BioXcel will use $260M finance deal to expand indications for schizophrenia drug

BioXcel Therapeutics aims to become the leading artificial-intelligence-enabled neuroscience company, and it may have just received the financing to get there–but terms apply.

The commercial-stage biopharmaceutical entered a $260 million long-term financing agreement with Oaktree Capital Management and Qatar Investment Authority to accelerate growth and commercially launch a new schizophrenia drug in return for a share of the profits.

BioXcel uses AI to leverage already approved drugs or clinically validated candidates and identify new therapeutics. The company focuses on neuroscience and immuno-oncology medicines, and its current pipeline includes therapeutics for patients with schizophrenia, bipolar disorder, Alzheimer’s disease, major depressive disorder, dementia and certain cancers.

Oaktree, a global investment manager recording $166 billion in managed assets at the end of last year, led the financial deal, with participation from QIA, the sovereign wealth fund of Qatar. The $260 million in gross funds will fuel BioXcel’s commercial launch of IGALMI—or dexmedetomidine—an orally dissolving formula used to treat agitation associated with schizophrenia or bipolar I or II disorder in adults. 

The financing plan includes up to $135 million in senior secured term loans, according to a Securities and Exchange Commission filing. $70 million of these funds were conditional on FDA approval of IGALMI, which was granted April 5 on the back of data from two phase 3 trials. The drug is to be given under supervision of a healthcare provider, and its safety and effectiveness haven’t been established beyond 24 hours of the first dose.   

The remaining loan commitment can be borrowed before the end of 2024 as long as certain regulatory, financial and sales milestones for IGALMI are met.

The rest of the strategic financing is comprised of a revenue interest financing agreement—up to $120 million in capped revenue interest on net U.S. sales of IGALMI and any other future products—and an equity investment of up to $5 million.

The financing will support the expansion of clinical development efforts of IGALMI, which includes a phase 3 program for the acute treatment of agitation in patients with Alzheimer’s as well as additional neuroscience and immuno-oncology clinical programs.

Combined with the New Haven, Connecticut-based company’s existing cash balance and anticipated business plan, the new financing is expected to give BioXcel a cash runway into 2025.

“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,” Vimal Mehta, Ph.D., CEO of BioXcel Therapeutics, said in an April 19 release. The company is also working to expand the geographical reach and medical settings in which IGALMI is offered, Vimal noted.

BioXcel remains committed to advancing its additional neuroscience and immuno-oncology portfolio, including BXCL502 for chronic agitation in dementia and BXCL701 for prostate cancer and advanced solid tumors.