Vimal Mehta; President, Chief Executive Officer, Director; BioXcel Therapeutics Inc
Richard Steinhart; Chief Financial Officer, Senior Vice President; BioXcel Therapeutics Inc
Vincent O'Neill; Executive Vice President, Chief of Product Development and Medical Officer; BioXcel Therapeutics Inc
Alec Stranahan; Analyst; BofA Securities, Inc.
Good morning, and welcome to the BioXcel Therapeutics Third-Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. (Operator Instructions) After the formal remarks, there will be a question-and-answer session. (Operator Instructions)
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 could affect future results are detailed in the company's quarterly report on Form 10-Q for the quarterly period ended June 30, 2024, which can be found at www.bioxceltherapeutics.com or on www.sec.gov and which will be updated in its quarterly report on Form 10-Q for the quarterly period ended September 30, 2024.
As a reminder, today's call is being recorded. Speaking on today's call are Dr. Vimal Mehta, Chief Executive Officer; and Richard Steinhart, Chief Financial Officer. They will be joining the Q&A session by Dr. Vince O'Neill, Chief of Product Development and Medical Officer; Dr. Frank Yocca, Chief Scientific Officer; and Dr. Rob Risinger, Chief Medical Officer of Neuroscience.
It is now my pleasure to turn the call over to Dr. Mehta. Please go ahead.
Thank you, operator. Good morning, everyone, and thank you for joining us. This past Tuesday, we announced important milestones with our two pivotal Phase 3 trials with BXCL501. These trials are for agitation associated with bipolar disorder or schizophrenia in the home setting and for agitation associated with Alzheimer's dementia.
We believe BXCL501 could potentially be a much needed acute treatment option for the millions of patients, who do not have FDA approved therapy for these challenging conditions. Our goal is to transform the treatment paradigm.
Starting with our SERENITY at home trial to evaluate BXCL501 for acute treatment of bipolar or schizophrenia-related agitation, we believe this indication represents a near-term growth opportunity and is our immediate focus area.
We designed this study leveraging our substantial clinical experience with BXCL501 conducting 10 double-blinded placebo control trials. We are particularly excited to advance this trial, because it marks the first evaluation of BXCL501 in the home setting.
The first patient was randomized late last week and we look forward to advancing enrollment. Trial duration is expected to be nine to 12 months from the September initiation as we previously communicated. We are also continuing our planning for our TRANQUILITY In-Care trial to evaluate BXCL501 as a potential acute treatment for Alzheimer's related agitation. This represents a much larger, longer term growth opportunity.
We recently received feedback from the FDA on our proposed protocol for the trial, which will be our second pivotal Phase 3 trial for this condition and which largely mirrors our TRANQUILITY 2 Phase 3 study. In addition to acute agitation, we are pleased with the potential chronic treatment opportunities with BXCL501 through externally funded studies currently being conducted by leading academic research institutions.
We recently announced a Department of Defense grant to fund a Phase 2a efficacy and safety study of BXCL501 for acute stress disorder at the University of North Carolina. This marks the second externally funded stress-related trial of BXCL501. Just to remind everyone, we discovered BXCL501 using our AI platform and are pleased to see further validation of its broad therapeutic potential.
While focusing on clinical development, we are continuing to maintain our approved product, IGALMI, in the market with minimal resources. We are committed to making this drug available to patients, while maintaining our brand equity. To support our trials with the goal of reaching data readout, we are working to strengthen our balance sheet. At the same time, we continue evaluating strategic financing alternatives.
In summary, we are pleased with the progress of our SERENITY and TRANQUILITY programs. We believe we have attractive opportunities to address substantial unmet medical needs, while expanding the market potential for BXCL501. This belief is reinforced by a growing intellectual property portfolio that provides long-term patent protection from which we aim to build a leadership position in the treatment of agitation.
I would now like to turn the call over to Rich, who will review our financial results for the third quarter of 2024. Rich?
Richard Steinhart
Thank you, Vimal. Net revenue for IGALMI was $214,000 for the third quarter of 2024, compared to $341,000 for the same period in 2023. The decrease in sales was primarily due to the timing of reorders from existing customers.
However, for context, it's important to point out that net revenue of $1.9 million for the nine months ended September 30, 2024, represents an 89% increase from $1 million in the same period in 2023. The increase in new customer acquisitions and increased sales activity reflects rising utilization.
Cost of goods sold for the three months ended September 30, 2024 and 2023 were $1.2 million $512,000 respectively. Cost of goods sold is related to the cost to produce, package, and deliver IGALMI to customers, as well as costs related to excess or obsolete inventory.
The increase in cost of goods sold for the three months ended September 30, 2024, is a result of higher non-cash charges for reserves for excess or obsolete inventory, compared to the same period in 2023. Charges for reserves for excess or obsolete inventory were $1.2 million and $495,000 for the three months ended September 30, 2024 and 2023 respectively.
Research and development expenses were $5.1 million for the third quarter of the 2024, compared to $19.6 million for the same period in 2023. The decreased expenses were primarily due to decreased clinical trial expenses, professional fees, as well as personnel and related costs resulting from the company's reprioritization in August of 2023 and reduction in force in May 2024.
Selling, general, and administrative expenses were $7.7 million for the third quarter of 2024, compared to $24.3 million for the same period in 2023. The lower expenses were primarily due to decreased personnel and related costs, resulting from the company's reprioritization in August 2023 and further reduction in force in May 2024, as well as decreased professional fees and commercial expenses.
BioXcel Therapeutics had a net loss of $13.7 million for the third quarter of 2024, compared to a net loss of $50.5 million for the same period in 2023. Company used $16.3 million in operating cash during the third quarter of 2024. Cash and cash equivalents totaled $40.4 million as of September 30, 2024.
Now I'd like to turn the call back to Vimal.
Vimal Mehta
Thank you, Rich. We would now like to open the call for questions. Operator?
Operator
(Operator Instructions)
Alec Stranahan, Bank of America.
Alec Stranahan
Okay, great. Hey guys, thanks for taking our questions. Just two quick ones from us. I guess first, how has the launch of the SERENITY study gone so far? Maybe walk us through the process of getting the first patient on the study and whether you expect the rate of enrollment could be similar or maybe accelerate for the other 200 or so patients on the study? And then I've got a follow-up.
Vincent O'Neill
Sure. Good morning, Alec. This is Vince here. So I'll start that and then I'll hand over to Rob to give a bit more detail if he feels I'm missing anything. So essentially, as you know, the study has kicked off, the first patient randomized relatively recently. We're in the ramp up phase right now. That will be totally typical for a study like this. I will mention we're coming into the holiday season, so that would typically involve a little bit of a slowdown at the sites, but then we would typically see a rebound in the January timeframe. So this is our approach to the study and what we've seen so far is absolutely standard.
I'll just mention lastly, we have a large number of sites, so 200 patients and I think the final number is 26 active sites. So that's a large number of sites for the number of patients or target enrollments. So we're very comfortable with the timeline and I'll just state it again, anticipated nine to 12 months.
Anything to add to that, Rob?
Robert Risinger
No, we're right on track and the ramp up is occurring at the moment. So we're tracking and rolling this out across multiple sites and coordinating all of these activities, so it's truly integrated across sites.
Alec Stranahan
Okay, that makes sense. And then on the randomization, could you just remind us if rescue medications are allowed, especially thinking about the placebo arm and whether this might actually be a helpful data point that you may be measuring over the 12-week study period? Thanks.
Robert Risinger
Yes, rescue medications are allowed in the trial. Patients may receive a rescue if necessary. And as you said, half of, literally one-half of the patients, 100 versus 100, will be receiving placebo. So it's a sort of safety measure. And yes, we are tracking that as a sort of surrogate of inefficacy, we'll call it, an indicator of inefficacy for those patients on placebo.
Alec Stranahan
Got it. Thanks for the color.
Operator
(Operator Instructions)
Graig Suvannavejh, Mizuho Securities.
Graig Suvannavejh
Hey, good morning. Thanks for taking my questions. I've got two; first, just I might have missed this earlier, but on the TRANQUILITY trial protocol, what was the specific feedback that you got from FDA? If you could provide any color on that?
And then secondly, was just hoping if you could provide an update on where you are with the cash runway and optionality or options that you are considering with regards to funding the company? Thanks.
Vincent O'Neill
Sure. Good morning, Greg. This is Vince. I'll take the first part of that question. So, I mean, we don't typically give blow-by-blow details of FDA comments. What I can say, though, very comfortable in saying this, the feedback was direct, actionable, and really very concise. So, we're actually very happy with the feedback we received. Did you want to handle second part, Rich?
Richard Steinhart
I will handle it. Greg, did you have any more feedback you needed on the FDA feedback because we have already outlined that what that trial design is and what are the key elements of the design of the trial. Is there anything else we can embellish for you or that's good?
Graig Suvannavejh
Thank you very much. That's very good.
Vimal Mehta
Sure, sure. Regarding the strengthening our balance sheet, as in my prepared remark, we are working on all options that we have previously outlined. And we work with our strategic partner also, so that we can get to the data readout. And that's the company's key focus, how to get to the data readout, and strengthen the balance sheet.
Graig Suvannavejh
Maybe just a follow-up here with the trial underway of sorts. Can you provide color as to whether the current financing or cash to have is efficient to take the trial to completion again my apologies if I made [mistake] before?
Vimal Mehta
We have not provided any guidance Graig, but we initiated the trial with a view that we want to get to the data readout and work with all stakeholders, so that we can get to the data readout, which is not that far off from where we are, and we initiated this trial in September, and our guidance is nine to 12 months.
Operator
Sumant Kulkarni, Canaccord Genuity
Sumant Kulkarni
Good morning. Thanks for taking my questions. I have two: one financial and one trial related. The financial one is how would you characterize your latest negotiations with your large investors on your ability to keep financial covenants at bay?
And second, how important is the successful completion of SERENITY At-Home to the company in terms of that trial's ability to potentially unlock partnership opportunities for the larger at-home agitation market?
Vimal Mehta
Hi, good morning, Suman. This is Vimal. As I mentioned that we are continuing speaking with all our stakeholders, including our strategic partners. And as you know, they've been very collaborative, and we are very pleased with that. We are continuing on that path and focus continues to be that we can strengthen the balance sheet at the same time we can get to the data readout.
And for the SERENITY, coming back to your question regarding the SERENITY At-Home partnership, now if we think about the company, we are way advanced than where we were last year. We already have SERENITY At-Home trial in progress and we're expecting the data readout like you know next year.
The TRANQUILITY In-Care which is our second Phase 3 trial, which mirrors the TRANQUILITY 2, where we had positive data in efficacy and safety, so that is ready to start.
So company from a clinical trial perspective and moving these trial forward, which can be huge value drivers for all stakeholders like particularly patients, caregivers, health care providers and all our other stakeholders. We are pursuing every path that will allow us to maximize the value for our shareholders and that continues to be the focus of the company.
Operator
Samir Devani, Rx Security.
Samir Devani
Hi, guys. Thanks for taking my questions. I guess the first one is just on, I think last time we spoke, you mentioned that the TRANQUILITY In-Care trial would have a cohort of 20 patients in the At-Home setting. So I just wanted to confirm following the FDA feedback whether that was still the case. I guess that's question one.
Vincent O'Neill
Yes, hi there. This is Vince here. So yes, at the end of the day after discussion internally, we took that pilot out of the protocol. So currently that's not part.
Samir Devani
Okay. And then I guess the second question is just really on BXCL701 and whether you've had made any progress in terms of options for progressing that product? Thanks very much.
Vincent O'Neill
Sure, so I can give the following update. So we're still in the process, I think as I may be mentioned on the last quarterly, probably a longer process and at least I personally had anticipated, but what it's still within that process working with our firm, who has expertise in this area with potential partners, diligence, room activities, et cetera. So it's still an ongoing process.
Samir Devani
Great, and maybe if I could just sneak one more in. In terms of the stock write-down, could you just confirm that, or give us an indication of what sort of inventory you're still holding and what may be at risk going forward, thanks.
Richard Steinhart
Sure, this is Rich, thanks. I think we're in pretty good shape now with that write-down. We should have enough product to sustain us for the next couple of years. And remember, I think this is a non-cash charge, and if sales pick up, we'll have plenty of inventory to sell with this. It's just looking at where we are today and projecting out. So I think we're in pretty good shape with inventory.
Samir Devani
Thanks, Richard.
Operator
Thank you. We've reached the end of our question-and-answer session. I'd like to turn the floor back over for any further closing comments.
Vimal Mehta
Thank you, everyone, for joining us today and for your continued interest in BioXcel Therapeutics. Have a great day.
Operator
Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.
