BioXcel Therapeutics, Inc. Q2 FY2022 Earnings Call

Good morning and welcome to the BioXcel Therapeutics Second Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the presentation, there will be a question-and-answer session. 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 quarterly report on Form 10-Q for the quarter ended March 31, 2021 which can be found at www.BioXceltherapeutics.com or on www.sec.gov, which will be updated in its quarterly report on Form 10-Q for the quarter ended June 30, 2022. As a reminder, today's conference is being recorded. Joining us on today's call are Dr. Vimal Mehta, Chief Executive Officer; Richard Steinhart, Chief Financial Officer; Matt Wiley, Chief Commercial Officer; Dr. Rob Risinger, Chief Medical Officer of Neuroscience; Dr. Frank Yocca, Chief Scientific Officer; and Dr. Vince O’Neill, Chief Medical Officer of Oncology. It is now my pleasure to turn the call over to Dr. Mehta, the CEO of BioXcel Therapeutics. Please go ahead.

Thank you, operator. Welcome everyone and thank you for joining our call today to discuss BioXcel Therapeutics financial performance and business highlights for the second quarter of 2022. It has been a busy but rewarding few months. And we have many exciting updates to review this morning. As you know, we are a biopharmaceutical company utilizing artificial intelligence approaches to develop transformative medicines in neuroscience and immuno-oncology. You have heard me discuss our five-year vision to become the premier AI-driven neuroscience company and our progress from this past quarter across all parts of our business continues to bring us closer to this ambitious goal. Let me begin by highlighting our notable achievements across the organization. We have laid the foundation for a successful entry into the market for IGALMI, our FDA-approved acute treatment for mild, moderate or severe agitation associated with bipolar I or II disorder or schizophrenia in adults. Our sales team has been in the field for over two months and key commercial activities are in full swing to create awareness and drive eventual adoption. Since our launch in early July, our priority remains delivering this new treatment option to hospital systems, healthcare professionals and patients. Our Chief Commercial Officer, Matt Wiley will discuss commercial progress and early feedback from the field in more detail shortly. While the IGALMI launch marked an important milestone for the 501 program, we continue our heavy focus on our three-pillar portfolio expansion strategy for the franchise. Let me summarize our progress since last quarter. Following a successful Type B meeting with the FDA, we have further executed our strategy for our first strategic pillar, which is broadening the medical settings where 501 can be offered. On this front, I'm excited to announce our SERENITY III trials for at-home use. This pivotal double-blinded placebo-controlled study is designed to evaluate BXCL501 60 microgram dose for agitation associated with bipolar I or II disorder and in schizophrenia and will consist of two parts. The first part is similar to our SERENITY I and II trials, which were the basis for our IGALMI approval earlier this year, and is designed to assess efficacy and safety in acutely agitated bipolar and schizophrenia patients in an institutional setting. Like SERENITY I and II, SERENITY III's primary efficacy endpoint is a change from baseline in the PEC total score at two hours compared to placebo. The second part of SERENITY III is designed to assess safety compared to placebo when it is administered at home. We believe SERENITY III may be de-risked for the following reasons. First, it will utilize many of the same investigators and clinical sites as SERENITY I and II. Second, we have already observed dose-dependent responses in our Phase 1/2b study for 60, 80, 120 and 180 microgram doses. Recent market research shows a significant number of newly identified unclaimed and untreated episodes in bipolar patients in the at-home setting. This is additive to the claims data research showing that one-third of the 25 million bipolar and schizophrenia agitation-related episodes occur outside the institutional setting. Coupled together, this is a clearly defined medical need and large market opportunity in which we have already demonstrated the efficacy and safety of IGALMI. Additionally, the experience which psychiatrists will gain in the institutions with the current commercial effort will help build a strong bridge to eventual community use if approved. We expect to initiate SERENITY III in the second half of 2022. Next, as part of our integration strategy, expansion strategy, we have made strides in our clinical development programs for 501. Our TRANQUILITY program for the acute treatment of agitation in patients with Alzheimer's disease is advancing well. Our TRANQUILITY II pivotal trial is enrolling with top-line data now expected in the first half of 2023, and we still anticipate initiating enrollment in the second half of this year for TRANQUILITY III, our second pivotal trial in the program. With the recent approval of IGALMI and a strong initial level, we believe the TRANQUILITY program has been significantly de-risked. Additionally, the positive efficacy, safety and tolerability data generated to date, along with breakthrough therapy designation from the FDA provides us continued confidence in the pivotal TRANQUILITY program. We look forward to progressing 501 towards a supplemental NDA for agitation in patients with Alzheimer's. Alzheimer's disease-related agitation remains a clinical area of significant and growing unmet need with an estimated 100 million episodes per year in the U.S. and no FDA-approved therapies. We're excited by the potential of 501 to play a key role in providing a much sought-after solution for Alzheimer's-associated agitation. Further to our indication expansion strategy, we're investigating the potential utility of 501 as an adjunctive treatment in major depressive disorder. Our Phase 1 multiple ascending dose trial in healthy volunteers is progressing well with our 30 and 60 microgram dose cohorts complete. This double-blinded placebo-controlled study includes multiple cohorts, each consisting of 18 volunteers. The 80 microgram dose escalation portion of the trial is currently underway. Data readout for this daily dosing study is expected in the first half of 2023 and will inform our dose selection for a future proof-of-concept depression studies. Over 300 million anti-depression prescriptions are filled annually in the U.S., and current treatments are limited by slow onset of action and incomplete responses. More broadly, the 60 microgram daily dosing over seven days in healthy volunteers is quite encouraging and supportive for our leading programs for at-home use. Moving on to the third and final pillar for our 501 expansion strategy, growing geographic footprint. Given the significant near-term U.S. market opportunities, the company has available by developing 501 for bipolar I and II and in schizophrenia patients in the home setting and as an adjunctive treatment for MDD, we have made the strategic choice to prioritize resources to execute our U.S. strategy over ex-U.S. As a result, we have chosen not to file an MAA at this time; we fully intend to pursue a well-timed geographic expansion at the most appropriate and opportune time. Moving beyond 501, we are leveraging our proven AI technology to build out a sustainable R&D pipeline. As part of our efforts to build out our neuroscience franchise, we continue to advance formulation work for BXCL502 which demonstrates a novel and differentiated mechanism of action for the chronic treatment of agitation related to dementia and other neuropsychiatric conditions. Shifting to our oncology franchise, we have established OnkosXcel, a fully operational focus subsidiary to provide maximum strategic and financial flexibility and position us for sustained expansion and optimization of the franchise. We're actively seeking strategic options, including third-party investments to advance OnkosXcel and ultimately unlock significant value for our immuno-oncology franchise. Under OnkosXcel, we're advancing the clinical development of BXCL701, our leading immuno-oncology clinical candidate being developed for the treatment of aggressive forms of prostate cancer. This includes progress on our metastatic castrate-resistant prostate cancer Phase 2 trial of 701 plus KEYTRUDA combination therapy in patients with either small cell neuroendocrine carcinoma or adenocarcinoma phenotype. Patient enrollment in the SCNC cohort is expected to be completed in the second half of this year. In addition, enrollment is advancing for our adenocarcinoma randomized trial expansion, evaluating 701 monotherapy for its 701 KEYTRUDA combination therapy. We look forward to providing additional updates on our plans to maximize shareholder value for our oncology subsidiary later this year. On the corporate front, we have welcomed industry veteran Michael Miller to our Board of Directors and the BioXcel family. We are very pleased to have his strategic leadership and commercial growth experience available during this exciting time for BioXcel. Lastly, we continue to fortify our intellectual property with two new patents related to IGALMI's cell formulations containing dexmedetomidine and methods of treating agitation using that. In summary, we have made great progress across all aspects of our business this quarter, and are continuing our work to transform the agitation department landscape and other neuropsychiatric conditions. We have many exciting catalysts on the horizon and look forward to continuing our journey towards becoming the leading AI-enabled neuroscience company. Now, I would like to turn the call over to Matt Wiley, who will give an update on the IGALMI launch. Matt?

Thank you, Vimal and good morning, everyone. I'm pleased to report our progress on three fronts this morning: our early market access momentum, key learnings from our initial field force efforts, and our commercial strategy and execution. The market access activities are progressing very well and are on schedule. While the contracting timeframe with group purchasing organizations or GPOs can take six to nine months on average, we have been encouraged by our early engagement. There are three national GPOs that represent over 90% of the beds in our 1,700 targeted hospitals, and we are in various stages of discussions and negotiations with each. We expect to finalize the contracting process over the next few months and we'll share our progress with you when these relationships are complete. In addition to national GPOs, we've engaged with integrated delivery network hospitals or IDNs to drive further downstream adoption of IGALMI. We have also executed the CMS contract and completed the federal supply schedule submissions to unlock access to state and VA hospitals respectively. We've completed the first phase of our commercial build-out and deployment of our sales personnel in the highest priority targets. To date, our field force has successfully engaged the majority of their target hospitals and has made progress in P&T formulary review discussions. Multiple hospital systems and IDNs have indicated their interest in the product and expressed intent to review. As P&T committees review IGALMI in their scheduled meetings during the second half of this year, we will provide an update with more specific metrics. We've learned a lot since the field launched 10 weeks ago. The early response to our awareness activity, sales messaging, and IGALMI concept for which there is no commercial precedent has been starkly positive and has revealed tremendous opportunity within the bipolar and schizophrenia agitation markets. Through discussions with stakeholders and target hospitals, our understanding of the value proposition of IGALMI continues to strengthen. The challenges surrounding the administration of intramuscular injections is a market dynamic that is becoming increasingly worrisome to institutional stakeholders and one that creates a market environment favorable to IGALMI. The use of physical restraint is often required to inject agitated patients and can increase both the expenses and safety risks to staff. Physical restraint can be costly and resource-intensive for hospitals at approximately $1,500 per patient, which typically surpasses the reimbursement. Consequently, a novel treatment option like IGALMI may offer an effective solution to address these issues while potentially limiting associated expenses. Furthermore, agitated patient outbursts may result in patient caregiver and staff injuries, which leads to loss work time, transfers, lawsuits, and generally unsafe work environments. COVID-driven staffing pressure still exists at many of these places of care. As institutions look for ways to decrease the use of restraints and reduce injury to staff, we are observing a desire to increase the use of oral, less invasive medications for managing agitation consistent with consensus guidelines. Turning now to marketing, we are deploying tactics to support the sales efforts and amplify the awareness of IGALMI. To educate healthcare providers on the core benefits of IGALMI, we have recently deployed our promotional speaker peer-to-peer program. These programs will ramp up significantly over the next two quarters to drive interest, formulary adoption, and demand. The team has also successfully launched our IGALMI now available digital campaign, which has achieved over 100,000 visits to our HCP website and garnered meaningful engagement with content in just a short period of time. Based on the positive market response to IGALMI, significant progress with market access and increasingly favorable market dynamics, we're excited to begin our second phase of personal promotion and fully deploy our sales team across 70 territories over the next several months. This puts us in a strong position to take full advantage of the opportunity to treat volumes of patients. Now, I'll turn the call over to Richard, who will give a financial update. Rich?

Thank you, Matt. I will now review our second quarter 2022 financial results. Research and development expenses were $17.9 million for the second quarter of 2022 compared to $13.9 million for the same period in 2021. The increase in R&D expenses was primarily attributable to clinical costs related to the company's TRANQUILITY program. Selling, general and administrative expenses were $18.4 million for the second quarter of 2022 compared to $14.1 million for the same period in 2021. The increase in SG&A expenses was primarily due to personnel and costs related to the launch of IGALMI in the U.S. BioXcel Therapeutics reported a net loss of $37.7 million for the second quarter of 2022 compared to a net loss of $27.6 million in the same period in 2021. Cash burn for the quarter was approximately $33 million, which includes approximately $700,000 in inventory costs and $3.6 million in prepaid clinical trial fees. As of June 30, 2022, cash and cash equivalents totaled approximately $233.5 million. This excludes $30 million of contributions from the $260 million strategic financing announced in April. To date, the company has met the milestones and has received $100 million from that agreement. Now I'd like to turn the call back to Vimal.

Thank you, Richard. We would now like to open the call for questions. Operator?

Thank you. At this time, ladies and gentlemen, we will be conducting our question-and-answer session. Our first question is coming from the line of Greg Harrison with Bank of America. Please proceed with your question.

Hey, good morning, guys. Thanks for taking the questions. Maybe to start out, could you provide some more color on the ex-U.S. strategy? Maybe just talk a little bit about the drivers behind the decision and how you would characterize the discussions that you've had with potential partners?

Regarding the ex-U.S. strategy, it has been evolving considering that our program is evolving really fast. The U.S. opportunity is so attractive in the short run with our recent announcement of the SERENITY III program where our drug is already approved, IGALMI, it can go to the home setting. The Alzheimer's program is progressing, and we will be ready to file SNDA in that program after completion of two pivotal trials. So opportunity in the U.S. is really large. In addition, we are pursuing MDD. It's a strategic choice on resource deployment, shall we focus on the U.S. or continue to focus both in the U.S. and outside us. So once we have captured opportunity in the U.S., then we will start deployment of strategy outside ex-U.S. Our goal will be to look for a partner who can cover multiple geographies rather than originally we were thinking of just looking for a single partner in Europe. Now Japan is a very attractive market considering the Alzheimer's-related agitation, and we have a very strong IP position. So we are making strategic choices just from a resource deployment perspective. Otherwise, the opportunity is very attractive outside the U.S., in addition to the U.S.

Okay, that makes sense. And then maybe just one more, maybe an update on the IGALMI launch. Have you seen any early adopters in the month or so since trade launch? And if not, when would you expect the first to start to come on board?

With the process, Greg. First of all, thanks for the question. The process takes six to 12 months on average to just get the formulary approval in the hospitals. Driving adoption typically happens after that process has been completed. So the steps that we're taking now that we've been taking over the last 10 weeks is to drive interest, identify P&T stakeholders and begin the process to get formulary adoption in those hospitals. Once that happens, we'll see swifter uptake, but this is how typical hospital launches proceed. It's an operational fact, and we're just working within that set of facts.

Got it. Okay. Well, thanks again. And congrats on the progress.

Thank you, Greg.

Thank you. Our next question is coming from the line of Robyn Karnauskas with Truist Securities. Please proceed with your question.

Hi, thanks for taking my question. And again, good work on the progress. So regarding SERENITY III, why only 60 milligrams? Can you repeat that? And what percentage of the population might be excluded that would require a higher dose? That's my first question, then I have a follow-up.

That's a great question, Robyn. 60 microgram, as you know, in our previous dose escalation study, we saw that 60, 80, 120, 180 they were all effective. We're starting with 60, because that's a dose that's most relevant in an outpatient setting and I'll have Rob outline why we chose the 60 microgram dose drop.

Sure. So we chose the 60 as Vimal pointed out, because we actually have data on 60 micrograms from our dose-ranging study in schizophrenia. It separated from placebo at two hours. It has a large proportion of patients who respond to 60, so the number that might, let's say, need another dose is very small. The trial is designed very slickly; we are demonstrating the efficacy in almost an identical population, and it will be a combination of schizophrenia and bipolar disorder. It will be done at the very same sites that completed SERENITY I and II. So we expect identical results in terms of an improvement from baseline and the PEC total score at two hours. And then we're testing it for safety purposes at home, which we've received agreement from the FDA that this is a pivotal trial and will allow us to expand the label for this same indication, if you will agitation associated with schizophrenia or bipolar disorder, but at home use.

And so just to be clear, can you repeat those, and is the first portion just in the hospital and then the second portion at home? Or is it all at home and just the second portion is more for safety?

The first portion is identical to what we've done in SERENITY I and II; it will be acutely agitated patients who present in an acutely agitated state. We will be able to demonstrate the 60 microgram dose as efficacious. And then the second portion of the study is testing the safety at home.

So the first portion is in a hospital setting?

Yes.

And Robyn, there is a reason for it because we are using PEC score, and it's a lot more convenient to have a PEC score rated by some experts rather than at their home setting. And that's the reason we split the two phases.

The PECS score is what we've already demonstrated.

Okay. That makes sense. And then the second question I have is regarding the impact of the healthcare reform bill. I mean, obviously, if you sell this drug significantly and Alzheimer's, it's a rather large Medicare population. And by nine years after launch, you could be outside of that small biotech exclusion criteria. But are you within the top 50 drugs in Medicare? Have you thought about how we should think about, I guess the first question would be, what is your estimate split for Alzheimer's for Medicare in the United States? And if you thought about how we should model that given it now looks like it's going to be in law?

The Medicare provision in the reform bill is primarily aimed at drugs that are already costing CMS billions of dollars, so negotiations will focus on those first. Regarding your question, the Medicare segment of the Alzheimer's opportunity is approximately one-third of the total opportunity we've identified in our modeling. We anticipate addressing potential concerns related to pricing flexibility in the future, as we have previously communicated our strategy for this market. However, we still have a significant journey ahead to achieve FDA approval, and considering a bill that has not yet been ratified feels a bit early.

Okay, great. Thank you.

Thanks, Robyn.

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

Thanks for taking my question. And sorry for any background noise. I have a couple. The first one is on SERENITY III, on the safety aspect. What exactly do you plan to collect in terms of metrics for the at-home use component?

Thank you, Sumant. It's Rob Risinger. The metrics for adverse events will be gathered as you would typically do in any trial. Patients will report adverse events at the time of dosing. There will be reliable informants, such as a caregiver, spouse, or family member who will also report adverse events to the investigators. The process for collecting these adverse events will be the same as in other outpatient trials, where a patient comes into the office and describes their experiences, and the investigator documents that information.

Right. And then my follow-up is given that the label currently does not restrict the use of IGALMI to a specific setting. Is there anything that precludes a physician from sending a patient home with it today?

Sumant, that's a great question. As you said, the label focuses on under supervision. So wherever there is supervision available, IGALMI we believe can be used. We're just focusing on the hospital setting because two-thirds of the patients out of 25 million episodes come to the hospital market. It's a very well defined and focused approach, how physicians will use it. Once they develop experience, all of that will unfold in the next six to 12 months.

Thank you.

Thank you, Sumant.

Thank you. Our next question comes from the line of an analyst with Jefferies. Please go ahead with your question.

Hi, team, this is Commis on for Chris. What is the importance of interim use for SERENITY III? Do you expect to fully incorporate outpatient as a second indication? In terms of clinical relevance concerning Alzheimer's agitation and psychosis, what leads you to have confidence in your endpoint and its clinical significance? Finally, in your MDD trial, what factors influenced your dose selection?

Thank you for your questions. I will pass it on to Rob to answer both the TRANQUILITY program as well as then follow-up with MDD.

Sure, so let me be clear, it's the same indication in SERENITY III. This is acute agitation episodes associated with schizophrenia or bipolar disorder. And so we believe that using IGALMI for episodes that aren't just in the hospital or just directly in front of a healthcare provider, but enabling the patient to take this when they're agitated at home, could potentially even prevent the patient from requiring hospitalization or going to the emergency room or running to a clinic. So it's exactly the same indication, but there's tremendous value to the patient and the people around the patient to sort of prevent an escalation from occurring. And then the second piece is that why a patient ends up in the emergency room, because agitation is a spectrum, mild, moderate, and severe; it escalates. So if you are preventing the agitation when it's in early stages of mild stages at home, it's very different than these patients will not need to go to the emergency room. So I think it’s a dynamic between the institution and the reason patients end up there because they don't have a choice or no treatment options at home. So that's why two-thirds of the patients are in the institution. And if IGALMI is available, and when their back scores are lower compared to when they end up in the emergency room, you could treat these patients with the dose we have selected.

So with respect to the major depression and dose selection, we're testing the tolerability and, of course, safety of escalating doses, both escalating individual doses and dosing more than once a day for example, dividing doses into morning and evening doses, for example. And so the tolerability is really important prior to testing this in a proof-of-concept study for depression. So those are the simple biomarkers that would enable us to select a dose. How well is it tolerated? Are there any safety issues? And thus far we continue to escalate patients.

Thank you. We'll move on to our next question, which is coming from the line of Yatin Suneja with Guggenheim. Please proceed with your question.

Good morning. This is Eddie on for Yatin. Thanks for taking our questions. Congrats on all the progress. For the at-home expansion program in SERENITY III and Part 1, what would be a reason why a patient wouldn't proceed to at-home dosing? Does the company or experts you have spoken to or regulators have some safety bar for what would need to happen to ensure a patient can safely move to at-home administration? And then would there be a limit to the number of doses a patient can take in Part 2? And then for the MDD program, given the rapid onset of action you saw for agitation, would you expect to see a rapid onset of antidepressant efficacy? And what are the earliest time points you're looking for efficacy in this study?

Thank you. So the patients in SERENITY III, the first portion will be dosed with either placebo or the 60 microgram dose; those patients are independent of the patients in Part 2. Part 2 is testing the dose at home. It's not a gateway. So I realized that your question implies that you think a patient is going to start with Part 1 and continue to use it at home; that's not what we're doing. The first part of the trial is patients who are acutely agitated, they present with agitation, and we're treating it with the 60 microgram dose. So we'll have very accurate data on efficacy, as well as safety in a tightly controlled situation, where everything can be monitored, just as if you were in the emergency room. The second part of the study is entirely at home in a whole different set of patients. So again, we will have enough data; the FDA has said that they will consider this a pivotal trial for the indication at home.

So there were no safety concerns or any reasons that we could not do the first portion in at-home setting; as I mentioned previously, it's all about having the robustness of the data and using the scale that we have used in SERENITY I and II, and we were able to use this and at the same time demonstrate safety at-home, so that it can become a package for label expansion or for another SNDA.

Got you, that's helpful. And then on efficacy?

In MDD, we're not looking at one or two hours; we're looking at the days and weeks. Efficacy in MDD we expect to see very early but remains to be seen. We'll be likely testing this within the first week, second week, et cetera. We're not just looking at the acceleration of antidepressant response; we're also looking at the proportion of patients who improve. We know that SSRIs are not the be-all and end-all; for example, antidepressants don't work for everyone. Maybe they work for a large proportion greater than 50%. But we'd like to greatly improve that. So we're looking at both acceleration and responders or response overall when treated with BXCL501.

And this study is going to have four weeks or something like that, right?

Daily dosing over a period of four weeks.

Thank you. We'll move on to our next question, which is coming from the line of Colin Bristow with UBS. Please proceed with your question.

Hey, good morning. Thanks for taking the questions. I guess as we think about subsequent quarters where you're going to report revenue, can you just give us any details around how revenue will be recognized? Is that when orders are made or shipped and received? So that's question one, second, sorry if I've missed this, but let's say TRANQUILITY II timing slipped a little from the end this year to the first half of May. Just curious to what's the rationale behind this and in terms of any details or anything you can give us on the other assets moving forward? Thanks.

This is Richard. On the sales, we're going to recognize sales when it's sold to the final customer through the hospital. That's where we actually will recognize sales.

Okay, great.

And regarding the TRANQUILITY program, we are conducting this trial in Alzheimer's patients where the elderly patients reside and in residential settings, and we have observed COVID disruptions sometimes in these sites, and that restricts access for CRO to go into the elderly center. We don't know what could happen in the next several months in the fall with COVID. So we are just being cautious and providing guidance that there could be a slip on the data readout because of those reasons. In terms of operational aspects, we are not seeing any issues in the number of patients that are there. These are elderly patients; they are frail, so you do get a little bit more screen failures, and you will get it in that SERENITY trial because those are younger patients. So I would say those are the reasons, nothing very specific except COVID-related delays, or you can get more screen failures because the patients are frail, and they may have some other associated medical complications and they can get excluded.

Okay, great. Thank you.

And you had the third question, was it related to MDD or our — I just want to clarify?

Just in terms of when do we get more information on your other assets for the somewhat under moving stealthy forward?

Sure. So that asset is now going through the formulations. We expect that work to complete. And then once we have done all of the preclinical workup and we are ready to take to the clinic, we will disclose what that asset is which indications we are choosing. Initially, we have mentioned that one of the indications where it fits in very well is chronic agitation in the treatment of chronic agitation and dementia. But we continue to explore additional options where the mechanism will fit in, and we will lay out the plan in 2023.

Great, thank you guys.

Thank you, Colin.

Thank you. Our next question is coming from the line of Graig Suvannavejh with Mizuho. Please proceed with your question.

Good morning. I hope everyone's having a fantastic day. This is Richard Allen for Graig Suvannavejh who is on the other line. My first question goes on to the SERENITY III plan. How large do you expect the study to be with a goals enrolling how many patients and by when do you expect them? And my second part of that is that what do you think of the incremental increase to revenue since a third of episodes occur outside of institutional settings? Can we assume a 30% increase to peak revenues or what was the company's state? Thank you.

Thank you, Richard, for those questions around the SERENITY III. First question, I will pass it on to Rob so he can outline the number of patients and everything. But we expect this trial to be pretty short. Just to remind everyone, both trials SERENITY I and II had 750 patients, 375 each. And three-arm study there we were testing two doses and a placebo. And we completed the enrollment in about five months or so. So these are very fast trials in terms of the timing. And in terms of the number of patients, I will pass it on to Rob because he is currently doing powering studies to make sure we power the study to Rob.

So each portion of the study, the first and second half will be well under the — I believe it was 350 patients in SERENITY I, 350 in SERENITY II. So because they're independent patients, they are essentially, in a way, independent studies. We know that these will enroll relatively quickly. In addition, this there's no exclusion, so unlike SERENITY I and II, SERENITY I was patients with schizophrenia and SERENITY II was patients with bipolar disorders. We're mixing that and the FDA has agreed that we can test this in both patients with schizophrenia and bipolar disorder at the same time in the same study because our effects are similar. Humans are humans, regardless of what the underlying illness is. Thus, we expect an even faster enrollment. We don't anticipate any problems with recruitment for this agitation, as it is relatively common. We were able to enroll both the SERENITY I and II very rapidly, even in the midst of the major part of the COVID pandemic.

So Richard, we will provide guidance once we roll out the plan — pivotal plan, that when the data readout is expected, but it will certainly be in 2023, and we'll provide more granular guidance on first half or second half.

So, Richard, this is Matt. Regarding your question about revenues for the community setting, your calculations are correct in noting that there are about a third of the agitation episodes in that setting. However, recent market research has shown that in the bipolar population, which accounts for most of the agitation, we identify roughly 10 additional episodes not reflected in the claims data. This translates to around a 60% increase compared to our previous estimates of the community setting opportunity. These extra episodes are not present in schizophrenia patients since their compliance with anti-psychotics typically reduces agitation. This aligns with what we observed in claims. In bipolar patients, the additional episodes are managed through meditation, exercise, illicit drug use, and alcohol. We consider these as potential opportunities for 501, assuming we receive approval for that indication.

Great, thank you. So then, and you also mentioned that IGALMI exceeded expectations in its value proposition. What do you think the uptake curve should look like for IGALMI then? Are you comfortable with where consensus is currently? Or do you see that shifting?

So there's a — as I said, there's an operational or mechanical process to unlock the value and uptake in hospitals. We still have to deal with that process. However, the early signs have been very encouraging; the interest in the drug is very encouraging. We see things moving in a very positive direction. So I wouldn't see that impacting the uptake curves in the near term just because of the mechanics of getting drug on formulary and unlocking the potential for demand. But once that's behind us, I see a big opportunity to help a lot of patients.

And we continue to see a lot of face-to-face meetings. Our sales teams are getting a lot of face-to-face time, despite COVID or any other reason. And they're getting very positive feedback, as Matt said. It's all very encouraging. In fact, whatever we were thinking this drug potential will be now being in the marketplace for 10 weeks. We are even more excited about.

Great, thank you so much.

Thank you, Richard.

Thank you. The next question is coming from the line of Ram Selvaraju with H.C. Wainwright. Please proceed with your question.

Thanks very much for taking my questions. Just here wanted to ask if you could submit this information regarding the regulatory process for the indication for the user statement of IGALMI within the context of what you are trying to capture with certain degrees. So if SERENITY III proved to be positive, what should we think about with respect to a regulatory view period? And also if you could comment on any intent on your side with respect to doing any exploratory clinical work in generalized anxiety disorder, if any? Thank you.

Thank you, Ram. So Rob you…

We expect to quickly assemble a package for a supplemental NDA application once the trial concludes, likely within a few months. The review timeline will depend on the FDA. We might request fast track status based on our findings, which we believe will demonstrate strong efficacy and comparable or even improved safety compared to the approved 120 and 180 microgram doses. We can detail the regulatory process in future discussions, but first, we need to collect the data. We anticipate obtaining this data soon since we're enrolling a wide range of participants with schizophrenia and bipolar disorder, and we will provide further updates later. Regarding other indications like generalized anxiety disorder, we are planning studies to explore various potential indications. We are considering preliminary studies for anxiety disorders, panic disorder, PTSD, and even developmental disorders. We have had conversations with investors about exploring these areas, including autism. Our plans include conducting basket studies, which are small preliminary studies that help us determine if there's a signal for further research. These studies are cost-effective and quick, guiding our next development steps. However, our primary focus remains on expanding at-home use to demonstrate the efficacy and safety of IGALMI in Alzheimer's disease and major depressive disorder, which will be our next steps.

Thank you.

Thank you. Our next question is coming from the line of Corinne Jenkins with Goldman Sachs. Please proceed with your question.

Hi, how should we think about your pricing strategy for potential indication expansion to include as needed or chronic dosing of economy? Thank you.

Yes, so as we think of further downstream indications, we continue to have flexibility in how we might think about pricing in those settings. We haven't made any determinations yet. We'll still continue to monitor the market, and per the previous question around legislation and things of that nature, we'll watch the market dynamics closely. And we'll make a decision on pricing to best fit the markets that we're going into. It's fair to say that we have a very smart pricing strategy now in the institutional setting, and that may actually fit future downstream indications. So while we'll continue to monitor and make that decision as if we should get approval for those indications, and at the time that we enter those markets.

Sure, thanks. And could you also please confirm how many doses of IGALMI are you expecting patients to receive in part two of the SERENITY III trial? And for how long will you be evaluating the patients?

Patients will be using the BXCL501 at home when they have an episode of acute agitation. So we're giving the film and monitoring them over a period of months so that we pick up the frequency and what happens when they use the film. Patients, because it's placebo-controlled, are able to take rescue medication, that will be very much an individual thing. Patients do take additional medications at home to attempt to treat their anxiety. They obviously also take alcohol or marijuana and try meditation. There's a lot of things that they take, but principally we're testing the effect of a single dose of the BXCL501, that 60 microgram dose; and there is a possibility for an additional dose, but that will have to be up to the patient as to whether or not they're feeling something from the initial dose and calming.

Sure. Thank you.

Thank you. It appears we have no additional questions at this time. So I'd like to pass the floor back over to Dr. Mehta for any additional concluding remarks.

Thank you, everyone, for joining us today. We look forward to connecting with many of you in the coming weeks, including at the Canaccord Growth Conference, where Matt and I will be hosting meetings and participating in a fireside chat. Have a great day.

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