BioXcel Therapeutics (NASDAQ:BTAI) has published top-line data from Serenity III part 1. Although the results have shown good clinical efficacy in patients with a very clear safety profile, they have not been statistically significant (p=0.0734). The market reacted that same day with a 25% drop, a drop that, as we will see later, seems totally disproportionate to me.
I have to admit that I was very confident that the 60 mcg dose primary endpoint would have been met because the company, in the last Q1ER CC, seems to be very confident.
In fact, in my previous article “BioXcel Therapeutics: It Is All About Key Upcoming Clinical Data Readouts” I commented that it was very likely that the objectives would be achieved in this first part.
In the previous phase II trial where the following doses were used: (60mcg, 80mcg, 120mcg and 180mcg) all the objectives were achieved with p-value<0.05, except that of 60mcg, where a clinically acceptable result was obtained (reduction of 1.5 points in the PEC compared to placebo) but not with statistical significance (P=0.1227). BioXcel thought that increasing the number of patients in the first part of Serenity III would reduce the p-value to <0.05. The final result has been a reduction of the p-value to 0.073 but it has not been enough.
It is also true that the dose chosen (60mcg) in this first part of Serenity is 50% lower than the one approved by the FDA last year for use in Hospitals settings. An excessively large reduction has finally turned out to be insufficient to achieve the objective set.
The company intends to find the optimal dose that achieves an acceptable efficacy, with a very good safety profile, and statistically significant. Because Serenity III has the ultimate goal of expanding the use of Igalmi to “at-home” use, safety is the main target for BioXcel, which is why they have selected such a low dose in this first part of the Serenity III trial.
After the publication of the results, BioXcel intends to continue with the next part 2 of Serenity in an “ascending-dose trial”, in which they will probably test various doses in a range between 60mcg and 80mcg.
In the CC BioXcel specifically talks about 80mcg, and it is not by chance, because as we have said, the last phase II trial (adaptive Phase 1b, randomized, double-blind, placebo-controlled, multi-center, U.S. trial) carried out in 2019 with 60mcg, 80mcg, 120mcg and 180mcg, achieved all the objectives in regarding efficacy and safety profile and with a p-value < 0.05 for the three highest doses.
In the next part II, BioXcel cannot fail, which is why they have proposed 80mcg as a possible dose, a dose that the company already knows works.
Personally, I think that even with a dose of 70mcg primary endpoints would be achieved.
Why didn’t they use the 80mcg dose in the first part, if the company already knew that all the objectives were achieved with that dose in the last phase II trial?
Well, BioXcel, as mentioned in the previous Q1ER CC, what prevails in Serenity III is safety, since it is what the FDA will mainly focus on for its approval in the “at-home” use.
After these results, it seems evident that the optimal dose of efficacy, very good safety and with a value of p < 0.05 could be 70 mcg or 80 mcg.
In the other hand, very soon BioXcel will report the data for Tranquility II (40mcg and 60mcg). This catalyst is one of the most important BioXcel has this year, as an annual revenue peak potential of between $500 million and $1 billion is at stake.
Here it is important to note that BioXcel in the last phase II trial achieved all endpoints at p<0.05, at 30 mcg and 60 mcg doses.
Here, unlike Serenity III, the company already knows that BXCl501 achieves all the goals in elderly patients at 30 mcg in a phase II trial. Therefore, I think it is very difficult that Tranquility II does not achieve all the objectives in both arms.
I remain fully confident in the potential of BioXcel, and I consider that the collapse caused by the result of Serenity III part 1, offers an excellent opportunity to take positions.
The Serenity III trial is ongoing, the second part will start soon with a dose, most likely between 60mcg and 80mcg, that BioXcel is confident will achieve all objectives.
Tranquility II (40 mcg and 60 mcg) data will be published in a few weeks (June), and here most likely no nasty surprises (already previously tested at 30 mcg and 60mcg hitting all targets), and the oncology program with BXCL701 is about to continue with Phase II trials in treatment-resistant prostate tumors.
My target price for this summer remains in the range of $40/$50 due to the good perspectives in the coming results of Tranquility II. Serenity III continues its march, and although in its first part it has not achieved the objectives, in the second part it will with a dose higher than 60mcg.
With a current market cap of around $521 million, I still see the stock price at least double the current price in a few months.
Serenity III part I: Although statistical significance has not been achieved, the clinical results will serve to better adjust the dose in the second part
As we have previously commented, the results obtained in Serenity III Part 1 have been reasonably good, achieving a 1-point reduction in the PEC score compared to the placebo group, but without statistical significance. The best thing has been the safety data since only 1 case of hypotension has been reported, less than 1%. The company states that the second part of Serenity III will be set up as an ascending dose trial, possibly with various doses in the range between 60 mcg and 80 mcg, to reach the optimal dose for the best efficacy and safety profile and with statistically significant.
As mentioned above, in the last phase II trial, an excellent efficacy result was obtained in the 80 mcg arm: a margin of 2.6 point reduction in PEC score compared to placebo with a p-value = 0.0152.
Regarding the safety profile that these doses in the 60 mcg-80 mcg range can offer, it is quite likely that it will be very clean since with 60 mcg only one case of hypotension (less than 1%) has been reported, and with 120 mcg the percentage of hypotension was less than 5%.
In the second part of Serenity III, the safety profile obtained is going to be especially important because being configured for “home use”, the FDA is going to pay special attention here. In fact, BioXcel has commented that in this second part, Igalmi can be administered a second time within 24 hours of the first dose, if necessary. Under this hypothesis, two doses of Igalmi of 70 mcg or 80 mcg administered on the same day would be equivalent to a dose of 140 mcg and 160 mcg respectively, that is, a dose that would be between the two doses approved by the FDA in 2022 (120 mcg and 180 mcg) and that it showed a good safety profile in trials. Therefore, for the following second part of the trial, the 70 mcg or the 80 mcg dose, both will probably show a good efficacy and safety profile and with statistical significance. Furthermore, the good safety profile from both doses quite possibly allow the administration of a second dose, if necessary, on the same day.
Finally, it is important to note that in the second part of Serenity III, the patient will be followed up for 3 months after the administration of Igalmi. This is important because one of the bearish theses so far was that a post-administration follow-up had only been done in the following 24 hours in trials.
Therefore, although Serenity III part I top-line data has been a setback, these results serve to better adjust the optimal dose of the second part of the trial whose data are expected for the second semester of the current year 2023.
Tranquility II Top-Line Results: Next Big Catalyst
Next June, BioXcel will report data from the Tranquility II trial evaluating BXCL501 to treat agitation in elderly patients with Alzheimer’s. The dose of 40mcg and 60mcg is administered.
In this case, BioXcel already tested the 30mcg and 60mcg doses a few years ago in a phase II trial, achieving all the endpoints (primary and secondary endpoints) with statistical significance in both arms.
The data from that phase II trial were:
1) 30 mcg: 2.2 point reduction compared to placebo on the PEC rating scale with a p-value = 0.0149 after 2 hours of dosing.
2) 60 mcg: 4.6 point reduction compared to placebo on the PEC scale with a p-value = 0.0002 after 2 hours of dosing.
3) Safety profile: only mild or moderate hypotension was reported in 10% of the 60 mcg arm. There were no cases in the 30 mcg arm.
Therefore, now at 40 mcg and 60 mcg, most likely all the trial endpoints will be met in both arms. I think the optimal dose will be 40mcg, in which the best efficacy and safety profile will be accomplished.
These results will constitute one of the main catalysts that BioXcel presents this year 2023.
Risks
As in any biotech company, there are a series of risks that any investor should take into account:
-The following results (Tranquility II) do not reach the desired objectives.
-With respect to the cash position, cash and cash equivalents totaled USD $165.5 million as of March 31, 2023. BioXcel believes that the full execution of its strategic financing with Oaktree and Qatar Investment Authority and the proceeds of IGALMI will result in a sufficient amount of cash outflow until 2025. I do not expect a possible offer until next year, 2024.
Conclusion
BioXcel has just published the results of the first part of the Serenity III trial in which, although clinically good results, it has not been able to achieve statistically significant.
The choice of 60 mcg was a long shot as it was already tested in the previous phase II trial where statistical significance was also not achieved. BioXcel stated that increasing the number of patients would be enough to achieve a sufficient reduction in the p-value up to a maximum of 0.05, a situation that ultimately did not occur (P=0.07).
In any case, this first part of the trial has served for the company to choose a more optimal dose for the second part of the trial, where it will most likely choose a dose between 60mcg and 80mcg. At this range, they will almost certainly hit all targets with statistical significance.
The next results of Tranquility II, in June, constitute one of the main catalysts that BioXcel presents this year 2023.
With a dose of 40 mcg and 60mcg used, it is very likely that they can achieve all the objectives with statistical significance in both arms, since in the previous phase II trial with the 30 mcg and 60 mcg it was already achieved.
Now is a good time to take positions, and I still keep my price target in the $40-$50 range for the next several months.
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