BioXcel Therapeutics, Inc., a commercial-stage biopharmaceutical company utilizing artificial intelligence approaches to develop transformative medicines in neuroscience and immuno-oncology, April 19th announced strategic financing agreements with funds managed by Oaktree Capital Management, L.P. (“Oaktree”) and Qatar Investment Authority (“QIA”).
Under the agreements, Oaktree and QIA will provide up to $260 million in gross funding to support the Company’s commercial activities of IGALMI™ (dexmedetomidine) sublingual film, which was previously approved by the FDA as the first new acute treatment for schizophrenia or bipolar disorder
In addition, the financing is intended to support the expansion of clinical development efforts of BXCL501, which includes a pivotal Phase 3 program for the acute treatment of agitation in patients with Alzheimer’s Disease (AD), and for the Company’s additional neuroscience and immuno-oncology clinical programs.
The long-term strategic financing process was led by Oaktree and is comprised of the following components:
- Credit Agreement: Up to $135 million in a delayed draw term loan
- Revenue Interest Financing Agreement: Up to $120 million in a capped revenue interest on net sales of IGALMI and any other future BXCL501 products
- Equity Investment: Up to $5 million purchase of BioXcel Therapeutics common stock
Under the agreement, BioXcel Therapeutics will receive $100 million in the first tranches of the strategic financing following approval by the U.S. Food and Drug Administration (FDA) of a New Drug Application (NDA) in respect of the use of the Company’s BXCL501 product for the acute treatment of agitation associated with schizophrenia or bipolar I or II disorder in adults. This condition was satisfied on April 5, 2022 with the FDA’s approval of IGALMI.
Key features of the financing include a credit facility with an interest-only period lasting through the duration of the facility of five years, which can be extended for an additional year at the Company’s option upon approval of BXCL501 by the FDA for the acute treatment of agitation associated with Alzheimer’s Disease.
The credit facility includes substantial flexibility for future business development and monetization events, including BXCL701, the Company’s investigational, oral innate immunity activator. Under the terms of the revenue interest financing agreement, Oaktree and QIA will receive tiered revenue interest financing payments on U.S. net sales of IGALMI and any other future BXCL501 products up to a capped return. The revenue interest financing rate ranges from 0.375% to 7.750% of annual net sales of IGALMI and any other future BXCL501 products in the U.S.
The total revenue interest financing payable by BioXcel Therapeutics to Oaktree and QIA has a cap at 1.75x of the amount funded, with the ability to redeem the revenue interest financing agreement at lower multiples within the first three years from funding.
The strategic financing also includes a potential equity investment of up to $5 million for shares of the Company’s common stock, to be made at the option of Oaktree and QIA, while the credit agreement is outstanding at a price per share equal to a 10% premium over the stock’s 30-day volume weighted average price leading up to the exercise by Oaktree and/or QIA of such option.
Vimal Mehta, Ph.D., CEO of BioXcel Therapeutics, said:
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. We are pleased to have strengthened our cash position with primarily non-dilutive capital as we prepare to launch IGALMI and progress our three-pillar portfolio growth strategy for this franchise, which includes pursuing additional indications, extending our geographical reach, and expanding the medical settings where IGALMI is offered. In parallel, we remain committed to advancing our additional neuroscience and immuno-oncology portfolio, including BXCL502 and BXCL701.
Aman Kumar, Co-Portfolio Manager of Life Sciences Lending at Oaktree, said:
We are delighted to partner with BioXcel Therapeutics during this upcoming period of anticipated growth, highlighted by the recent approval and anticipated commercial launch of IGALMI as an acute treatment of agitation associated with schizophrenia or bipolar I or II disorder in adults. The Company has an exciting, AI-driven approach to drug discovery and development, and we look forward to funding the expansion of these efforts and assisting the Company in bringing new, innovative therapies to patients worldwide.
Upon closing of this transaction, and together with the Company’s cash balance and anticipated business plan, BioXcel Therapeutics is expected to have a substantial multi-year working capital runway. Full execution of this financing would result in cash runway into 2025 for the Company.