BioXcel Therapeutics(BTAI) - 2025 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Forward-Looking Statements The report contains forward-looking statements about the company's strategy, financial needs, and clinical programs, which are subject to significant risks and uncertainties - The report includes forward-looking statements concerning various aspects of the business, including sales strategy for IGALMI®, cost savings from its strategic reprioritization, ability to raise capital and continue as a going concern, clinical trial plans, and intellectual property strategy[11][14] - These statements are based on current management expectations and are subject to known and unknown risks, directing readers to detailed discussions in risk factor sections[12] Summary Risk Factors This section summarizes principal risks, including significant operating losses, potential Nasdaq delisting, critical funding needs, and substantial doubt about going concern - The Company has a history of significant operating losses and anticipates they will continue, raising substantial doubt about its ability to continue as a going concern[17] - There is a risk of being delisted from The Nasdaq Capital Market, which would harm stock liquidity and the ability to raise capital[17] - The business is dependent on the success of its sole approved product, IGALMI®, and its key product candidates, with failure to develop or commercialize them substantially harming the business[17] - The Company has significant indebtedness under its Credit Agreement, where failure to raise additional capital could trigger an event of default and force program delays or eliminations[17] - The company is subject to legal proceedings and investigations which could be costly and result in unfavorable outcomes[22] Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Q1 2025 and 2024, including balance sheets, statements of operations, and cash flows, with accompanying notes on key financial aspects Condensed Consolidated Balance Sheets As of March 31, 2025, cash and cash equivalents slightly increased to $31.0 million, total assets remained stable, and total liabilities decreased to $128.7 million, improving stockholders' deficit Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $31,013 | $29,854 | | Total current assets | $37,777 | $37,394 | | Total assets | $38,566 | $38,338 | | Liabilities & Equity | | | | Total current liabilities | $25,546 | $22,233 | | Long-term debt | $99,918 | $102,508 | | Total liabilities | $128,738 | $131,439 | | Total stockholders' (deficit) equity | $(90,172) | $(93,101) | Condensed Consolidated Statements of Operations Net loss significantly reduced to $7.3 million in Q1 2025 from $26.8 million in Q1 2024, driven by substantial decreases in operating expenses, despite lower net product revenue Statement of Operations Summary (in thousands, except per share data) | Metric | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Product revenue, net | $168 | $582 | | Research and development | $4,554 | $11,401 | | Selling, general and administrative | $5,699 | $13,264 | | Loss from operations | $(10,099) | $(24,163) | | Net loss | $(7,254) | $(26,791) | | Basic and diluted net loss per share | $(1.50) | $(13.89) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities improved to $12.0 million in Q1 2025, with $13.2 million provided by financing activities, resulting in a $1.2 million net cash increase and $31.0 million cash balance Cash Flow Summary (in thousands) | Activity | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(12,043) | $(17,706) | | Net cash from investing activities | $0 | $0 | | Net cash provided by financing activities | $13,202 | $26,626 | | Net increase in cash | $1,159 | $8,920 | | Cash and cash equivalents, end of period | $31,013 | $74,141 | Notes to Condensed Consolidated Financial Statements These notes detail the company's AI-driven drug development, critical going concern doubt due to losses and financing dependency, restructuring, complex debt terms, equity transactions, and ongoing legal proceedings including an SEC investigation - The company's management has concluded there is substantial doubt about its ability to continue as a going concern for at least 12 months from the financial statement issuance date, citing a history of significant losses, negative cash flows, and dependence on obtaining additional financing[44] - The company has undergone multiple restructuring actions, including workforce reductions in May and September 2024, to preserve cash and prioritize core clinical programs[57][58] - The company has a complex Credit Agreement with Oaktree, amended six times, with the Fifth Amendment waiving the minimum revenue covenant, fixing the interest rate at 13%, and establishing new capital raising requirements, all in compliance as of March 31, 2025[84][85][91][96] - In March 2025, the company raised approximately $13.0 million in net proceeds through a registered direct offering of common stock, pre-funded warrants, and accompanying warrants[125] - The company is involved in several legal proceedings, including a securities class action lawsuit and stockholder derivative complaints, with the class action parties scheduled for private mediation[183][184][185] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of financial condition and operations, detailing the AI-driven drug development, commercial status of IGALMI®, clinical program progress, reduced operating expenses, and critical liquidity challenges including going concern status Overview and Business Update The company, an AI-driven biopharmaceutical firm, focuses on neuroscience with lead product IGALMI® and key programs like BXCL501, while facing a Nasdaq delisting notice for market value non-compliance - The company received a Nasdaq delisting notice for failing to meet the $35 million minimum market value of listed securities requirement, with an appeal decision pending[200][201] - The SERENITY At-Home Phase 3 trial for BXCL501 is fully enrolled, with topline data expected in the second half of 2025, intended to support an sNDA for IGALMI's at-home label expansion[205][206] - The company has undergone significant restructuring, including workforce reductions in May and September 2024, to preserve cash and prioritize core clinical programs[210][211] Clinical Programs and Intellectual Property The company focuses on neuroscience candidate BXCL501, with the SERENITY At-Home trial fully enrolled and TRANQUILITY In-Care trial pending funding, while immuno-oncology programs are largely paused, supported by a robust IP portfolio - The TRANQUILITY program for Alzheimer's agitation requires additional Phase 3 efficacy and safety data, with the TRANQUILITY In-Care trial planned upon securing funding[222] - Investigator-sponsored trials are evaluating BXCL501 for Opioid Use Disorder (OUD), Alcohol Use Disorder (AUD) with PTSD, and Acute Stress Disorder (ASD), funded by NIDA and the Department of Defense[229][230][231][234] - Immuno-oncology programs, including BXCL701, have been paused to conserve resources, despite FDA Fast Track designation for BXCL701 in a specific prostate cancer indication[247][248] - The neuroscience patent portfolio for BXCL501 includes 13 U.S. patents listed in the FDA's Orange Book for IGALMI®, with expiration dates between 2037 and 2043[240] Results of Operations Q1 2025 net product revenue for IGALMI® decreased, while R&D and SG&A expenses significantly fell by 60% and 57% respectively due to restructuring, narrowing the net loss to $7.3 million Comparison of Operating Results (in thousands) | Line Item | Q1 2025 | Q1 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Product Revenue, Net | $168 | $582 | $(414) | (71)% | | R&D Expense | $4,554 | $11,401 | $(6,847) | (60)% | | SG&A Expense | $5,699 | $13,264 | $(7,565) | (57)% | - The decrease in R&D expense was mainly due to reduced costs for the TRANQUILITY II and III studies and lower personnel costs from the Clinical Prioritization[297] - The decrease in SG&A expense was primarily driven by reduced personnel costs, lower legal fees, and decreased commercial and marketing expenses as a result of restructuring[300][302] Liquidity and Capital Resources With $31.0 million cash as of March 31, 2025, the company faces substantial going concern doubt, with liquidity dependent on raising additional capital and complying with stringent debt covenants, including a $29.0 million net proceeds requirement - The company has substantial doubt about its ability to continue as a going concern, with $31.0 million in cash and cash equivalents as of March 31, 2025, projected to fund operations only into the third quarter of 2025[306][393] - The Fifth Amendment to the Credit Agreement requires the company to raise at least $29.0 million in net cash proceeds by mid-2025, of which $19.1 million has been met as of the filing[393] - The minimum liquidity covenant under the Credit Agreement increased to $10.0 million on March 31, 2025, and will further increase to $15.0 million on September 30, 2025[394] - On February 10, 2025, the company effected a 1-for-16 reverse stock split, with all share and per-share amounts in the report retrospectively adjusted[305] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section is not applicable for the reporting period - This section is not applicable for the reporting period[365] Item 4. Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective at the reasonable assurance level[368] - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[369] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is subject to various legal proceedings, including class action and derivative lawsuits, and a formal SEC investigation initiated in February 2024 regarding public disclosures and securities trading - In February 2024, the company became aware of a formal SEC investigation involving the company and certain directors and officers[373] - The SEC investigation relates to public disclosures about product sales, a Form 483 at a clinical trial site for the TRANQUILITY II study, and trading in the company's securities, with the company cooperating[373] Item 1A. Risk Factors This section extensively discusses risks, including precarious financial position, drug development uncertainties, commercialization challenges, reliance on third parties, intellectual property protection, and risks associated with common stock ownership - Financial risks are paramount, including a history of significant losses, substantial doubt about its ability to continue as a going concern, and the need for additional funding to avoid defaulting on its Credit Agreement[377][389][403] - Development of BXCL501 for Alzheimer's agitation is at risk due to principal investigator misconduct in the TRANQUILITY II trial and FDA requirements for additional efficacy and safety data, requiring significant time and funding[412][418][420] - The company faces a risk of being delisted from The Nasdaq Capital Market for not meeting the minimum market value requirement, which would harm liquidity and the ability to raise capital[382][385][386] - The company is substantially dependent on third parties for manufacturing and conducting clinical trials, where any failure could stop or delay development and commercialization[576][588] - The company is subject to ongoing legal proceedings, including a securities class action, derivative lawsuits, and a formal SEC investigation, which could result in substantial costs and divert management's attention[703][709] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds during the reporting period - None[725] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities during the reporting period - None[726] Item 5. Other Information The company reports no other material information, confirming no directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the quarter - During the first quarter of 2025, no directors or officers as defined by Rule 16a-1(f) adopted or terminated a Rule 10b5-1 trading arrangement[729]