questions asked are forward-looking statements subject to risks and uncertainties related to future events and or future financial performance of the company. Actual results could differ materially from those anticipated in these forward-looking statements. Risk factors that may affect results are detailed in the company's most recent public filings with the U.S. Securities and Exchange Commission, including its quarterly report on Form 10Q for the quarterly period ended September 30th, 2021, which can be found 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 Dr. Zilma Mehta, Chief Executive Officer, Richard Steinhardt, Chief Financial Officer, Vince O'Neill, Chief Medical Officer, Frank Yaka, Chief Scientific Officer, and Rob Reisinger, Senior Vice President of Clinical Development. It is now my pleasure to turn the call over to Dr. Mehta, the CEO of BioXcel Therapeutics. Please go ahead.
Zilma Mehta
Thank you, operator. Welcome, everyone, and thank you for joining our call today. We will update you on our financial performance and business highlights for the third quarter of 2021. As you know, BioXcel Therapeutics is a clinical stage biopharmaceutical company utilizing artificial intelligence approaches to develop transformative medicines in neuroscience and immunology. It is a very exciting time for the company, and we are pleased to report tremendous progress in our neuroscience and immunology franchise, as well as commercial and launch planning as we near our January 5th PADUFA date. We have many accomplishments to discuss today, Let's start with our most advanced program in neuroscience, BXCL501, for the acute treatment of agitation associated with schizophrenia and bipolar disorders 1 and 2. As a reminder, this is our lead investigational candidate that we doubled out from first in human trial to FDA acceptance for our NDA filing in under three years. This speed is remarkable, as we are not aware of any other AI-driven drug discovery and development company that has achieved these milestones as efficiently. We are now less than two months away from potential approval, and our commercial and launch readiness activities are advancing well. We have expanded our sales leadership, including onboarding a VP of sales and regional sales director. They have deep neuroscience expertise with multiple product launches in both institutional and outpatient settings, and experience working for startups and large companies. We are also focused on recruitment for our sales team across key territories. We are finalizing our market access and pricing strategy through evidence-based market research for 501. Through two strategic initiatives, we are continuing to educate key audiences about our innovative product with no similar launch analogs. First, we have fully launched our disease education campaign, promoting awareness around acute treatment of agitation in schizophrenia and bipolar disorder. This is a broad, multi-channel campaign that includes broadcast, and product theater presentations by key thought leaders. The campaign is designed to educate healthcare providers on the full spectrum of signs, symptoms, and levels of severity associated with agitation and the importance of prompt, non-invasive treatment for patients with schizophrenia and bipolar disorders. Second, our medical science liaison and medical medical managed care teams are actively engaged with healthcare providers at the institutional level and at conferences around the country. At several recent conferences, we had educational booths that effectively informed participants on how to assess agitation in a schizophrenia and bipolar patient and follow treatment guidelines. We will continue to actively participate at industry-leading conferences in the months ahead. Two strategic initiatives are continuously providing us with valuable insights for commercial launch while building important awareness of agitation associated with neuropsychiatric disorders. We are excited about the possibility of bringing a potential new treatment option to the millions of patients struggling with acute agitation associated with schizophrenia and bipolar disorder. Equally significant, 501 has the potential to be the first innovative product, new therapy for these indications in more than a decade. Our neuroscience franchise is growing rapidly. In fact, we believe that 501's pending approval and commercialization is just the beginning. As you will recall, we have a three-pillar portfolio extension strategy for BXCL 501. We intend to expand indications for 501, extend our geographic reach, and grow the medical settings where our treatments are offered. Let me quickly review our progress within each of these three pillars. Reflecting our indication expansion pillars, 501 represents a pipeline within a product, and we are advancing 501 across several indications. We plan to initiate a Phase III program evaluating 501 for the acute treatment of agitation in patients with Alzheimer's disease in Q4 of this year. This follows multiple meetings with the FDA and strategic considerations related to clinical, regulatory, and commercial potential. Alzheimer's disease is the most prevalent type of dementia in the U.S. For context, in Americans over 65 years old, Alzheimer's disease is expected to double over the next 20 years, increasing from 5.8 million in 2020 to 11.8 million in 2014. Up to 70% of those patients experience agitation, with an estimated 100 million episodes of agitation in the U.S. every year. We believe 501 would mark the first orally available therapy, if approved, where there are currently no FDA-approved therapies. Given the unmet medical need in this area, we intend to pursue BXCL501 in other dementia subtypes as part of our future development. Beyond dementia, we are expanding 501 into new indications, including a Phase 1b2 trial evaluating 501 as an adjunctive treatment in major depressive disorder, or MDD. a major public health burden with a high unmet need. It is estimated that 30 million or more Americans are currently on antidepressant, with 25% of those diagnosed remaining ill after starting treatment. Our team is preparing to submit an IND, and we expect to initiate a clinical trial in the first half of 2022. Second, as a part of our geographic expansion strategy, we expect to submit a marketing authorization application with the European Medicine Agency in the first half of 2022 for BXAL 501. We believe the EU represents a sizable market opportunity similar to the U.S. The third pillar of our expansion strategy is to grow the 501 franchise across multiple treatment settings as part of our land and expand strategy. 501 has the potential to move into outpatient settings, which represents another large market opportunity. We are actively pursuing the development and expansion strategy for both our current and future indications. Our AI platform continues to drive our innovation and has spurred the clinical progress of BXL501 into MDD and the discovery of BXL502. At R&D Day in September, we shared an in-depth look at how we apply this platform to accelerate our drug discovery and development efforts. We will continue to leverage our AI platform for building a sustainable R&D pipeline. We have already begun formulation and clinical development planning for BXEL 502 for the chronic treatment of agitation and dementia. 502 is designed as a monotherapy and we believe there may be a potential benefit of combining 501 and 502 as a treatment of agitation and dementia. Turning to our immuno-oncology franchise, we also made great strides progressing the BXEL 501 program. As a reminder, 501 is an orally administered systemic activator of innate immunity candidate being developed for the treatment of aggressive forms of prostate cancer and advanced solid tumors. As further evidence of 701's broad potential, in hard-to-treat tumors at ESMO in September. We presented positive interim data from our ongoing Phase 1B-2 study of BXL701 in combination with Keytruda. We demonstrated encouraging efficacy and a favorable safety profile in heavily pre-treated metastatic castrate-resistant prostate cancer patients with adenocarcinoma. Building upon these results, we also announced the expansion of our de novo and treatment-emergent small-cell neuroendocrine SCNC cohort. This is an area of high-end medical needs with no current standard of care. We expect to present additional efficacy data from the MD induction-led open-label Phase II basket trial of 701 and Keytruda for advanced solid tumors in the first half of 2022. Last week, the Journal of Immunotherapy of Cancer reported data findings suggesting 701 may enhance immunotherapy efficacy in cold tumor types such as pancreatic cancer. These findings also highlight the importance, potential importance of natural QR cells along with T cells in regulating pancreatic cancer tumor growth. These encouraging results have validated our continued efforts to identify other cancer types that could benefit from 701's novel mechanism of action. We continue to optimize the potential of our immunology franchise as we advance multiple clinical strategies. To summarize, this is a very exciting time for Bioexcel Therapeutics as we are rapidly progressing both franchises and preparing for commercial launch. We believe that we are uniquely positioned to take advantage of market opportunities in the near and long term. Now, I would like to turn the call over to Richard who will give a financial update. Richard?
Richard
Thank you, Vimal. I will now review our third quarter 2021 financial results. Research and development expenses were $11.9 million for the third quarter of 2021, as compared to $16.3 million for the same period in 2020. The decrease in expenses were primarily attributable to a reduction in our 501 clinical trial costs. These amounts were offset in part by an increase in clinical trial costs related to BXEL 701. In addition, we experienced greater professional and consulting fees, which were primarily related to the development of BXEL 501. General and administrative expenses were $14.9 million for the third quarter of 2021, compared to $8.5 million for the same period in 2020. The increase was primarily due to higher stock-based compensation and personnel costs due to continued expansion of our teams, increased marketing and commercial costs related to our preparation of the potential launch of BXEL 501 in the U.S., as well as increased insurance, legal, and professional fees. The company reported a net loss of $26.8 million for the third quarter of 2021 compared to a net loss of $24.8 million for the same period in 2020. As of September 30, 2021, cash and cash equivalents totaled approximately $252.9 million. Now I'd like to turn the call back to Vimal.
Zilma Mehta
Thank you, Richard. We would now like to open the call for questions. Operator?
Operator
Thank you. We will now be conducting our question and answer session. As a reminder, if you would like to ask a question at this time, please press star 1 on your telephone keypad. The confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question is coming from the line of Greg Harrison with Bank of America. Please proceed with your question.
Greg Harrison
Hey, good morning, guys. Thanks for taking our question. On the 501 review, have you started labeling discussions? And what are your expectations or goals for the label? And how do the different options there impact your commercial expectations for the drug?
Zilma Mehta
We expect the labeling discussions to start soon. We've been addressing the information requests from the FDA and we are under the window where labeling discussions are expected shortly. There can be two scenarios. One is that we have no medical supervision and then it can go into the institutional setting and or in the outpatient setting. Or there is a medical supervision and then launch will be in the institutional setting. So that's kind of a base case we are looking at, and we have presented in our commercial day that for institutional setting, we are ready to launch the product if that turns out to be the base case for our label. Great.
Greg Harrison
Thank you.
Operator
Thank you. Our next question is coming from the line of Robin Karnaskas with Truist. Pleased to see with your question.
Robin Karnaskas
Hi, thanks for taking the question. I guess I just had a question on the combination strategy 501, 502. You're starting a phase one trial. Can you just talk a little bit about how you're thinking about development strategy for that? I know for depression, it can be very challenging. And so when we think about phase one, you know, how are you designing phase one so that you could really get a good sense of whether or not you'll see a signal if you go forward? Thanks.
Zilma Mehta
Thank you, Robin, for asking the question. Our first plan for 502 is to do the formulation. We have recently identified that candidate. Once formulation has been completed, we're going to pursue that as a monotherapy. The purpose of any combination benefit can be that, as you know, a lot of chronic therapies don't work for almost six weeks. They don't provide any benefit. But a combination with 501 can provide that extra benefit that drug can start working onset early, as well as it can maintain, like, you know, provide the benefit for the chronic aspect of the irritation. So that's the thought process there. But initially, we're going to start as a monotherapy.
Robin Karnaskas
And then just to sign for depression and also 40 milligram update, when will we get a sense of the 40 milligram dose data?
Zilma Mehta
So 40 microgram data for dementia, we've been completing that trial. and doing some blinded analysis related to safety and other features, and we will be utilizing all that data in selecting our two doses for our Phase III program, and we'll report on that.
spk03
Okay.
Operator
Thank you. Our next question is coming from the line of Suman Kulkarni with Canaccord. Please proceed with your question.
Canaccord
Good morning. Thanks for taking my questions. I have a couple. Now that you're closer to your action date, Are there any commercial variables that you feel might need more focus versus what you had announced in your commercial day in light of some of the changes that you've had at the top? And secondly, on the dementia data, could you give us some specifics on what exactly you've aligned with the FDA so far on starting a potential phase three there? Thanks.
Zilma Mehta
For commercial, our focus has been in building our sales organization as we have strong commercial leadership team to continue with our launch preparations. And as I reported, that we have hired VP of sales, regional sales directors, and continuing to hire the sales team for those specific territories and regions where the sales, we have hired regional sales directors. So that part of the process is progressing well. And second piece related to that is finalizing our pricing strategy. So we have done a lot of qualitative, quantitative research, evidence-based research to come up with a pricing strategy that will allow to capture the maximum potential of BXEL 501. That encompass coming up with a strategy that will be a VAC price, and once we have the VAC price, what, depending on the medical setting, what discounting strategy will be. So all of that work has been going on, and it's near completion. So those are the two important pieces which will come together by the end of the year to get us ready for our launch upon approval of the drug by FDA. And regarding your second question about the dementia specifics, once we provide that we have initiated the trial, we will lay out the full Phase III program that we have aligned with the FDA. At a high level, I can say it's going to have a lot of components of tranquility because that data resulted in our breakthrough therapy designation. One thing you have noticed is that we have chosen to go initially with the Alzheimer's disease to keep the focus for strategic reasons and get to the SNDA in a pure population in Alzheimer's. We will continue to provide, as we outline our phase three program, what the key elements of design feature are in a few weeks. Very helpful. Thanks.
Operator
Thank you. Our next question is coming from Colin Bristow with UBS. Please proceed with your question.
Colin Bristow
Good morning, and thanks for taking the questions. Just to build on your comments on the sales build-out, could you just quantify how many you have hired versus how many you ultimately expect to hire? And then where are you in the process of replacing Bill Kane? And then just as we think about the launch of 501, are you expecting to provide revenue guidance post-approval? Thanks.
Zilma Mehta
Thank you, Colin, for the question. Answering your question that the total number, if it is an institutional setting, we have guided that it will be about 75 sales member team. So currently, as I indicated, we have hired the sales management team, and we continue to recruit the sales team. The regional sales managers are on board, and they are defining their strategies and the territories. that they want to focus in terms of bringing the sales teams on board and the timing for it. As you know, our IDN is our key market. There are 57 IDNs, and they are the two-thirds of the overall market. So we are building a strategy what will allow us to get the maximum coverage and how to ramp up the sales team. In terms of bringing on A chief commercial officer, we currently are focused on approval as well as launch, and we want to make sure that we can maintain the momentum with our current team, and we are evaluating our options, what is a good timing to bring on the chief commercial officer on board, and we will report on that.
Colin Bristow
And on the potential sales guidance post-approval?
Zilma Mehta
So what we will be able to, like once we have the approval and we have all our pricing strategy and all that formed up, we will provide a matrix what we can use for the launch and what the guidance will be over a period of time. At this point, we are working through all of that, and we will guide when we are in a position to provide the key launch matrix.
Colin Bristow
That's great. Thank you very much.
Operator
Thank you. Our next question comes from the line of Ram Silvaraju with HC Wainwright. Please proceed with your question.
Ram Silvaraju
Thanks very much for taking my questions. Firstly, on the commercial side, I was wondering if you could provide us with some granularity regarding the factors driving what you expect from the perspective of market access and, in particular, the attitudes of various payers to coverage of 501s. And secondly, if you could provide us with any commentary regarding gross to net discounting and rebating that you anticipate to be in place over the course of the initial months of the 501 launch, please.
Zilma Mehta
Good morning, Ram. Thank you for the question. Regarding your question about the discounting, only those discussions can start once we have the approval to sit down across with the peers. and come up with a strategy. First, we need to come up with a VAC price and then the discounting strategy, and that will happen upon approval. Up until now, what we have is evidence-based research, market research that has been conducted that what is the value proposition for the product, what is the optimal pricing, and what pricing in different medical settings. So all that groundwork is being conducted, and What is encouraging about the product is that product profile is very well received by the SCPs or any research we have done with the potential pairs because it meets, as you know, 501 meets treatment guidelines. It has a very rapid onset of action, high response rates, as well as durable responses, and it's oral therapy. So we are very encouraged that For 501, value proposition in the marketplace is very strong. Now we will initiate these conversations once we have the approval of the drug and we'll be able to provide more granularity on some of the questions you have asked.
Ram Silvaraju
Okay, thank you. That's helpful. Secondly, I was wondering if you could comment on, you know, kind of the timing and expectations regarding business development strategies around 501 particularly as this pertains to markets outside of the United States. And if you think that there's any positive read-through from the recent announcement of Pfizer's in-licensing of certain ex-U.S. rights pertaining to Nortec, and if you think that that might have some implications for what you ultimately intend to do with 501 down the road in order to optimize the value of the drug in ex-U.S. markets.
Zilma Mehta
Great question, Ram. So we are initially focusing on Europe because that's where we are planning to file our MA application in first of October 2022. So answering your question, what will be the good timing for the BD strategy is 2022 to file our MA and then have a partner because then partner can get ready for the potential launch based on approval in 2023. We continue to evaluate and we continue to receive requests for other geographies, including Japan, China, and other territories, and we evaluate those options. But currently, we are focused on getting ready for our launch and initiating the Phase 3 program in dementia. And second, from the business development perspective, we have prioritized Europe as our first territory, or if we find a global partner who is interested in all other territories, we will consider that as well.
Ram Silvaraju
And last question is, are you still contemplating a spin-out of 701 into a separate entity listed or not? And what are the factors potentially driving the timing of this and when we might see it occur? Thank you.
Zilma Mehta
So we keep all our strategic options open for 701, which could involve licensing, partnering, co-commercialization, including the option you have outlined. We keep that, and we'll continue to work with the board what is the optimal option to maximize value for our shareholders. And at the same time, we are conciding that with some of the data that will be coming out for 701, from our two trials, prostate cancer trial, that is, we presented the data at the ASMO, and some of the data we'll be getting in our advanced tumor trials. So having the data and building a strategic option, then we will provide clear direction what our plans are for 701 in 2022. Thank you.
Operator
Thank you. Our next question is coming from the line of Yacht and Soonasia with Guggenheim Securities. Please proceed with your question.
spk10
Yeah. Hey, guys. This is Eddie on for Yacht. Thanks for taking the question. On the dementia study, if you don't get an outpatient label for the current NDA, which I think is your current base case, what do you need to show in this additional phase three to get that label change when you file for the SMDA? And then on the European side, can you just talk a little bit more about how big that market is and how the standard of care especially for mental health, differs between the two regions? Like what are the additional challenges in that market? Thanks.
Zilma Mehta
For dementia, I'd just like to reiterate our Tranquility Trial was conducted in ALS, Assisted Living Facility, which is as close to the community setting. So I will not compare our schizophrenia, bipolar, NDA comment that I made about the medical setting. So in dementia, we have already accounted for that. And once you see the Phase 3 program, you will see that we have taken into account the medical setting that we will be conducting the trial. So we don't see that there will be a specific need for any of that in the dementia program, but that's why we took our time in interacting with the FDA and come up with a robust Phase 3 program that will allow us to focus on completing our SND for dementia. Coming back to Europe, Europe is a very different market. It's, I believe, more challenging, particularly for neuropsychiatric disorders. But the area we are focused with 501 agitation resulting from some of these diseases, there are no, like, you know, standard of care that's optimal, like US, so that meets treatment guidelines. So there is a huge unmet medical need. So we are filing the MA, and it's encouraging that with scientific advice from the EMA agency, we can use the FDA package to file the MA. In addition, the conversations we are having with the partners, they all see a huge potential in the indications we are focused for treatment of agitation. But the obvious challenges are the pricing. The obvious challenges are there are multiple countries that you have to work with. Those are the challenges for any product, and we are very aware of that. And while selecting our partner, we are taking all that into account, who will be optimal partner to be able to launch this product successfully in Europe.
spk10
Thank you. And just one final quick question. Can you confirm that all the 501 manufacturing sites have been inspected by the FDA up to this point?
Zilma Mehta
What I can confirm is we don't expect any more inspections from the FDA where we are in the process. Thank you.
Operator
Thank you. Our next question is coming from the line of Anita Duchant with Barenburg. Please proceed with your question. Hi, good morning.
Anita Duchant
Thanks for taking my question. Firstly, I had a question on the FDA PDUFA date. With the agency currently sort of addressing all the backlog of applications, how confident are you of sort of receiving the decision by January 5th? Or is there a possibility of them coming with a decision earlier? Or how early are we likely to know if they were to extend that timeline?
Zilma Mehta
Good morning, Anita. Thank you for the question. We would love to have a Christmas gift. So we can predict when the approval will happen, but what we can tell is that process is progressing well, and our team has multiple experiences of getting the NDA approval, and we feel very confident that we are at a good spot where we are in our review process.
Anita Duchant
Okay. That's helpful. And then I just had a quick question on the BASC-IT trial with MD Anderson. What sort of additional efficacy data do you expect to see from that study?
Zilma Mehta
So let me pass that question to Will.
spk04
Sure. Good morning, Anita. So that study is continuing to enroll. We did announce several months ago now that both arms or each arm passed the efficacy bar to proceed to full enrollment. And so look to, you know, without committing to any particular scientific forum, you know, look to a large general oncology conference for that readout next year.
Operator
Okay, thank you. Thank you. We have no additional questions at this time, so I'd like to pass the floor back to management for any closing remarks.
Zilma Mehta
Thank you everyone for joining us today. I look forward to connecting with many of you in the coming weeks and updating you on our continued progress. Have a great day.
Operator
Ladies and gentlemen, this does conclude today's teleconference. Once again, we thank you for your participation and you may disconnect your lines at this time.
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