BioXcel Therapeutics, Inc.

Good morning and welcome to the BioXL Therapeutics second quarter 2023 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 that are subject to risks and uncertainties related to future events and or the future financial or business performance of the company. Actual results could differ materially from those anticipated in these forward-looking statements. Risk factors that may affect future results are detailed in the company's annual report on Form 10-Q for the quarter ended March 31, 2023, which can be found at www.bioexceltherapeutics.com or on www.sec.gov, and which will be updated in its quarterly report on Form 10-Q. for the quarter ended June 30th, 2023. As a reminder, today's conference is being recorded. Joining us on today's call are Dr. Vimal Mehta, Chief Executive Officer, Richard Steinhardt, Chief Financial Officer, Matt Wiley, Chief Commercial Officer, Dr. Rob Reisinger, Chief Medical Officer of Neuroscience, Dr. Vince O'Neill, Chief R&D Officer of Oncas Excel Therapeutics, and Dr. Frank Yacca, Chief Scientific Officer. It is now my pleasure to turn the call over to Dr. Amedda, the CEO and founder of BioExcel Therapeutics. Please go ahead.

Thank you, operator. Welcome, everyone, and thank you for joining our call today. Before we begin, I first want to say that the company was dismayed and frustrated by our recent discovery of certain investigator misconduct that occurred during our Tranquility II trial. This summer has not progressed as we had anticipated, and we plan to make significant changes to our entire business structure. While I'm deeply disappointed, I'm more determined than ever to continue developing our drug candidates and put Biaxial Therapeutics back in a position to accomplish its core mission. Now, I will start by covering our strategic reprioritization and how it is designed to position us for success going forward. In addition, I will share as much information as I can about the status of our Tranquility Program in Alzheimer's associated agitation. Six years ago, we founded Biocell Therapeutics with a clear mission to build a uniquely disruptive biopharmaceutical model using AI approaches to bring transformative medicines to patients. We believe we have fulfilled this mission with the approval and launch of Egalme and with our programs in the late stage of clinical development. We are now taking the necessary steps across the business to strengthen our ability to advance our land and expense strategy. Specifically, we are taking clear, well-defined, and decisive actions in three areas. First, let's discuss our commercial reprioritization. We landed with EGALMI's approval in the institutional setting we are now shifting resources to the expand aspect of our market strategy into what we believe is a potentially more promising retail pharmacy and outpatient setting. This shift is largely due to the fact that the hospital setting proved to be more difficult to penetrate than we originally anticipated, particularly in a challenging post-COVID environment. However, we remain committed to making Egalme available to patients in the institutional setting. We began deploying a contracting effort with large hospitals, healthcare systems, and integrated delivery network prior to our reprioritization and have been pleased to see it achieve some initial success with increased demand from existing hospital customers and large health systems. In fact, our Q2 revenues doubled from Q1 largely due to this contracting strategy. Therefore, we will now broadly adopt it. As part of this action, we plan to reduce our total workforce from approximately 190 to 80 employees over the next several months. The majority of these reductions will be in the commercial organization To help us build toward potential labor expansions and to support EGALMI, we will maintain a core 12-member team from market access, commercial operations, sales, and trade functions. This decision to reduce our workforce was extremely difficult for the management team and the board, but was necessitated by a variety of market and business factors. I'm grateful to all of our employees who made many contributions to our company. We are committed to providing support to those impacted as they transition from the company. The second part of our business transformation involves shifting our development focus to high potential education market opportunities for BXEL 501. In bipolar disorders, schizophrenia, and Alzheimer's disease, We firmly believe this drug has the potential to have a positive impact on patients and caregivers and address a significant unmet medical need. For example, 23 million episodes of bipolar schizophrenia-related agitation occur annually in the U.S. In the at-home setting, in addition, 100 million Alzheimer's-related agitation episodes occur every year in the U.S. Importantly, more than 80% of these patients are in a residential setting, and episodes here represent more than half of the total episode volume. We are motivated to develop 501 to address the needs of these patients. We have developed a comprehensive plan for our Tranquility program in Alzheimer's associated agitation. In June, we announced positive top-line data from Tranquility 2. This was a uniquely complex trial requiring mobilization of clinical teams whenever an agitation episode occurred. We were pleased that our top-line data showed that we met our primary endpoint with the 60-megagram dose with 501 demonstrating a statistically significant 39% greater reduction in PEC score from baseline compared to placebo at two hours. We also met a key secondary endpoint with a statistically significant reduction in agitation symptoms versus placebo, as measured by PEC score change from baseline at one hour with 60 microgram dose. 501 was well-tolerated. with no drug-related serious adverse events over trial duration. As we disclosed in an 8-K filing, there were issues related to a principal investigator at a Tranquility II clinical site. The conduct by this PI was unacceptable and extremely unfortunate. We are investigating the issue and, for example, have already initiated an audit by an independent third party of the data from the PI's clinical site. In addition, we have requested a meeting with the FDA to discuss our entire Tranquility Program. This will include both Tranquility 2, Tranquility 3 clinical trials, the data audit, and the data package that may be required to support submission of an SNDA sequence. seeking approval of 501 for the acute treatment of agitation in mild to moderate dementia patients with probable Alzheimer's disease. We hope to have an update on the Tranquility Program, including the audit and FDA meeting by the end of the year. Regarding Tranquility III, we paused enrollment after early trial data showed a much higher background frequency of agitation episode than originally expected. It appears that this patient population may be better suited for a chronic treatment of agitation while our focus is on developing 501 as acute treatment of Alzheimer's agitation. As a reminder, we have breakthrough therapy designation for the acute treatment of agitation associated with dementia. In parallel, we are advancing our serenity program for the at-home acute treatment of agitation associated with bipolar disorders or schizophrenia. In May, we reported top-line results from Serenity 3 Part 1. We evaluated patients in Part 1 in a monitored medical setting as surrogates for the at-home setting. The trial assessed the safety and efficacy of 60-megagram dose of BXCL501 which is half of the lowest approved dose of Vicalme using the same primary and secondary endpoint as in the CINITY1 and 2. While we believe the data suggests the potential for 501 to be effective in a monitored medical setting with 60-microgram dose, we did not meet the primary endpoint or mean change in PEC score at two hours. However, the 60-microgram dose was well-tolerated and demonstrated favorable safety results, including proportionately fewer adverse events compared to those observed during serenity 1 and 2, which evaluated the approved 120 microgram or 180 microgram doses. We believe these safety results support the potential for at-home use. We are now conducting Serenity 3 Part 2. It is a 12-week study to evaluate the safety of a 60-microgram dose of BXL501 with an optional 60-microgram dose. To identify a dose to potentially provide an optimal balance between the safety and efficacy in the at-home population, we performed pharmacokinetic and pharmacodynamic modeling that suggested that use of an 80-microgram dose or BX501 could provide this balance. We believe the evaluation of an 80-microgram dose is further supported by our previous clinical experience with this dose during our Phase 1B trial in schizophrenia patients with agitation. We plan to meet with the FDA to discuss the 80-microgram dose and a protocol amendment to the ongoing Serenity 3 Part 2 study. The primary objective of Part 2 is to describe the incidence of treatment-emergent adverse events. The primary endpoint is a comparison of serious adverse events and treatment-emergent adverse events as compared to placebo. And the secondary endpoints include a number of efficacy assessments. Turning to our major depressive disorder program, we reported positive top line results from the phase 1B multiple ascending dose trial in May. As part of our reprioritization effort, we will pause this program. To augment our clinical development team, Dr. Vince O'Neill, who is currently serving as head of R&D for OncoseXL, will play a broader role in our neuroscience development. Vince has been with the company since the IPO in 2018 and has extensive pharmaceutical clinical development experience. Vince played an instrumental role in Serenity 1 and 2 trials, along with our chief medical officer, Dr. Rob Riesinger, that resulted in the approval of Egalme and the successful human proof of concept trials for 701 in our oncology program. Dushan Kostic, our head of medical affairs, will play an important role in developing clinical and medical strategies of 501 to support commercialization of any potential indications. He has more than two decades of pharmaceutical industry experience in neuroscience. This includes clinical development and commercialization of leading drugs such as Ablify, Invega, Ablify, Mantenna, and Rixalty. We have also initiated a search to expand our board of directors to strengthen clinical development expertise. The third part of our business transformation involves prioritizing AI-driven innovation to strengthen our neuroscience clinical development. Our unique integration of data science, clinical expertise, and commercialization gives us a powerful and distinct competitive advantage in building a robust R&D pipeline. We are truly excited about our clinical development initiatives and pipeline candidates, including VXL502. We look forward to highlighting these developments at an R&D event we plan to host later this year. We also plan to spotlight our next generation AI platform capabilities for identifying, and re-innovating late stage drug candidates and introduce BXEL 503 and 504. In summary, this is challenging yet transformative period for our company. We are taking swift and decisive steps with the goal of putting the company in the best possible position for future success. We have received interest from potential corporate partners However, it is far too early to know what, if any, form such a transaction could take. We are passionate about our goals and remain committed to delivering long-term value to shareholders. Now, I will turn the call over to Rich, who will discuss our second quarter financial results.

Thank you, Vimal. Thank you, Vimal. Our second quarter 2023 financial results are as follows. Net revenue of the GALMI was approximately $457,000 for the quarter. Research and development expenses were $27 million for the second quarter of 2023, compared to $17.9 million for the same period in 2022. The increased expenses were primarily attributable to increased clinical trial expenses for Serenity III and Tranquility II. Selling general and administrative expenses were $25.9 million for the second quarter of 2023, compared to $18.4 million for the same period in 2022. The increased expenses were primarily attributable to an increase in personnel and related costs to support the commercialization of El Gami. While Excel Therapeutics had a $53.5 million loss for the second quarter of 2023, compared to a net loss of $37.7 million for the same period in 2022. The loss for the quarter included approximately $6.1 million in non-cash stock-based compensation. Cash and cash equivalents totaled $127.5 million as of June 30, 2023. As noted, the company is undertaking a strategic reprioritization that includes a reduction in the workforce of more than 50%, which is expected to reduce expenses significantly. In the absence of additional capital becoming available, the company, under the strategic financing agreements or otherwise, the company estimates that its current cash and cash equivalents will last through mid-2024. The company's previously disclosed cash runway projection assumed a full utilization of its strategic financing agreements of $155 million with Oak Tree Fund Administration and Qatar Investment Authority. Based on recent events, the company is not likely to be in a position to meet the milestones required to access the additional capital under the financing agreements. The company is exploring multiple ways to extend its cash runway and is already in discussions with its strategic financing partners to amend the agreements. Successful modification of these agreements could extend the company's cash runway. Finally, with regards to ONCOS Excel, we are currently examining strategic alternatives, including strategic partnerships or financing. Now I'd like to turn the call back to Vimal.