BioXcel Therapeutics Inks $260 Million Strategic Financing With Oaktree and Qatar Investment Authority

Edward Kim  |

Image source: BioXcel Therapeutics

Two weeks after getting its first FDA approval, BioXcel Therapeutics ( BTAI) announced strategic financing agreements with Oaktree Capital Management and Qatar Investment Authority (QIA), through which those firms will provide up to $260 million in gross funding to support BioXcel's commercialization of Igalmi (dexmedetomidine) sublingual film for acute treatment of agitation associated with schizophrenia or bipolar I or II disorder.

Additionally, the financing is intended to support the expansion of clinical development efforts of BioXcel's BXCL501 program, out of which Igalmi has been the first approved product. The company is planning a pivotal Phase 3 trial for the acute treatment of agitation in patients with Alzheimer’s Disease, as well as additional neuroscience and immuno-oncology clinical programs.

The financing comprises the following:

  • Credit Agreement: Up to $135 million in a delayed draw term loan
  • Revenue Interest Financing Agreement: Up to $120 million in a capped revenue interest on net sales of Igalmi and any other future products associated with the novel compound.

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  • Equity Investment: Up to $5 million investment in BioXcel common stock

The company will receive $100 million in the first tranches of the financing, with the FDA's approval of Igalmi satisfying the condition.

BioXcel Therapeutics is utilizing artificial intelligence approaches to develop transformative medicines in neuroscience and immuno-oncology, 

“Following our recent approval of Igalmi and today’s financing announcement, we have never been in a better position to realize our vision of becoming the leading AI-enabled neuroscience company,” said Vimal Mehta, Ph.D., BioXcel's CEO.

“We are pleased to have strengthened our cash position with primarily non-dilutive capital as we prepare to launch Igalmi and progress our three-pillar portfolio growth strategy for this franchise, which includes pursuing additional indications, extending our geographical reach and expanding the medical settings where Igalmi is offered."

Igalmi for acute treatment of agitation associated with schizophrenia or bipolar I or II disorder

Earlier this month, on April 6, BioXcel announced that the FDA had approved Igalmi sublingual film for the acute treatment of agitation associated with schizophrenia or bipolar I or II disorder in adults.

An estimated 7.3 million people in the US are diagnosed with schizophrenia or bipolar disorders, and up to a quarter of this population experiences agitation with great frequency, totaling up to 25 million agitation episodes for these two patient populations per year.

Agitation episodes are associated with a significant burden for patients, caregivers and the healthcare system.

“This condition has been a long-standing challenge for healthcare professionals to treat,” said Dr. John Krystal, M.D., the Robert L. McNeil, Jr. Professor of Translational Research and Chair of the Department of Psychiatry at Yale School of Medicine.

“The approval of Igalmi, a self-administered film with a desirable onset of action, represents a milestone moment. It provides healthcare teams with an innovative tool to help control agitation. As clinicians, we welcome this much-needed new oral treatment option.”

Igalmi is the first new acute treatment for schizophrenia or bipolar disorder-associated agitation in nearly a decade

Investment thesis

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BioXcel Therapeutics was spun out of BioXcel Corporation in 2018. The stock was the definition of irrational exuberance in 2021 and has since come back to earth. As much as we found the stock to be overvalued at last year's lofty levels, it may be undervalued here, and we think a strong case can be made for investors with high risk tolerance to consider the stock now.

  • The company had $233 million in cash and equivalents as of Dec. 31, 2021. Full execution of this latest financing would result in operational runway into 2025.
  • At the current market cap of $377 million, investors are paying only a modest amount for the commercial upside of Igalmi and the balance of the pipeline.
  • BioXcel has demonstrated a very fast path to its first FDA-approved therapy, going from breakthrough designation to commercial approval for Igalmi in just four years.
  • The company has several potential catalyst events coming up in 2022:
    • Commercial launch of Igalmi
    • Progress in trial for agitation associated with Alzeimer's
    • Progress in trial for major depressive disorder.
    • Interim efficacy data will be available in the second half of this year for BioXcel's relapsed solid tumors trial
  • BioXcel's pipeline is focused on very large target market indications, including agitation associated with other neurological diseases as well as immuno-oncology.

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Source: Equities News

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