BioXcel halving head count, narrowing R&D as cash runway crumbles

BioXcel Therapeutics is cutting deep to cope with the collapse of its cash runway. With the company unlikely to meet the requirements for an anticipated cash infusion, the biotech is laying off almost 60% of its staff and narrowing its focus to keep going through the middle of next year.

In May, BioXcel told investors its cash runway could stretch into 2025. The forecast rested on the belief that the combination of the $165.5 million it had in the bank, sales of its agitation drug Igalmi and cash from Oaktree Fund Administration and Qatar Investment Authority (QIA) would see it through next year. Now, a key part of the funding plan has fallen away.

BioXcel’s agreement with Oaktree and QIA provided a path for $155 million to flow into the business, but only if the biotech met certain milestones. Monday, BioXcel told investors it is now “not likely to be in a position to meet the milestones required to access additional capital.”

Talks to modify the agreements are underway but, for now, BioXcel’s runway forecast assumes no further capital from the deals. BioXcel revealed that the money stream has dried up alongside details of how it's cutting costs. The big action is a reduction in head count, which BioXcel plans to slash from 190 to 80.

The layoffs are part of a revision of the biotech’s clinical development and commercial strategies. On the R&D side, BioXcel is now focused on developing BXCL501, a sublingual film formulation of the sedative dexmedetomidine, for the at-home treatment of agitation in schizophrenia, bipolar disorders and mild to moderate dementia due to probable Alzheimer’s disease.

In June, BioXcel shared phase 3 data on BXCL501 in dementia patients with probable Alzheimer’s who were housed in assisted living facilities and residential care settings. While the study was dogged by quality issues, the biotech plans to talk to the FDA about the package it would need to win approval in the assisted living and at-home settings. BioXcel lacks clinical data on at-home use in dementia patients. 

With BioXcel now focused on the at-home setting, the biotech has paused enrollment in a phase 3 trial that is testing BXCL501 in dementia patients in nursing homes. Based on the rate of agitation in subjects enrolled so far, BioXcel thinks agitation may be a chronic problem in the population. As such, the biotech concluded the setting would need a different development program and switched its focus to home use.

The combination of BioXcel exceeding expectations on its product revenues while also announcing a restructuring meant Mizuho analysts described their reaction as "mixed on the update," which they noted came against a backdrop of "multiple disappointments" for the company. 

Investors appeared to hold a firmer view, sending the biotech's stock sinking 35% to $4.82 in premarket trading Monday from a previous closing price of $7.40.