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Item 1. Business

2022-03-11 compared with 2021-03-12 · 345 added, 340 removed, 582 unchanged (54% of the section changed)

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We believe that this differentiated approach has the potential to reduce the cost and time of drug development in diseases with a substantial unmet medical need.

Our two most advanced clinical development programs are BXCL501, an investigational, proprietary, orally dissolving, sublingual thin film formulation of the adrenergic receptor agonist dexmedetomidine , or Dex, for the treatment of agitation resulting from neuropsychiatric disorders, and BXCL701, an investigational orally administered systemic innate immune activator for the treatment of a rare form of prostate cancer and advanced solid tumors that are refractory or treatment naïve to checkpoint inhibitors.

Our two most advanced clinical development programs are BXCL501, an investigational, proprietary, orally dissolving, sublingual thin film formulation of the adrenergic receptor agonist dexmedetomidine, or Dex, for the treatment of agitation resulting from neuropsychiatric disorders, and BXCL701, an investigational orally administered systemic innate immune activator for the treatment of castration resistant prostate cancer and advanced solid tumors that are refractory or treatment naïve to checkpoint inhibitors.

Impact of COVID-19 Pandemic

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and demand for certain goods and services, such as medical services and supplies, has spiked, while demand for other goods and services, such as travel, has fallen.

Throughout 2020, we took steps in line with guidance from the U.S.

Centers for Disease Control and Prevention , or CDC and the State of Connecticut to protect the health and safety of our employees and the community.

In particular, we implemented a work-from-home policy for all employees and have restricted on-site activities to certain chemical, manufacturing and control , or CMC , and clinical trial activities.

To date, we have taken steps in line with guidance from the U.S.

Centers for Disease Control and Prevention (“CDC”) and the State of Connecticut to protect the health and safety of our employees and the community.

In particular, we implemented a work-from-home policy for all employees and have restricted on-site activities to certain chemical, manufacturing and control (“CMC”) and clinical trial activities.

We continue to assess the impact of the COVID-19 pandemic to best mitigate risk and continue the operations of our business.

Beginning late in the second quarter of 2020, we began to slowly bring our staff, in very limited numbers, back to our office.

Our office is currently open to employees on a voluntary basis with a maximum number of 25% of employees present at any given time , which is aligned to state guidelines.

We have also implemented protocols as required under the State of Connecticut’s Reopen program and have limited travel.

This modified return-to-work approach is continuing into 2022.

We have taken steps to protect our workforce and have instituted strict work rules to protect our employees.

To date, our remote working arrangements have not significantly affected our ability to maintain critical business operations.

We continue to work closely with our clinical sites to monitor the potential impact of the evolving COVID-19 pandemic.

We remain committed to our clinical programs and development plans.

Through December 31, 2020, we have not experienced any significant delays to our ongoing or planned clinical trials, except for challenges in accessing elderly care facilities;

Other than our Phase 2 clinical trial evaluating BXCL501 in patients with delirium, through December 31, 2021, we have not experienced any significant delays to our ongoing or planned clinical trials, except for challenges in accessing elderly care facilities and ICU settings;

however, this could rapidly change.

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The following is a summary of the status of our clinical development programs as of the date of this Annual Report on Form 10-K.

Our goal is to become a leader in the field of neuroscience and immuno-oncology.

The key elements to achieving this goal are to:

● Advance BXCL501, a proprietary, orally dissolving thin film formulation of dexmedetomidine, or Dex, a selective α 2a adrenergic receptor agonist, designed for acute treatment of agitation, and opioid withdrawal symptoms towards approval through the Section 505(b)(2) pathway.

The Company believes that BXCL501 may directly target a causal agitation mechanism.

Our goal is to become the leading AI-enabled neuroscience company while further developing our immuno- oncology assets.

We continue to evaluate all strategic options available to us for these assets which could include licensing, partnering, co-commercialization or a spin-out.

The key elements to achieving these goals are as follows:

● Advance BXCL501, a proprietary, orally dissolving thin film formulation of dexmedetomidine, or Dex, a selective α 2a adrenergic receptor agonist, targeting symptoms from stress-related behaviors such as agitation and opioid withdrawal symptoms.

BXCL501 is our most advanced neuroscience clinical program, currently being developed for the acute treatment of agitation related to schizophrenia, bipolar disorders, Alzheimer’s disease and delirium, the symptoms associated with opioid withdrawal, and as an adjunctive treatment for major depressive disorder (“MDD”) in conjunction with the use of Selective Serotonin / Norepinephrine Reuptake Inhibitors (“SS/NRIs”).

We have submitted a New Drug Application (NDA) utilizing the Section 505(b)(2) pathway for BXCL501 for the acute treatment of agitation associated with schizophrenia and bipolar disorders I and II.

The United States Food and Drug Administration (“FDA”) filed the application for review and assigned an April 5, 2022, Prescription Drug User Fee Act (“PUDFA”) goal date.

● Neurological and Psychiatric Disorders.

We believe that BXCL501 , if approved, has the potential to become the standard of care for the acute treatment of agitation arising from diseases such as:

◾ Schizophrenia and bipolar disorder (SERENITY TRIAL);

◾ Dementia (TRANQUILITY TRIAL);

◾ Schizophrenia and bipolar disorder (SERENITY I and II trials);

◾ Alzheimer’s disease (TRANQUILITY II and TRANQUILITY III trials within our pivotal Phase 3 program)

● In addition, given the differentiated design of BXCL501 and its potential mechanism of action, we believe BXCL501 has the potential to address several diseases or conditions where agitation is a symptom of the condition or underlying disease, including:

◾ As an adjunctive treatment for MDD;

◾ Opioid withdrawal (RELEASE trial);

◾ Delirium (PLACIDITY trial);

◾ Post-traumatic stress disorder in collaboration with the VA Connecticut Healthcare System and the Yale University Medical School;

◾ other neuropsychiatric indications.

● Additional Indications.

We also plan to evaluate BXCL501 for several additional indications including neuro psychiatric and neuro degenerative disorders.

In addition, we plan to evaluate BXCL501 in chronic agitation in dementia either as a single agent or a combination product with another agent.

● Agitation Franchise Expansion.

We are also investigating potential treatments for the entire spectrum of agitation from pre-agitation to severe agitation.

We are exploring the use of wearable digital device technology, such as the Apple watch, with the goal of the prevention and treatment of agitation, including, if approved, the administration of BXCL501 prior to the onset of agitation.

For severe agitation, a single use intramuscular, or IM, injection called KalmPen™ is under development.

◾ Post-traumatic stress disorder (“PTSD”).

Pipeline Opportunities for Franchise Expansion

In December 2020, the VA Connecticut Healthcare System and Yale University Medical School were awarded a grant by the U.S.

Department of Defense’s Congressionally Directed Medical Research Programs to evaluate BXCL501 in patients suffering from PTSD as well as alcohol use disorder.

We plan to investigate BXCL501 as a potential chronic treatment for PTSD.

We continue to explore the potential for a wearable device to measure early signs of agitation in patients who are consistent with the patient groups we are evaluating in BXCL501 clinical trials.

Feasibility studies demonstrated that patients were able to wear these devices and that these devices were able to transmit data to our service vendor.

Along with our service vendor, we are developing methods to use these data in an effort to construct algorithms designed to predict when a patient is becoming agitated.

The goal of this program is to establish a predictive algorithm that would allow providers to treat patients before they become highly agitated.

A study in healthy volunteers that are mildly agitated is scheduled to begin in Q1, 2022.

We are advancing our preparations for commercial and launch readiness in preparation for the potential approval of our NDA for BXCL501 by the FDA.

We are optimizing the design and recruitment of our sales force and market access and pricing strategy for the potential commercial launch of BXCL501 for the acute treatment of agitation associated with schizophrenia and bipolar disorders I & II.

This work will be a crucial foundation to launching additional potential follow-on indications, paving the way for our expanding neuroscience business.

During the second half of 2021, we fully launched our unbranded disease education campaign to promote awareness around the treatment of agitation in schizophrenia and bipolar disorders.

In addition, we fully deployed our Medical Science Liaison and Medical Managed Care teams who actively engaged with healthcare professionals and payors to provide key insights to support our commercial strategy.

If BXCL501 is approved outside the United States we would consider launching the product through collaborations with third parties.

We recently identified and initiated the development of a second neuropsychiatric product candidate, BXCL502.

We plan to evaluate BXCL502 initially as a monotherapy and possibly as a combination with BXCL501 for the chronic treatment of agitation in patients with dementia, including Alzheimer’s disease.

The active pharmaceutical ingredient (“API”) underlying BXCL502 is designed to be a potent and selective antagonist of a G-protein coupled receptor (“GPCR”) that affects serotonergic signaling in the brain.

Our preclinical data and machine learning results suggest BXCL502 has the potential to treat agitation and stress related neuropsychiatric symptoms in dementia.

In previously published third party clinical trial data, daily administration of the API of BXCL502 demonstrated improvement in agitation using a well-established, clinically validated

symptom scale.

Formulation and clinical development planning are currently underway with BXCL502.

Immuno-Oncology

BXCL701 is a potential first-in-class, oral, small-molecule immunomodulator designed to stimulate both the innate and acquired immune systems by inhibiting DPP 8/9.

DPP 8/9 behave as "checkpoints"

of pyroptosis and inflammasome activation.

We believe that BXCL701, if successfully developed and approved, may establish a differentiated immuno-oncology platform by modulating multiple steps in the cancer immunity cycle and, when combined with checkpoint inhibitors and/or immune activating agents, may be able to convert immuno-resistant (“cold”) tumors to immuno-sensitive (“hot”) tumors.

● Complete BXCL701 Phase 2 trials to evaluate its potential for the treatment of castrate resistant cancer (“CRPC”), including the neuroendocrine (“NEPC”) variety.

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In addition to the efficacy cohort in NEPC patients, in August 2020, we opened a separate cohort for CRPC patients who have failed taxane-based chemotherapy and up to two lines of second-generation androgen pathway blockers.

Top line results from this trial are expected in mid-2021.

Topline results from the Phase 1b portion of this trial were presented at the American Society of Clinical Oncology Genitourinary Symposium in February 2021.

Interim data from the Phase 2 portion of the study were also presented at the European Society for Medical Oncology conference in September 2021.

We reported updated interim data from the Phase 2 portion of this trial in NEPC and adenocarcinoma cohorts at the American Society of Clinical Oncology (“ASCO”) Genitourinary Cancers Symposium (“ASCO-GU”) in February 2022.

● Basket Trial.

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The investigator led study is designed to evaluate the response rate of orally administered BXCL701, combined with Pembrolizumab (KEYTRUDA ® ) in patients with advanced solid cancers.

The study will evaluate both patients who are naïve to checkpoint therapy and those who are refractory to checkpoint therapy.

Top line results from the basket trial are also expected in mid-2021.

● Soft Tissue Sarcoma.

On January 26, 2021, the FDA granted BXCL701 orphan designation for the treatment of soft tissue sarcoma .

● Topline Results .

Topline results from two ongoing trials with BXCL701 in aggressive forms of prostate cancer and advanced solid tumors are expected in mid-2021.

The study will evaluate patients who are naïve to checkpoint therapy and those who are refractory to checkpoint therapy.

Interim data were presented at the June 2021 ASCO annual meeting.

In the first half of 2022, we expect to present additional interim efficacy data from the trial.

● Potential for Expedited Review Programs.

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We believe BXCL701 may be active at multiple stages of the cancer immunity cycle and therefore, we believe BXCL701 offers a “pipeline in a product” platform given its potential for evaluation across other cancers.

BXCL701 was granted an orphan drug designation for the treatment of acute myeloid leukemia in September 2019, its fourth orphan drug designation in addition to pancreatic cancer, melanoma, and soft tissue sarcoma.

We believe existing preclinical evidence supports the combination of BXCL701 with checkpoint inhibitors and/or agents that act on “co-stimulatory” pathways within immune effector cells.

Moreover, we believe agents that stimulate antibody-dependent cell mediated cytotoxicity, or ADCC , or cell-based therapies such as chimeric antigen receptor T cell , or CAR T , therapy, oncolytic viruses or therapeutic vaccines all represent potential combination with BXCL701.

BXCL701 was granted orphan drug designation for the treatment of acute myeloid leukemia in September 2019, its fourth orphan drug designation in addition to pancreatic cancer, melanoma, and soft tissue sarcoma.

We believe existing preclinical (and clinical) evidence supports the combination of BXCL701 with checkpoint inhibitors and/or agents that act on “co-stimulatory” pathways within immune effector cells.

Moreover, we believe agents that stimulate antibody-dependent cell mediated cytotoxicity (“ADCC ”), or cell-based therapies such as chimeric antigen receptor T cell , therapy, oncolytic viruses or therapeutic vaccines all represent potential combination with BXCL701.

● Identify biomarkers to select patients who we believe have the highest likelihood to respond to our product candidates.

Predicting optimal drug responses in patients requires the identification and validation of predictive biomarkers.

We believe that our ability to identify patient subsets most likely to respond to our product candidates will increase the clinical benefit to patients and improve the probability of success of our clinical trials.

We believe that our ability to identify patient subsets most likely to

respond to our product candidates will increase the clinical benefit to patients and improve the probability of success of our clinical trials.

The indications for our lead product candidate BXCL701 were chosen in part because they are known to overexpress dipeptidyl peptidase, or DPP 8/9, and fibroblast activation protein, or FAP.

Our planned proof-of-concept clinical trial of BXCL701 will retrospectively examine biomarkers related to its molecular and cellular targets to identify those that may correlate with clinical efficacy and increase our likelihood of success.

● Enhance our R&D pipeline by leveraging our therapeutic area expertise with EvolverAI to identify, develop and commercialize new product candidates in neuroscience and immuno- oncology.

● Maximize the commercial potential of our product candidates.

We have worldwide development and commercialization rights to BXCL501, BXCL502, and BXCL701.

If BXCL501 and BXCL701 are approved in the United States, we are developing plans to build a specialty sales force in the United States for BXCL501 and considering other opportunities to collaborate with third parties to maximize the potential of our product candidates.

● Enhance our R&D pipeline by leveraging our therapeutic area expertise with our growing internal capabilities to identify, develop and commercialize new product candidates in neuroscience and immune oncology.

In addition to our leading clinical programs and our emerging and future pipeline, we have identified several potential product candidates and intend to select our next clinical program from among such candidates.

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We may also opportunistically in-license additional product candidates identified through our AI platform approach within our core areas of expertise.

● Maximize the commercial potential of our product candidates .

We have worldwide development and commercialization rights to BXCL501 and BXCL701.

If BXCL501 and BXCL701 are approved in the United States, we would consider building a specialty sales force in the United States and/or collaborate with third parties to maximize the potential of our product candidates.

We are currently taking the early steps towards developing a specialty sales force for BXCL501 in anticipation of potential commercialization.

Furthermore, we intend to commercialize BXCL501 and BXCL701, if approved, outside the United States through collaborations with third parties.

Our Novel Drug Re-Innovation Approach

We intend to develop first-in-class, high value therapeutics by leveraging EvolverAI, a research and development engine created and owned by our parent, BioXcel.

We believe the combination of our therapeutic area expertise and our ability to generate product candidates through our exclusive collaborative relationship with our parent company, BioXcel Corporation in the areas of neuroscience and immune-oncology gives us a significant competitive advantage.

EvolverAI was developed over the last decade and integrates millions of fragmented data points using artificial intelligence, or AI and proprietary machine learning algorithms.

After evaluating multiple product candidates using EvolverAI, we selected our lead programs because our analysis indicated these drugs may have utility in new therapeutic indices where there is substantial unmet medical needs and limited competition.

By focusing on clinical candidates with relevant human data, we believe our approach will help us design more efficient clinical trials, thereby accelerating our product candidates’ time to market.

We retain global development and commercialization rights to these two programs.

Our AI-based discovery and development process is the foundation of our drug re-innovation model for identifying the next wave of medicines.

Our therapeutic area experts have over 150 years of combined experience across the drug discovery and development value chain.

We believe EvolverAI is a novel method of finding potential product candidates because it combines the comprehensiveness and efficiency of machine learning and big data analytics with the expertise and intuition of human experience in drug development.

We believe the combination of our therapeutic area expertise and our ability to generate therapeutic candidates in neuroscience and immuno-oncology through our exclusive collaborative relationship in those areas with BioXcel gives us a significant competitive advantage.

We aim to develop and implement holistically throughout the drug development process an artificial intelligence (“AI”) eco system designed to rapidly identify drugs that engage novel targets related to our key focus areas in neuroscience and immuno-oncolgy.

Our in-house, uniquely integrated AI -to -drug -development capability is complemented by BioXcel LLC’s services and technology.

For example, we have constructed a labeled properties graph (also referred to as a “knowledge graph”) that visually relates neuropsychiatric symptoms, brain circuits, drug targets and existing drugs.

By making these connections, new potential uses for existing drugs emerge.

The knowledge graph may be queried to uncover not only single drugs but potentially new combinations of drugs that we believe may be more effective in treating disorders than single agents.

New combinations of drugs provide the opportunity to evaluate lower, potentially tolerable doses of drugs and also provide the basis for stronger intellectual property positions.

The AI team works closely with business development to prioritize the most valuable external opportunities in a data-driven manner.

These opportunities may be found in new potential uses for launched drugs, in drugs that are part of pharmaceutical company pipelines that are no longer being pursued, or within academic efforts to develop new drug candidates.

In addition to our AI approach to neuropsychiatric symptoms and neurological rare diseases, in oncology we are actively examining signaling pathways in tumors that we believe are potential targets for synergistic drug combinations .

We believe synergistic drug combinations may allow more effective treatments by reducing the probability of drug adaptation by cancer cells.

AI is useful in matching existing oncology drugs and their mechanism of action to specific types of cancer as well as identifying combinations that we believe may have a higher probability of success.

Traditional drug development is plagued with low success rates (13.8%, according to an MIT study of 186,000 trials from January 2000 to October 2015), long drug development cycles (10-15 years, according to PhRMA Key Facts 2016), and exorbitant development costs ($2.6 billion per drug, according to PhRMA Key Facts).

Furthermore, many serious diseases continue to go unaddressed due to limitations of the current drug discovery paradigm.

The pharmacological space spans more than 27,000 active pharmaceutical agents, and only approximately 4,000 are approved and marketed drugs benefiting patients.

These marketed drugs may be applied to other indications, including rare diseases, and represent an untapped potential for meeting significant unmet medical need and recoupment of research and development investments.

A large number of the remaining agents are clinical candidates that are active, shelved, or have failed for reasons other than toxicity and can potentially be re-engineered for different indications or patient segments.

Many of the remaining agents are clinical candidates that are active, shelved, or have failed for reasons other than toxicity and that can potentially be re-engineered for different indications or patient segments.

They potentially represent an unrealized investment of billions of research and development dollars by the private and public sectors, resulting in an immeasurable amount of patient suffering and sacrificing during clinical development.

Furthermore, many serious diseases continue to go unaddressed due to limitations of the current drug discovery paradigm.

The recent advent of numerous ‘omics’ technologies (genomics, proteomics) and rapid advances in science and medicine are generating terabytes of valuable unexploited knowledge that is widely distributed in multiple big data lakes with several orders of complexity and variety.

Much of this data is not being systematically applied to the development of next generation therapeutics, thus preventing the optimization of drug development utilizing the understanding of technology, science,

medicine, markets, and commercial opportunities.

The efficient and intuitive use of big data remains a bottleneck and a challenge to the pharmaceutical industry.

Taken together, these factors underscore the need for fundamental new approaches to drug discovery and development.

The market opportunity to identify new uses for existing pharmacological agents remains substantial due to the lack of technology driven insights.

Our parent, BioXcel, has created a proprietary R&D engine, EvolverAI, for drug re-innovation that provides a proprietary systems-based approach designed to unlock the hidden value in drugs.

The combination of our therapeutic area expertise and our exclusive collaborative relationship with BioXcel enables us to screen, analyze, and identify the product candidates that we believe have a high likelihood of benefiting patients.

Also, these compounds usually have known pharmacokinetic properties allowing for a more data-driven

selection of appropriate doses for development programs.

Finally, with respect to neuropsychiatric indications, we prioritize those compounds with structural design features that may contribute to high blood-brain barrier permeability, which may increase the likelihood of compound penetration into the brain.

Lack of brain penetration is a common cause for failure of many drugs developed for neuropsychiatric indications.

In addition, BioXcel is prioritizing compounds with available human safety data, acceptable pharmacokinetic results, and data that supports a high probability of achieving reasonable brain concentrations after dosing.

The compounds in our pipeline have been identified using this proprietary platform.

EvolverAI is designed to eliminate human bias by scanning millions of data points from disparate data sources to create network maps.

The nodes and connections in the network map are weighted and ranked based on the validity of supporting evidence using disease specific algorithms.

They are then further analyzed using artificial intelligence and machine learning approaches supplemented by human domain-based expertise to uncover novel connections between disease parameters, molecular targets, mechanisms of actions and product candidates.

This drug re-innovation model has been exemplified by the successful development and commercialization of drugs such as Tecfidera (Biogen, Inc.), Thalomid (Celgene Corporation) and Viagra (Pfizer, Inc., or Pfizer).

This drug re-innovation model has been exemplified by the successful development and commercialization of drugs such as Tecfidera ® (Biogen, Inc.), Thalomid ® (Celgene Corporation) and Viagra ® (Pfizer, Inc.).

All of these drugs were identified by insights in biology and disease pathophysiology.

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are based on the re-innovation and combination of existing clinical candidates or marketed drugs to provide novel solutions for patients.

Unfortunately, such discoveries have been severely limited in scope due to the lack of a genuinely integrated big data analytics-based approach.

We believe that only EvolverAI allows a comprehensive and unbiased evaluation of the complete pharmacological space.

We believe our drug re-innovation model and exclusive collaborative relationship with BioXcel has the potential to reduce the cost and time of drug development, help us design more efficient trials, and accelerate our product candidates’ time to market.

This assumption is based on capitalizing product candidates with substantial clinical data and mitigated risk due to well-defined safety profiles, known PK/PD properties, and an established manufacturing and regulatory path.

Unfortunately, such discoveries have been severely limited in scope due to the lack of a genuinely integrated approach of mining big data and advanced analytics.

Our AI-based discovery and development process is the foundation of our drug re-innovation model for identifying the next wave of potential medicines.

Our therapeutic area experts have over 200 years of combined experience across the drug discovery and development value chain.

We believe that our method of finding potential product candidates gives us a higher probability of success because it combines the comprehensiveness and efficiency of machine learning and big data analytics with the expertise and intuition of human experience in drug development.

We believe the combination of AI and drug discovery and development expertise facilitates the generation of therapeutic candidates and gives us a significant competitive advantage.

Our approach is illustrated below:

We continue to integrate and evolve our neuroscience AI machine learning and drug development platform, focusing on symptoms resulting from stress-related behaviors.

The combination of Evolver AI and this platform has led to the identification and rapid development of BXCL501 as well as advancing other potential indications leading to the submission of our first NDA.

We are continuing to leverage our platform to identify and develop new neuroscience programs.

We continue to integrate and evolve our neuroscience and immuno-oncology AI machine learning and drug discovery and development platform.

Our platform has led to the identification and rapid development of BXCL501, leading to the submission of our first NDA as well as the advancement of other potential indications.

We are continuing to leverage our platform to identify and develop new neuroscience and immuno-oncology programs.

BXCL501 Neuroscience Program

BXCL501 is an investigational, proprietary, orally dissolving, thin film formulation of dexmedetomidine (Dex), a selective alpha-2a receptor agonist, targeting symptoms from stress-related behaviors such as agitation and opioid withdrawal symptoms.

BXCL501 is an investigational, proprietary, orally dissolving, thin film formulation of dexmedetomidine (Dex), a selective alpha-2 receptor agonist, targeting symptoms from stress-related behaviors such as agitation and opioid withdrawal symptoms.

BXCL501 is our most advanced neuroscience clinical program, currently being developed for the acute treatment of agitation related to schizophrenia, bipolar disorders, dementia (Alzheimer’s disease) and delirium, the symptoms associated with opioid withdrawal as well as for the adjunctive treatment of MDD in conjunction with the use of SSRIs or SNRIs.

As a selective adrenergic agent with a sublingual or buccal route of administration, BXCL501 is designed to be easy to administer and has shown a rapid onset of action in multiple clinical trials, including clinical trials studying patients with schizophrenia, bipolar disorders, and dementia.

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Agitation is characterized by feelings of unease, excessive talking and/or unintentional and purposeless motions, such as wringing of the hands or pacing.

People experiencing agitation may also express excitement, hostility, poor impulse control, tension, uncooperativeness, and sometimes disruptive behavior, which could lead to aggression and violence.

People experiencing agitation may also express excitement, hostility, poor impulse control, tension, uncooperativeness, and sometimes disruptive behavior, which may lead to aggression and violence.

In many cases, people develop agitation when treatment for their underlying disorder is not working well.

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Agitation can occur suddenly or slowly and vary in length, lasting for a few minutes or for an extended period of time.

With the agitation issues associated with schizophrenia and bipolar disease coupled with a fast-growing elderly population, the difficulties and expenses of acute treatment of agitation are expected to grow significantly.

Based on our market research, we estimate that in 2016 the total direct financial cost of all aspects of care for agitation in Alzheimer’s Disease, or AD , was approximately $40 billion.

Below are estimated statistics associated with BTI’s initial indications targeting agitation in Schizophrenia , Bipolar Disease and Dementia.

Market for Treating Agitation

Schizophrenia & Bipolar Disorder

Disease Prevalence

Patients Experiencing Agitation

1 Schizophrenia:

Wu et al., 2006;

Bipolar Disorder:

Merikangas et al., 2007

2 Herbert et al., 2013

* - current internal Company estimates

With the agitation issues associated with schizophrenia and bipolar disease coupled with a fast growing elderly population who are potentially likely to experience agitation associated with Alzheimer’s disease, the difficulties and expenses of acute treatment of agitation are expected to grow significantly.

Based on our market research, estimates indicate that by 2031 drugs for mental disorders could be up to $59 billion.

Below are estimated statistics associated with these indications.

Treatments for Agitation

Antipsychotics, the current standard of care for acute treatment of agitation in schizophrenia and bipolar disorder, are also used off-label to treat agitation in dementia as well as delirium.

Antipsychotics, the current standard of care for acute treatment of agitation in schizophrenia and bipolar disorder, are also used off-label to treat agitation in dementia and other conditions.

Side effects of these medications include movement disorders, including akathisia and extrapyramidal symptoms.

One of the serious limitations of these drugs is that they can sedate the patient and do not permit verbal interaction with the hospital staff to continue.

Intramuscular (“IM ”) delivered antipsychotics, such as haloperidol andolanzapine, are used extensively in this setting but are invasive and often require patient restraint.

This type of treatment dehumanizes patients and can cause trauma that could have long-term impact on the individual.

Intramuscular (“IM”) delivered antipsychotics, such as haloperidol and olanzapine, are used extensively in this setting but are invasive and often require patient restraint.

This type of treatment dehumanizes patients and can cause trauma that could have long-term impact on the patient.

Furthermore, these treatments include a black box warning for use in elderly patients.

While sublingual tablet formulations utilizing antipsychotics have been developed, these sublingual formulations have long half-lives (21-24 hours) and significant side effects when given either acutely or chronically.

Oral agents such as benzodiazepines are also used but have a slow onset of action and are consequently not effective in the acute treatment of agitation.

Side effects of these agents include sedation, amnesia, confusion, and a paradoxical response.

They can intensify cognitive slowing, cause dependence, and can contribute to an increased risk of falls and fractures.

In addition, long-term use of benzodiazepines has been found to be habit-forming and can cause addiction.

While sublingual tablet formulations utilizing antipsychotics have been developed, these formulations have long half-lives (21-24 hours) and significant side effects when given acutely or chronically.

Oral agents such as benzodiazepines are also used but have a slow onset of action and are consequently ineffective in the acute treatment of agitation.

Side effects of these agents include sedation, amnesia, confusion, and paradoxical responses.

They can intensify cognitive slowing and worsen memory and motor impairment can contribute to an increased risk of falls and fractures.

In addition, long-term use of benzodiazepines has been found to be habit-forming and can cause addiction or relapse to abuse substances.

Non-adherence with oral agents can also be problematic as patients may attempt to spit out these medications.

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Currently, there are six products that are approved for thin-film administration.

For example, BioDelivery Sciences International, Inc., a commercial-stage specialty pharmaceutical company dedicated to patients living with chronic conditions, has developed a buccal film formulation of buprenorphine for chronic pain management and buprenorphine and naloxone for opioid dependence.

For example, BioDelivery Sciences International, Inc., a

commercial-stage specialty pharmaceutical company dedicated to patients living with chronic conditions, has developed a buccal film formulation of buprenorphine for chronic pain management and buprenorphine and naloxone for opioid dependence.

We have developed BXCL501 as a differentiated sublingual thin film dosage form of Dex, which we believe, if approved, may offer benefits such as ease of use and quick absorption for rapid therapeutic effects.

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We believe that BXCL501, with its differentiated pharmacology and ease of administration, if approved, could potentially be a first in class, non-invasive acute treatment for agitation that can be rapidly administered by physicians and caregivers.

Dex is approved in the United States for the sedation of initially intubated and mechanically ventilated patients during treatment in the Intensive Care Unit, or ICU.

Dex is approved in the United States for the sedation of initially intubated and mechanically ventilated patients during treatment in the intensive care unit (“ICU”).

It is also used in the intensive care setting for sedation of non-intubated patients prior to and/or during surgical and other invasive procedures.

Dex, launched in the United States as Precedex™ in 1999, is a selective α2a adrenergic receptor agonist that has a strong safety record and has been studied in over 130 clinical trials to date.

It has also been launched in the European Union and multiple other countries under the trade name Dexdor as a sedative for intensive care patients.

Dex gained approval by the European Medicines Agency, or EMA, for sedation of adult ICU patients (requiring a sedation level no deeper than arousal in response to verbal stimulation).

It has also been sold in the European Union and other countries under the trade name Dexdor® as a sedative for intensive care patients.

Dex was approved by the European Commission for sedation of adult ICU patients requiring a sedation level no deeper than arousal in response to verbal stimulation (corresponding to Richmond Agitation-Sedation Scale (“RASS”) 0 to -3).

It has been used to prevent or treat hyperactive delirium resulting from anesthesia in the ICU.

Given these uses of the IV formulation of Dex, we believe Dex formulated in a sublingual thin film will allow for ease of administration in settings where rapid acute treatment of agitation is needed.

Phase 1 IV Dexmedetomidine Studies

Throughout 2018 and 2019 we completed four clinical trials and announced the results from several proof-of-concept Phase 1 studies of intravenous, or IV, Dex for acute treatment of agitation.

● Data from our four IV Dex studies in healthy volunteers, schizophrenia patients, SDAT patients, and opioid withdrawal patients was used to determine the optimal dose of BXCL501.

The goal of the healthy volunteer studies, which was met, was to achieve mild sedation without any clinically meaningful cardiovascular side effects.

The IV formulation of Dex achieved mild sedation or a RASS score of -1 in patients at a Dex exposure level without producing any clinically meaningful effects on blood pressure and/or heart rate.

This activity was evident in eleven (11) out of twelve (12) subjects on the IV formulation of Dex and occurred within thirty minutes of starting the dose, which produced the desired effect.

In contrast, mild sedation was observed in only 1 out of 4 individuals on placebo.

The mild sedative effects of the IV formulation of Dex persisted for ninety to one hundred and twenty minutes, a clinically relevant duration.

The study also found that the IV formulation of Dex was well tolerated, and the results supported further clinical evaluation of dexmedetomidine in acute treatment of agitation resulting from neuropsychiatric disorders including schizophrenia and Senile Dementia of the Alzheimer’s Type, or SDAT.

● In November 2018, we announced positive results from a Phase 1b study evaluating IV Dex for acute treatment of agitation in patients suffering from schizophrenia.

The trial met its primary endpoint by identifying a safe dose of IV Dex that produced a mild arousable sedation, defined by a RASS score of -1.

The study enrolled a total of fourteen (14) patients.

Ten (10) patients in the treatment arm received IV Dex therapy, while four (4) patients received placebo.

Dose escalation was performed by infusing 0.2 to 0.6 mcg/kg/hr of the IV formulation of Dex over a period of thirty minutes.

The dose range in this study was consistent with the range used in the healthy volunteer study.

The study demonstrated that nine out of ten patients in the treatment arm achieved a RASS score of -1, while no patients in the placebo arm experienced meaningful sedation.

Additionally, the drug was well tolerated without any clinically meaningful adverse effects on blood pressure and/or heart rate.

As a secondary endpoint, nine out of ten patients in the treatment arm had agitation reduced to a minimum as measured by a Positive and Negative Symptom Scale - Excitatory Component , or PEC, score of 7 or below in contrast with 0 out of 4 of the placebo patients.

PEC is a five item scale that measures symptoms of agitation with each item rated from 1 -Absent to 7 -Extreme.

● In January 2019, we announced positive results from a Phase 1 study evaluating IV Dex for acute treatment of agitation in patients suffering from SDAT.

The SDAT trial met its primary endpoint by identifying a well-tolerated dose of IV Dex that produced a mild arousable sedation, defined by a RASS of -1.

This study enrolled a total of fourteen SDAT patients.

Ten patients in the treatment arm received IV Dex therapy, while four patients received placebo.

In accordance with study designs used in previous participant populations, Dex treatment was begun at 0.1 mcg/kg/h and dose escalation occurred every thirty minutes by increasing the infusion rate by 0.1 mcg/kg/h to a maximum infusion of 0.5 mcg/kg/h.

Such dosing allowed for the efficient determination of the optimal dose in each participant.

The study demonstrated that seven out of ten patients in the treatment arm achieved arousable sedation (RASS score of -1), versus only 1 of 4 patients in the placebo arm.

The drug was well tolerated without any clinically significant adverse events.

● In February 2019, we announced positive proof of concept data from a Phase 1b study of IV Dex in patients suffering from opioid withdrawal symptoms.

The study provided evidence supporting further evaluation of BXCL501’s selective alpha-2a adrenergic receptor mechanism application in opioid withdrawal symptoms, in addition to acute treatment of agitation in schizophrenia, bipolar disorder and dementia.

The study enrolled total of fourteen patients with opioid dependence.

Ten subjects were randomized to the treatment arm while five subjects were randomized to the placebo arm.

Symptoms of opioid withdrawal were evaluated using the Clinical Opioid Withdrawal Scale, or COWS1, an 11-item scale that measures a constellation of withdrawal symptoms experienced after abstaining from opioid use.

All ten subjects receiving IV Dex responded to treatment, while there were no responders in the placebo arm.

Results from this study suggest that IV Dex mitigated the physiological symptoms of opioid withdrawal.

Data from the four IV Dex studies in healthy volunteers, schizophrenia patients, SDAT patients, and opioid withdrawal patients was used to determine the optimal dose of BXCL501.

Given these uses of the IV formulation of Dex, we believe Dex formulated in a sublingual thin film and at much lower doses will allow for ease of administration in settings where rapid acute treatment of agitation is needed.

BXCL501 Clinical Trials

SERENITY I and SERENITY II

In July 2020, we announced topline results from the SERENITY I and II pivotal trials, which showed that treatment with BXCL501 was well-tolerated and resulted in clinically meaningful reductions in agitation in schizophrenia and bipolar disorder 1 and 2 patients.

In October 2020, we held a pre-New Drug Application (“NDA”) meeting with the U.S.

In October 2020, we held a pre NDA meeting with the U.S.

Food and Drug Administration (“FDA”) to discuss the content and format of our anticipated NDA submission.

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On March 5, 2021, we completed the rolling submission of our NDA to the FDA.

The FDA has a 60-day filing review period to determine whether the NDA is complete and acceptable for filing.

In January 2021, we announced topline results from the TRANQUILITY trial, a phase 1b/2 randomized, placebo-controlled, adaptive ascending dose-finding study that enrolled 54 patients with agitation related to dementia.

In May 2021, we announced the FDA had notified us that our NDA submission was accepted for filing.

The FDA assigned a PDUFA goal date of January 5, 2022.

In December 2021, we announced the extension of the FDA review period of our NDA to April 5, 2022.

We also have plans underway to submit a Marketing Authorization Application (“MAA”) to the European Medicines Agency (“EMA”) for BXCL501 for the acute treatment of agitation associated with schizophrenia and bipolar disorders I & II in the first half of 2022.

TRANQUILITY and TRANQUILITY II and III

In January 2021, we announced topline results from the TRANQUILITY trial, a Phase 1b/2 randomized, placebo-controlled, adaptive ascending dose-finding study that enrolled 54 patients with agitation related in dementia., including Alzheimer's disease.

Patients received BXCL501 at either 30mcg (n=16), 60mcg (n=20), 90 mcg (n=4) or placebo (n=14).

Overall, BXCL501 was well tolerated and demonstrated statistically significant, clinically meaningful, rapid, and durable reductions in agitation with the 60 mcg dose as measured by multiple scales.

The trial’s primary endpoint was to evaluate safety and tolerability.

Overall, BXCL501 was well tolerated and demonstrated statistically significant, clinically meaningful, rapid, and durable reductions in agitation with the 60 mcg dose as measured by multiple rating scales.

The trial’s primary endpoint was to evaluate safety and tolerability in elderly demented patients experiencing an acute episode of agitation.

During the study, BXCL501 was well-tolerated and no severe or serious adverse events were reported.

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There were no reported cases of syncope or falls in any of the patients studied.

Higher exposure levels of BXCL501 were observed in this elderly patient population compared to earlier trials.

For the same dose, higher exposure levels of BXCL501 were observed in this elderly patient population compared to earlier trials in younger patient populations.

The trial met its secondary efficacy endpoints with the 60 mcg dose compared to placebo in all three agitation scales:

the Pittsburg Agitation Scale , or PAS, and the Modified Cohen -Mansfield Inventory , or Mod-CMAI.

the Positive and Negative Syndrome Scale-Excitatory Component Score (“PEC” or “PANSS-EC”) the Pittsburgh

Agitation Scale (“PAS”), and the Modified Cohen -Mansfield Inventory (“Mod-CMAI”).

Treatment with BXCL501 demonstrated statistically significant and clinically meaningful reductions in total scores at two hours post-dosing (PEC p=0.0011;

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PEC response rate = 70%), numerical separation from placebo in PEC total score as early as 30 minutes with statistically significant reductions on both PEC and PAS at 60 minutes lasting 8 hours after treatment.

Additional statistically significant reductions with the 60 mcg dose compared to placebo at the 2 hours post-dosing were observed with the Agitation and Calmness Scale (ACES p=0.0006) and Clinical Global Impression-Improvement Scale (CGI p<0.0001, 90% responder rate).

Additional statistically significant reductions with the 60 mcg dose compared to placebo at the 2 hours post-dosing were observed with the Agitation and Calmness Scale (“ACES”) (ACES p=0.0006) and Clinical Global Impression-Improvement Scale (CGI p<0.0001, 90% responder rate).

The 30 mcg dose cohort showed numerical improvements across all scales.

On March 3, 2021, we announced that following a routine quality control review of the Company’s TRANQUILITY study data, the Company discovered that two patients were mis-categorized within the 30 mcg cohort at the clinical site.

After moving the two patients into their appropriate placebo and 30 mcg groups, the data from the 30

mcg cohort were re-analyzed, resulting in the 30 mcg dose crossing over to statistical significance at the two hour time point, as measured by PEC:

On March 3, 2021, we announced that following a routine quality control review of the Company’s TRANQUILITY study data, the Company discovered that two patients dose assignments were mis-categorized within the 30 mcg cohort at the clinical site.

After moving the two patients data into their appropriate placebo and 30 mcg treatment groups, the data from the 30 mcg cohort were re-analyzed, resulting in the 30 mcg dose crossing over to statistical significance at the two hour time point, as measured by PEC:

and Mod-CMAI:

The Company also announced that it has initiated a 46 patient (1:1 randomization) multicenter, placebo-controlled TRANQUILITY expansion study investigating a 40 mcg dose cohort of BXCL501.

PK/PD modeling of BXCL501 data from the TRANQUILITY trial was supportive of evaluating the efficacy of a 40 mcg dose.

Results are expected to provide additional insights to support the Company’s clinical development strategy directed at all segments of the dementia market.

With the positive results from TRANQUILITY, we have been advancing the BXCL 501 dementia clinical program in close consultation with the FDA.

An end of Phase 2 meeting has been scheduled with the FDA in the second quarter of 2021, following which the Company plans to finalize study design, dosing, and endpoints for its pivotal Phase 3 program, which is expected to begin in the second half of 2021.

In August 2020, we announced that the third dose cohort (90 mcg twice a day, 12 hours apart).

was enrolling in the RELEASE trial.

This is a multicenter, randomized, double-blind, placebo-controlled, ascending dose Phase 1b/2 trial designed to evaluate the safety, pharmacokinetics, tolerability, and efficacy of BXCL501 in patients experiencing symptoms of opioid withdrawal.

We expect to report topline results from the study in the first quarter of 2021.

In October 2020, we announced that we had received authorization to proceed under our IND Application from the FDA for treatment of patients with agitation associated with delirium in intensive care units, including patients with COVID-19 and on February 25, 2021, we announced the initiation of the Phase 2 PLACIDITY trial of BXCL501.

The Company also announced that it extended the TRANQUILITY I trial to initiate a 46 patient (1:1 randomization) multicenter, double-blind placebo-controlled expansion study investigating a 40 mcg dose cohort of BXCL501.

Pharmacokinetics and pharmacodynamics modeling of BXCL501 data from the TRANQUILITY trial was supportive of evaluating the efficacy of a 40 mcg dose.

Results of this expansion are expected to provide additional insights to support the Company’s clinical development strategy directed at all segments of the dementia market.

On March 15, 2021 we announced that BXCL501 was granted Breakthrough Therapy designation from the FDA for the acute treatment of agitation associated with dementia.

This designation is intended to expedite the development and review of certain product candidates designed to treat serious or life-threatening diseases or conditions, and the designation enables increased interaction and guidance from the FDA.

On December 15, 2021, after our initial Breakthrough Therapy designation meetings with FDA, we announced the initiation of our program to evaluate BXCL501 for the treatment of acute agitation associated with dementia in Alzheimer’s patients.

The program’s two studies, TRANQUILITY II and TRANQUILITY III, are designed to evaluate the safety and efficacy of BXCL501 in adults 65 years and older across the range of illness including mild, moderate and severe illness in assisted living or residential facilities and nursing homes.

The program will consist of two randomized, double-blind placebo-controlled, adaptive, parallel group pivotal trials, TRANQUILITY II and TRANQUILITY III.

Each study will enroll 150 dementia patients 65 years and older.

Patients will self-administer 40 mcg or 60 mcg of BXCL501 or placebo whenever agitation episodes may occur over a three-month period.

TRANQUILITY II will enroll patients with mild to moderately severe dementia in assisted living or residential facilities who generally require minimal assistance with activities of daily living.

TRANQUILITY III will enroll patients in nursing homes with moderate to severe dementia who require moderate or greater assistance with their activities of daily living.

The studies are designed to assess agitation as measured by the changes from baseline in the PEC and PAS total scores.

The primary efficacy endpoint for both studies will be the change in PEC total score from baseline measured at two hours after the initial dose and subsequent doses.

Patients who complete TRANQUILITY II or TRANQUILITY III will be eligible to enroll in an open label, 52-week safety study designed to describe the safety and efficacy of BXCL501 in continued use.

The RELEASE trial was a multicenter, randomized, double-blind, placebo-controlled, ascending dose Phase 1b/2 trial designed to evaluate the safety, pharmacokinetics, tolerability, and efficacy of BXCL501 administered twice daily for 7 days in patients experiencing symptoms of opioid withdrawal.

In March 2021, we announced RELEASE top line results.

The trial’s primary objective was to evaluate safety and tolerability of twice daily dosing of BXCL501 for 1 week.

BXCL501 was well tolerated, with no severe or serious adverse events reported across all doses evaluated.

With respect to retention, a secondary endpoint, the study showed that patients in multiple dose cohorts treated with BXCL501 had numerical improvements in retention rates, a key goal of opioid withdrawal treatment, compared to placebo.

The 120 mcg and 180 mcg dose groups showed 42% and 52% rates of retention at day 6 of BXCL501 treatment, respectively, versus 24% for placebo, though these differences were not statistically significant.

However, the results also showed that, of the 87% of patients who had fentanyl in their systems upon entry, with greater than 50% remaining fentanyl positive following the morphine stabilization phase of 5 days.

Consequently, withdrawal symptoms were not equivalent across various dose cohorts, suggesting that morphine did not stabilize or ‘normalize’ withdrawal symptoms in these patients.

Efficacy measures, including assessment of patients’ symptoms of acute opioid withdrawal following the morphine maintenance phase with the Clinical Opiate Withdrawal Scale (“COWS”) and the Short Opiate Withdrawal Scale of Gossop (“SOWS-Gossop”) were secondary objectives of the trial.

Improvements were not observed in SOWS-Gossop”) or COWS total scores in the BXCL501 treatment arms compared to placebo.

The Company believes that the high prevalence of fentanyl, and its extended washout may have contributed to the lack of normalization of withdrawal during morphine maintenance could have confounded results and made them difficult to interpret.

We believe the favorable tolerability results observed in multiple dose regimens within the RELEASE trial provides valuable insights that support investigation across additional indications and treatment settings.

In October 2020, we announced that we had received authorization to proceed under our Investigational New Drug (“IND”) application from the FDA for treatment of patients with agitation associated with delirium in intensive care units, including patients with COVID-19 and on February 25, 2021, we announced the initiation of the Phase 2 PLACIDITY trial of BXCL501.

This program is intended to provide a potential synergy with the medical and commercial infrastructure being developed to support our first two indications.

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An exploratory endpoint of this trial will be to determine the overall clinical improvement after drug administration using the Clinical Global Impression – Improvement Scale (“CGI-I”).

Topline data is expected in the first quarter of 2022.

Agitation associated with delirium is a serious condition that affects patients in many hospital settings:

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Currently, there are no FDA-approved medications for delirium or agitation associated with delirium.

BioXcel and its collaborators, the VA Connecticut Healthcare System and the Yale University Medical School, were awarded a grant by the U.S.

Department of Defense’s (“DOD”) Congressionally Directed Medical Research Programs (“CDMRP”) to evaluate BXCL501 in patients suffering from post-traumatic stress disorder (“PTSD”) related to alcohol and substance abuse disorder (“ASUD”).

This will be the first time the Company is investigating BXCL501 as a potential chronic treatment.

Additional Opportunities

We are also continuing our development of BXCL501, exploring this candidate as a potential treatment option for chronic agitation associated with dementia.

We are also developing a single-use intramuscular injection for patients with severe agitation (non-cooperative).

Relative Bioavailability Study

In the third quarter of 2020, we analyzed the data from a cross-over study in healthy volunteers comparing the bioavailability of BXCL501 administered sublingually with the film placed drug-side down under the tongue, compared to the film placed drug-side up under the tongue, and administered buccally (placed between the lower lip and gum).

Results of this study showed that:

● consistent with previously reported data, BXCL501 was rapidly absorbed into the systemic circulation following drug side down or drug side up sublingual administration or buccal administration of the BXCL501 film;

● administering BXCL501 sublingually was shown to be bioequivalent to administering BXCL501 buccally;

● administering BXCL501 with the drug side up under the tongue was shown to be bioequivalent to administering BXCL501 drug side down under the tongue;

● subjects were able to drink water starting at 15 minutes following sublingual BXCL501 administration without affecting bioavailability in the subject.

Other Neuropsychiatric /Neurodegenerative Indications

Given the differentiated design features of BXCL501 and its selective mechanism of action, we believe that BXCL501 has the potential for broad applicability across several indications where agitation is a symptom of a condition or underlying disease.

There are additional neurological and psychiatric disorders where agitation is a symptom that requires treatment.

We are also exploring the potential of BXCL501 in Depression Related Agitation, Anxiety Disorders and Traumatic Brain Injury.

BXCL701, DPP 8/9 and FAP Inhibitor for the Treatment of NEPC

PLACIDITY enrollment was voluntarily paused, and continues to be paused, to assess challenges posed in opening relevant clinical sites and enrolling delirium patients in the ICU settings, including as a result of the burden COVID-19 has placed on the ICU.

The Company and its collaborators, the VA Connecticut Healthcare System and the Yale University Medical School, are evaluating BXCL501 in patients suffering from PTSD related to alcohol and substance abuse disorder (“ASUD”).

Yale University Medical School was awarded a grant by the U.S.

Department of Defense’s (“DOD”) Congressionally Directed Medical Research Programs (“CDMRP”).

The Company is investigating BXCL501 as a potential chronic treatment for patients with these conditions.

Given the significant market opportunities available to us developing BXCL501 for the treatment of agitation in patients with Alzheimer’s disease and MDD, we have determined it is the best interest of all stakeholders to focus our efforts in those disease areas and have decided to de-emphasize our opioid withdrawal and delirium indications.

PEDIATRIC STUDY

In June 2021, we initiated a global clinical trial designed to evaluate the safety and efficacy of BXCL501 in agitation associated with pediatric schizophrenia and bipolar disorder.

The multisite, double-blind, placebo controlled, parallel group trial will enroll patients with schizophrenia, schizoaffective disorder, bipolar I and bipolar II disorder.

Similar to the SERENITY I and II trials, the primary endpoint is the change from baseline PEC total score at 2 hours.

The trial has been initiated in the U.S.

and enrollment is ongoing.

Major Depressive Disorder

We have recently expanded our programs to evaluate BXCL501 as an adjunctive treatment for MDD.

We expect that the initial clinical study in this program will be a double-blind, placebo-controlled, multiple ascending dose trial to evaluate the safety and tolerability of twice daily doses of BXCL501 in healthy volunteers.

A Phase 2 proof of concept study is planned to evaluate whether daily adjunctive use of BXCL501 provides a more rapid initial clinical antidepressant response than placebo when initiating SSRI or SNRI alone.

We are preparing to submit an IND to the FDA and if allowed to proceed by the FDA, expect to initiate the first clinical trial in the first half of 2022.

BXCL701, DPP 8/9 Inhibitor for the treatment of Castration-Resistant Prostate Cancer

BXCL701 is a potential first-in-class, oral, small-molecule immunomodulator designed to stimulate both the innate and acquired immune systems by inhibiting DPP 8/9.

DPP 8/9 behave as "checkpoints"

of the innate immune system.

We believe that BXCL701 , if successfully developed and approved, may establish a differentiated immuno-oncology platform by modulating multiple steps in the cancer immunity cycle and, when combined with checkpoint inhibitors and/or immune activating agents, may be able to convert immuno-resistant tumors to immuno-sensitive tumors (“cold” to “hot” tumors).

of pyroptosis and inflammasome activation.

Clinically, BXCL701 has been evaluated in more than 700 healthy subjects and cancer patients across multiple clinical trials, which provided evidence regarding tolerability, proof of mechanism, and single agent anti-tumor activity.

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While providing evidence regarding the safety profile of the drug, these clinical studies also identified a maximum tolerated and recommended Phase 2 dose to use in future clinical trials.

BXCL701 is in development for the treatment of Castrate Resistant Prostate Cancer, including the highly aggressive Neuro-endocrine variant NEPC, a segment of prostate cancer patients that have progressed on second generation androgen inhibitors (Zytiga and Xtandi).

BXCL701 is in development for the treatment of CRPC including the highly aggressive neuro endocrine variant of NEPC, a segment of prostate cancer patients that have progressed on second generation androgen inhibitors (Zytiga ® and Xtandi ® ) .

Approximately one in four patients treated with Zytiga and Xtandi are expected to develop NEPC based on current clinical literature.

The combined global sales of Zytiga and Xtandi, which are only approved for prostate cancer treatment, were over $7 billion in 2018, and we believe such sales number gives a perspective of the potential market for BXCL701 in this indication.

The combined global sales of Zytiga and Xtandi, which are only approved for prostate cancer treatment, were approximately $7 billion in 2020, and we believe such sales number gives a perspective of the potential market for BXCL701 in this indication.

Additionally, generic alternatives for Zytiga became available in the U.S.

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Prostate cancer is the most common malignancy and is the second leading cause of cancer death in men in the United States.

In 2016, there were an estimated 3 million men with prostate cancer in the United States.

According to estimates from Surveillance, Epidemiology and End Results Program, SEER, more than 174,000 men are expected to be diagnosed and more than 31,000 men were expected to die from prostate cancer in 2019.

In 2022, more than 3.1 million men in the United States are living with, or in remission from, prostate cancer.

The American Cancer Society’s estimates for prostate cancer in the United States for 2022 are about 268,490 new cases of prostate cancer and about 34,500 deaths from prostate cancer.

While the five year survival rate of local and regional prostate cancer is almost 100%, more aggressive forms of the disease such as metastatic prostate cancer have a five-year survival rate of approximately 30%.

These aggressive forms of prostate cancer can initially be treated with androgen deprivation therapy, or ADT.

However, almost all patients experience a recurrence in tumor growth, which results in the patient having castrate resistant prostate cancer, or CRPC.

These aggressive forms of prostate cancer can initially be treated with androgen deprivation therapy.

However, almost all patients experience a recurrence in tumor growth, which results in the patient having CRPC.

An estimated 180,000 men in the United States are eligible for treatment with the second generation anti-androgen drugs Zytiga and Xtandi.

These drugs have widely become the standard of care and generated combined worldwide sales of over $7 billion in 2018.

These drugs have widely become the standard of care.

Unfortunately, virtually all the patients who respond to Zytiga and Xtandi are expected to progress to even more aggressive forms of prostate cancer requiring further treatment.

About one in four of the progressing patients will develop very aggressive, androgen receptor, or AR-independent tumors, or NEPC, for which there is no effective treatment based on information in an article published in the Journal of the National Comprehensive Cancer Network in 2014 by Agarwal et.

About one in five of the progressing patients will develop NEPC, for which there is no effective treatment based on information in an article published in the Journal of the National Comprehensive Cancer Network in 2014 by Agarwal et.

and an article published by Journal of Clinical Oncology in 2014 by Wang et.

NEPC specifically displays neuroendocrine differentiation, either pathologically with the presence of the typical neuroendocrine small cells, or molecularly by expressing neuroendocrine markers.

Large market Opportunity:

Prostate Cancer Patient Population

Patients Eligible for Treatment with ADT

~180,000 (6%)

Patients progressing to NEPC

The market opportunity for BXCL701 in the initial target markets is detailed below:

Limitations of Current Treatments for CRPC

Despite demonstrated benefit of immunotherapies targeting PD-1—such as pembrolizumab—on clinical outcomes in many solid tumors, mCRPC remains largely resistant to such therapies with single-agent response rates of around 6%.

Further exploration has been focused on combination therapies.

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The Phase 1b portion of this trial was presented at the Society for Immunotherapy of Cancer’s, or SITC’s, 35th Anniversary Annual Meeting in 2020, and an efficacy update was recently presented at the ASCO Genitourinary Symposium in February 2021.

Topline results from the trial are expected in mid-2021.

Data from the Phase 1b portion of this trial were presented at the Society for Immunotherapy of Cancer’s, or SITC’s, 35th Anniversary Annual Meeting in 2020, and an interim efficacy update was presented at ASCO GU Symposium in February 2021.

We reported updated interim data from the Phase 2 portion of this trial in NEPC and adenocarcinoma cohort at the ASCO GU Symposium in February 2022.

Data from the Phase 2 portion of the trial were previously presented at the European Society for Medical Oncology conference in September 2021 and at ASCO GU in February 2021.

The MD Anderson-led Phase 2 open-label basket trial is designed to evaluate the response rate of orally administered BXCL701, combined with KEYTRUDA, in two arms:

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and Arm B is enrolling patients who have progressed following checkpoint therapy alone.

As of August 2020, the efficacy bar had been met for both arms, allowing the trial to advance to completion.

Preliminary data were recently presented at the SITC’s, 35th Anniversary Annual Meeting.

Topline results from the trial are expected in mid-2021.

On November 10, 2020, the Company and Nektar terminated the Nektar Collaboration Agreement, pursuant to which the Company and Nektar had agreed to jointly collaborate to conduct a Phase 1/2 clinical trial evaluating a combination therapy using BXCL701, Bempegaldesleukin, a CD122-biased agonist and a checkpoint inhibitor as a potential therapy for pancreatic cancer and such other clinical trials evaluating the combined therapy as mutually agreed by the parties.

The BXCL701 phase of the triple combination study of BXCL701, bempegaldesleukin (NKTR-214, Nektar Therapeutics) and BAVENCIO® (avelumab, Merck KGaA, Darmstadt, Germany and Pfizer) in second line pancreatic cancer was planned to initiate following Nektar and Pfizer’s Phase 1B dose-escalation trial of bempegaldesleukin and avelumab, which was delayed.

As a result, the parties have agreed to discontinue activities on the triple combination study and instead reallocate resources to other studies and development programs.

Interim data were presented at the June 2021 American Society of Clinical Oncology annual meeting.

In the first half of 2022, we expect to present additional interim efficacy data from the trial.

Other Immuno-oncology Indications

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We are prioritizing indications where the immuno suppressive microenvironment is driven by the potential molecular and cellular targets of BXCL701 and where the single agent activity of approved immune checkpoint inhibitors is limited.

On September 4, 2019, we announced that the FDA granted Orphan Drug Designation for BXCL701 for the treatment of acute myeloid leukemia, and on January 26, 2021, BXCL701 received Orphan Drug Designation for the treatment of Soft Tissue Sarcoma.

In addition, we believe BXCL701, if successfully developed and approved, may provide a platform for combination with immunotherapy modalities that go beyond the currently approved immune checkpoint agents that target the PD-1/PD-L1 axis.

We believe that BXCL701, if successfully developed and approved, may provide a platform for combination with immunotherapy modalities that go beyond the currently approved immune checkpoint agents that target the PD 1/PD L1 axis.

Following our proof-of-concept trials, we plan to conduct clinical trials covering a broad range of additional combinations with other immunotherapy agents, including:

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This entails re innovating existing agents through formulation changes and deuteration.

The utilization of EvolverAI has identified several monogenic diseases with available animal models across rare neuroscience diseases.

The utilization of our expanding internal AI capabilities along with BioXcel LLC’s AI capability has identified several monogenic diseases with available animal models across rare neuroscience diseases.

We utilize proprietary algorithms to identify associated mechanisms with existing pharmacology to test whether these agents can improve the disease profile in the animal model either through disease modification or symptomatic manner.

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This comprehensive map has permitted us to select a potential pipeline of candidates based on our ability to alter the tumor micro-environment and the potential to address relevant unmet medical needs for various tumor types.

Finally, we continually leverage the artificial intelligence platform owned by our parent to select and prioritize additional development opportunities to expand the current portfolio and broaden the addressable market for our lead programs through the identification of new indications.

This includes exploring additional combination therapy approaches to expand BXCL701’s target indications beyond NEPC and pancreatic cancer.

The pharmaceutical and biotechnology industries are characterized by rapidly advancing technologies, intense competition, and a strong emphasis on proprietary products.

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Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

therapeutics, if any, the level of generic competition and the availability of reimbursement from government and other third-party payors.

The key competitive factors affecting the success of all of our product candidates, if approved, are likely to be their efficacy, safety, convenience, price, the effectiveness of companion diagnostics in guiding the use of related therapeutics, if any, the level of generic competition and the availability of reimbursement from government and other third-party payors.

Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize medicines that are safer, are more effective, have fewer or less severe side effects, are more convenient or are less expensive than any medicines we may develop.

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In addition, our ability to compete may be affected in many cases by insurers or other third-party payors seeking to encourage the use of generic medicines.

There are many generic medicines currently on the market for certain of the indications that we are pursuing, and additional generics are expected to become available over the coming years.

There are many generic medicines currently on the market for certain indications that we are pursuing, and additional generics are expected to become available over the coming years.

If our therapeutic product candidates are approved, we expect that they will be priced at a significant premium over competitive generic medicines.

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Commercialization

We plan to retain our worldwide commercialization rights for some of our key product candidates, while for other product candidates we might consider collaboration opportunities to maximize returns.

While as a Company we have no experience in commercializing products, we intend to build our own commercialization organization and capabilities over time.

We plan to retain our worldwide commercialization rights for some of our key product candidates, while for other product candidates we could potentially consider collaboration opportunities to maximize returns.

As a Company we have no experience in commercializing products, however, we intend to build our own commercialization organization and capabilities over time.

We are considering partnerships, joint ventures, and a variety of business partnerships for the Japanese and European Markets.

We currently plan to retain US rights and have begun to lay the groundwork for commercialization efforts.

When appropriate, we will decide whether to build a sales force to manage commercialization for these product candidates on our own or in combination with a larger pharmaceutical partner to maximize patient coverage in the United States as well as to support global expansion, especially as our programs have a substantial opportunity for additional follow-up indications alone or in combinations.

We currently plan to retain U.S.

rights and are working towards a potential BXCL501 approval on April 5, 2022.

For example, in the second half of 2021 we fully launched our unbranded disease education campaign to promote awareness around the treatment of agitation in schizophrenia and bipolar disorders.

If BXCL501 is approved outside the United States we would consider launching BXCL501 through collaborations with third parties.

As product candidates advance through our pipeline, our commercial plans may change.

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Patent Portfolio

As of March 10, 2021, our patent portfolio included 6 Patent Cooperation Treaty, or PCT, applications, 8 U.S.

As of February 1, 2022, our patent portfolio included 6 Patent Cooperation Treaty, or PCT, applications, 16 U.S.

utility applications, 1 issued U.S.

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applications, 9 allowed or granted non-U.S.

patents, 2 design patent applications, one of which is a U.S.

patents, 1 design patent application, which is a U.S.

design application, and 34 allowed or registered design patents.

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We have also filed applications in additional patent families that are relevant to BXCL501.

We have applications pending in the

United States, Europe and Japan directed to methods of treating insomnia using sublingual Dex.

We have applications pending in the United States, Europe and Japan directed to methods of treating insomnia using sublingual Dex.

We expect that patents issuing from these applications, if any, will expire no earlier than 2035.

We also have applications filed in fifteen countries, including the United States, Europe, Japan, and China, directed to methods of treating agitation.

We also have applications filed in 15 countries, including the United States, Europe, Japan, and China, directed to methods of treating agitation.

We expect that patents issuing from these applications, if any, will expire no earlier than 2037.

We have one U.S.

application and one European application directed to intravenous administration of Dex.

application and one European

application directed to intravenous administration of Dex.

We expect that patents issuing from these applications, if any, will expire no earlier than 2039.

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If patents issue from those cases, we expect them to expire no earlier than 2041 and 2042, respectively.

We have multiple patent families filed to protect our BXCL701 program, including our core patent family directed to methods of using BXCL701 with immune checkpoint inhibitors, which is filed in the United States and fourteen other countries.

Any patents issuing from that family should expire no earlier than 2036.

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In addition, the scope of the rights granted under any issued patents may not provide us with protection or competitive advantages against competitors with similar technology.

Furthermore, our competitors may independently develop

similar technologies that are outside the scope of the rights granted under any issued patents that we own or exclusively in license.

Furthermore, our competitors may independently develop similar technologies that are outside the scope of the rights granted under any issued patents that we own or exclusively in license.

For these reasons, we may face competition with respect to our product candidates.

Moreover, because of the extensive time required for development, testing, and regulatory review of a potential product, it is possible that, before any particular product candidate can be commercialized, any patent protection for such product may expire or remain in force for only a short period following commercialization, thereby reducing the commercial advantage the patent provides.

force for only a short period following commercialization, thereby reducing the commercial advantage the patent provides.

Our Relationship with BioXcel LLC

We are currently a 37% owned subsidiary of BioXcel , and our pipeline compounds have been identified by applying BioXcel's R&D engine, EvolverAI, for drug re-innovation.

We entered into the Amended and Restated Asset Contribution Agreement, pursuant to which BioXcel agreed to contribute BioXcel’s rights, title and interest in BXCL501, BXCL701, BXCL502 and BXCL702, and all of the assets and liabilities associated in consideration for (i) 9,480,000 shares of our common stock, (ii) $1 million upon completion of an initial public offering, (iii) $500,000 upon the later of the 12 month anniversary of an initial public offering and the first dosing of a patient in the bridging bioavailability/ bioequivalence study for the BXCL501 program, (iv) $500,000 upon the later of the 12 month anniversary of an initial public offering and the first dosing of a patient in the Phase 2 proof of concept open-label monotherapy or combination trial with Keytruda for the BXCL701 program and (v) a one-time payment of $5 million within 60 days after the achievement of $50 million in cumulative net sales of any product or combination of products resulting from the development and commercialization of any one of the Candidates or a product derived therefrom.

Upon completion of our IPO in March 2018, $1 million was charged to Research and Development costs in connection with (ii) above and was paid on April 5, 2018.

We paid $500,000 to BioXcel in connection with (iii) above in April 2019.

In July 2019, we completed the first dosing of a patient in the combination trial of BXCL701 with Keytruda, and as a result we paid $500,000 to BioXcel in connection with (iv) above in July 2019.

We entered into a Separation and Shared Services Agreement with BioXcel that took effect on June 30, 2017, as amended and restated thereafter, or the Services Agreement, pursuant to which services provided by BioXcel through its subsidiaries in India and the United States will continue indefinitely, as agreed upon by the parties.

BioXcel LLC currently holds a 31% interest in the Company and our pipeline compounds have been identified by applying our growing internal AI capabilities along with utilizing BioXcel LLC’s expertise in EvolverAI, for drug re-innovation.

We entered into the Amended and Restated Asset Contribution Agreement, pursuant to which BioXcel LLC, agreed to contribute BioXcel LLC’s rights, title and interest in BXCL501, BXCL701, BXCL502 and BXCL702, and all of the assets and liabilities associated in consideration for (i) 9,480,000 shares of our common stock, (ii) $1 million upon completion of an initial public offering, (iii) $500,000 upon the later of the 12 month anniversary of an initial public offering and the first dosing of a patient in the bridging bioavailability/ bioequivalence study for the BXCL501 program, (iv) $500,000 upon the later of the 12 month anniversary of an initial public offering and the first dosing of a patient in the Phase 2 proof of concept open-label monotherapy or combination trial with Keytruda for the BXCL701 program and (v) a one-time payment of $5 million within 60 days after the achievement of $50 million in cumulative net sales of any product or combination of products resulting from the development and commercialization of any one of the Candidates or a product derived therefrom.

We entered into a Separation and Shared Services Agreement with BioXcel LLC that took effect on June 30, 2017, as amended and restated thereafter, or the Services Agreement, pursuant to which services provided by BioXcel LLC through its subsidiaries in India and the United States will continue indefinitely, as agreed upon by the parties.

These services are primarily for drug discovery, chemical, manufacturing and controls cost and general and administrative support.

Service charges recorded under this agreement were $1.3 million and $862,000 for the years ended December 31, 2020 and 2019, respectively.

Under the Services Agreement, the Company has an option, exercisable until March 12, 2023, to enter into a collaborative services agreement with BioXcel pursuant to which BioXcel shall perform product identification and related services for us utilizing EvolverAI.

The parties are obligated to negotiate the collaborative services agreement in good faith and to incorporate reasonable market-based terms, including consideration for BioXcel reflecting a low, single-digit royalty on net sales and reasonable development and commercialization milestone payments, provided that (i) development milestones shall not exceed $10 million in the aggregate and not be payable prior to proof of concept in humans and (ii) commercialization milestones shall be based on reaching annual net sales levels, be limited to 3% of the applicable net sales level, and not exceed $30 million in the aggregate.

BioXcel shall continue to make such product identification and related services available to us until at least September 30, 2024.

We paid $9 million in February 2020 for the purchase and subsequent cancellation of 300,000 shares owned by BioXcel, which is more fully discussed in Note 5 to the financial statements included elsewhere in this Annual Report on Form 10-K.

Service charges recorded under this agreement were $1.4 million and $1.3 million for the year ended December 31, 2021 and 2020, respectively.

Under the Services Agreement, the Company has an option, exercisable until March 12, 2023, to enter into a collaborative services agreement with BioXcel LLC pursuant to which BioXcel LLC shall perform product identification and related services for us utilizing EvolverAI.

The parties are obligated to negotiate the collaborative services agreement in good faith and to incorporate reasonable market-based terms, including consideration for BioXcel LLC reflecting a low, single-digit royalty on net sales and reasonable development and commercialization milestone payments, provided that (i) development milestones shall not exceed $10 million in the aggregate and not be payable prior to proof of concept in humans and (ii) commercialization milestones shall be based on reaching annual net sales levels, be limited to 3% of the applicable net sales level, and not exceed $30 million in the aggregate.

BioXcel LLC shall continue to make such product identification and related services available to us until at least September 30, 2024.

We paid $9 million in February 2020 for the purchase and subsequent cancellation of 300,000 shares owned by BioXcel LLC, which is more fully discussed in Note 5 to the financial statements included elsewhere in this Annual Report on Form 10-K.

Government Regulation

Government Regulation and Product Approval

packaging, storage, record-keeping, promotion, advertising, distribution, marketing and export and import of drug products.

Government authorities in the United States, at the federal, state and local level, and other countries extensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, marketing and export and import of drug products.

A new drug must be approved by the FDA through the NDA process before it may be legally marketed in the United States.

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In addition, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life.

While the IND is active and before approval, progress reports summarizing the results of the clinical trials and nonclinical studies performed since the last progress report must be submitted at least annually to the FDA, and written

IND safety reports must be submitted to the FDA and investigators for serious and unexpected suspected adverse events, findings from other studies suggesting a significant risk to humans exposed to the same or similar drugs, findings from animal or in vitro testing suggesting a significant risk to humans, and any clinically important increased incidence of a serious suspected adverse reaction compared to that listed in the protocol or investigator brochure.

In addition, during the development of a new drug, sponsors are given opportunities to meet with the FDA at certain points.

While the IND is active, progress reports summarizing the results of the clinical trials and nonclinical studies performed since the last progress report, among other information, must be submitted at least annually to the FDA, and written IND safety reports must be submitted to the FDA and investigators for serious and unexpected suspected adverse events, findings from other studies suggesting a significant risk to humans exposed to the same or similar drugs, findings from animal or in vitro testing suggesting a significant risk to humans, and any clinically important increased incidence of a serious suspected adverse reaction compared to that listed in the protocol or investigator brochure.

In addition, during the development of a drug, sponsors are given opportunities to meet with the FDA at certain points.

These points may be prior to submission of an IND, at the end of Phase 2, and before an NDA is submitted.

Meetings at other times may be requested.

These meetings can provide an opportunity for the sponsor to share information about the data gathered to date, for the FDA to provide advice, and for the sponsor and the FDA to reach agreement on the next phase of development.

Sponsors typically use the meetings at the end of the Phase 2 trial to discuss Phase 2 clinical results and present plans for the pivotal Phase 3 clinical trials that they believe will support approval of the new drug.

These meetings can provide an opportunity for the sponsor to share

information about the data gathered to date, for the FDA to provide advice, and for the sponsor and the FDA to reach agreement on the next phase of development.

Review and Approval Process

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Once filed, the FDA reviews an NDA to determine, among other things, whether a product is safe and effective for its intended use and whether its manufacturing is cGMP-compliant to assure and preserve the product’s identity, strength, quality and purity.

Under the Prescription Drug User Fee Act (“PDUFA”), guidelines that are currently in effect, the FDA has a goal of ten months from the filing date to complete a standard review of an NDA for a drug that is a new molecular entity, and of ten months from the date of NDA receipt to complete a standard review of an NDA for a drug that is not a new molecular entity.

Under the PDUFA, guidelines that are currently in effect, the FDA has a goal of ten months from the filing date to complete a standard review of an NDA for a drug that is a new molecular entity, and of ten months from the date of NDA receipt to complete a standard review of an NDA for a drug that is not a new molecular entity.

The FDA may refer an application for a novel drug to an advisory committee.

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Additionally, before approving a NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCPs.

If the FDA determines that the application, manufacturing process or manufacturing facilities are not acceptable, it will outline the deficiencies in the submission and often will request additional testing or information.

Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

After the FDA evaluates an NDA and conducts inspections of manufacturing facilities where the investigational product and/or its drug substance will be produced, the FDA may issue an approval letter or a Complete Response Letter (“CRL”).

An approval letter authorizes commercial marketing of the product with specific prescribing information for

specific indications.

An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications.

A CRL will describe all of the deficiencies that the FDA has identified in the NDA, except that where the FDA determines that the data supporting the application are inadequate to support approval, the FDA may issue the CRL without first conducting required inspections and/or reviewing proposed labeling.

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For example, the FDA may approve the NDA with a Risk Evaluation and Mitigation Strategy (“REMS”) to ensure the benefits of the product outweigh its risks.

A REMS is a safety strategy to manage a known or potential serious risk associated with a medicine and to enable patients to have continued access to such medicines by managing their safe use, and could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries, and other risk minimization tools.

A REMS is a safety strategy to manage a known or potential serious risk associated with a medicine and to enable patients

to have continued access to such medicines by managing their safe use, and could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries, and other risk minimization tools.

The FDA also may condition approval on, among other things, changes to proposed labeling or the development of adequate controls and specifications.

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The FDA offers a number of expedited development and review programs for qualifying product candidates.

For example, the Fast Track program is intended to expedite or facilitate the process for reviewing new products that are intended to treat a serious or life-threatening disease or condition and demonstrate the potential to address unmet medical needs for the disease or condition.

Fast Track designation applies to the combination of the product and the specific indication for which it is being studied.

The sponsor of a fast track product has opportunities for more frequent interactions with the applicable FDA review team during product development and, once an NDA is submitted, the product candidate may be eligible for priority review.

A Fast Track product may also be eligible for rolling review, where the FDA may consider for review sections of the NDA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the NDA, the FDA agrees to accept sections of the NDA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA.

For example, the Fast Track program is intended to expedite or facilitate the process for reviewing product candidates that are intended to treat a serious or life-threatening disease or condition and demonstrate the potential to address unmet medical needs for the disease or condition.

Fast Track designation applies to the combination of the product candidate and the specific indication for which it is being studied.

The sponsor of a Fast Track product candidate has opportunities for more frequent interactions with the applicable FDA review team during product development and, once an NDA is submitted, the NDA may be eligible for priority review.

An NDA for a Fast Track product candidate may also be eligible for rolling review, where the FDA may consider for review sections of the NDA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the NDA, the FDA agrees to accept sections of the NDA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA.

A product candidate intended to treat a serious or life-threatening disease or condition may also be eligible for Breakthrough Therapy designation to expedite its development and review.

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Any marketing application for a drug submitted to the FDA for approval, including a product candidate with a Fast Track designation and/or Breakthrough Therapy designation, may be eligible for other types of FDA programs intended to expedite the FDA review and approval process, such as priority review and accelerated approval.

A product candidate is eligible for priority review if it is designed to treat a serious or life-threatening disease or condition, and if approved, would provide a significant improvement in safety or effectiveness compared to available alternatives for such disease or condition.

An NDA is eligible for priority review if the product candidate is designed to treat a serious or life-threatening disease or condition, and if approved, would provide a significant improvement in safety or effectiveness compared to available alternatives for such disease or condition.

For new-molecular-entity NDAs, priority review designation means the FDA’s goal is to take action on the marketing application within six months of the 60-day filing date, or with respect to non-new-molecular-entity NDAs, within six months of the NDA receipt date.

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Orphan drug designation and exclusivity

States, or a patient population greater than 200,000 individuals in the United States and when there is no reasonable expectation that the cost of developing and making available the drug in the United States will be recovered from sales in the United States for that drug.

Under the Orphan Drug Act, the FDA may grant orphan designation to a drug intended to treat a rare disease or condition, defined as a disease or condition with a patient population of fewer than 200,000 individuals in the United States, or a patient population greater than 200,000 individuals in the United States and when there is no reasonable expectation that the cost of developing and making available the drug in the United States will be recovered from sales in the United States for that drug.

Orphan drug designation must be requested before submitting an NDA.

After the FDA grants orphan drug designation, the generic identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA.

If a product that has orphan drug designation subsequently receives the first FDA approval for a particular active ingredient for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications, including a full NDA, to market the same drug for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or if the FDA finds that the holder of the orphan drug exclusivity has not shown that it can assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition for which the drug was designated.

Orphan drug exclusivity does not prevent the FDA from approving a different drug for the same disease or condition, or the same drug for a different disease or condition.

If a product that has orphan drug designation subsequently receives the first FDA approval for a particular active ingredient for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications, including a full NDA, to market the same drug for the same disease or condition for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or if the FDA finds that the holder of the orphan drug exclusivity has not shown that it can assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition for which the drug was designated.

Orphan drug exclusivity does not prevent the FDA from approving a

different drug for the same disease or condition, or the same drug for a different disease or condition.

Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the NDA application user fee.

A designated orphan drug many not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation.

A designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation.

In addition, orphan drug exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or, as noted above, if a second applicant demonstrates that its product is clinically superior to the approved product with orphan exclusivity or the manufacturer of the approved product is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.

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or (4) such patent is invalid or will not be infringed upon by the manufacture, use or sale of the drug product for which the application is submitted.

Generally, the ANDA or 505(b)(2)

NDA cannot be approved until all listed patents have expired, except where the ANDA or 505(b)(2) NDA applicant challenges a listed patent through the last type of certification, also known as a paragraph IV certification.

Generally, the ANDA or 505(b)(2) NDA cannot be approved until all listed patents have expired, except where the ANDA or 505(b)(2) NDA applicant challenges a listed patent through the last type of certification, also known as a paragraph IV certification.

If the applicant does not challenge the listed patents or indicates that it is not seeking approval of a patented method of use, the ANDA or 505(b)(2) NDA application will not be approved until all of the listed patents claiming the referenced product have expired.

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This prohibition is generally referred to as the 30-month stay.

In instances where an ANDA or 505(b)(2) NDA applicant files a paragraph IV certification, the NDA holder or patent owner(s) regularly take action to trigger the 30-month stay, recognizing that the related patent litigation may take many months or years to resolve.

instances where an ANDA or 505(b)(2) NDA applicant files a paragraph IV certification, the NDA holder or patent owner(s) regularly take action to trigger the 30-month stay, recognizing that the related patent litigation may take many months or years to resolve.

Thus, approval of an ANDA or 505(b)(2) NDA could be delayed for a significant period of time depending on the patent certification the applicant makes and the reference drug sponsor's decision to initiate patent litigation.

The Hatch-Waxman Act establishes periods of regulatory exclusivity for certain approved drug products, during which the FDA cannot approve (or in some cases accept) an ANDA or 505(b)(2) application that relies on the branded reference drug.

For example, the holder of an NDA, including a 505(b)(2) NDA, may obtain five years of exclusivity upon approval of a new drug containing new chemical entities that have not been previously approved by the FDA.

For example, the holder of an NDA, including a 505(b)(2) NDA, may obtain five years of non-patent data exclusivity upon approval of a new drug containing new chemical entities that have not been previously approved by the FDA.

A drug is a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the therapeutic activity of the drug substance.

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Approval or clearance of the companion diagnostic device will ensure that the device has been adequately evaluated and has adequate performance characteristics in the intended population.

The review of in vitro companion diagnostics in conjunction with the review of our therapeutic treatments for cancer will, therefore, likely involve coordination of review by the FDA’s Center for Drug Evaluation and Research and the FDA’s Center for Devices and Radiological Health Office of In Vitro Diagnostics and Radiological Health.

The review of in vitro companion diagnostics in conjunction with the review of our product candidates in development for cancer will, therefore, likely involve coordination of review by the FDA’s Center for Drug Evaluation and Research and the FDA’s Center for Devices and Radiological Health Office of In Vitro Diagnostics and Radiological Health.

Under the FDCA, in vitro diagnostics, including companion diagnostics, are regulated as medical devices.

approval, registration and listing, manufacturing, labeling, storage, advertising and promotion, sales and distribution, export and import, and post-market surveillance.

In the United States, the FDCA and its implementing regulations, and other federal and state statutes and regulations govern, among other things, medical device design and development, preclinical and clinical testing, premarket clearance or approval, registration and listing, manufacturing, labeling, storage, advertising and promotion, sales and distribution, export and import, and post-market surveillance.

Unless an exemption applies, medical devices, including companion diagnostic tests, require marketing clearance or approval from the FDA prior to commercial distribution.

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If the FDA agrees that the device is substantially equivalent to a predicate device currently on the market, it will grant 510(k) clearance to commercially market the device.

If the FDA determines that the device is “not substantially equivalent” to a previously cleared device, the device is automatically designated as a Class III (i.e., high-risk) device.

If the FDA determines that the

device is “not substantially equivalent” to a previously cleared device, the device is automatically designated as a Class III (i.e., high-risk) device.

The device sponsor must then fulfill more rigorous PMA requirements, or can request a risk-based classification determination for the device in accordance with the “de novo” process, which is a route to market for novel medical devices that are low to moderate risk and are not substantially equivalent to a predicate device.

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International Regulations

In addition to regulations in the United States, we are and will be subject to a variety of regulations in other jurisdictions governing, among other things, clinical studies and any commercial sales and distribution of our products.

Whether or not we obtain FDA approval of a product, we must obtain the requisite approvals from regulatory authorities in foreign countries prior to the commencement of clinical studies or marketing of the product in those countries.

The requirements and process governing the conduct of clinical studies, product licensing, pricing and reimbursement vary from country to country.

In addition to regulations in the United States, we are and will be subject to a variety of regulations in other jurisdictions governing, among other things, clinical trials, marketing authorization, post-marketing requirements and

any commercial sales and distribution of our products.

Whether or not we obtain FDA approval of a product, we must obtain the requisite approvals from regulatory authorities in foreign countries prior to the commencement of clinical trials or marketing of the product in those countries.

The requirements and process governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country.

Failure to comply with applicable foreign regulatory requirements, may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.

Clinical Trials

Certain countries outside of the United States have a similar process that requires the submission of a clinical study application, or CTA, much like the IND prior to the commencement of human clinical studies.

In the European Union, or EU, for example, a CTA must be submitted to each country’s national health authority and an independent ethics committee, much like the FDA and the IRB, respectively.

Once the CTA is approved by the national health authority and the ethics committee has granted a positive opinion in relation to the conduct of the trial in the relevant member state(s), in accordance with a country’s requirements, clinical study development may proceed.

Clinical trials of medicinal products in the European Union must be conducted in accordance with EU and national regulations and the International Conference on Harmonization, or ICH, guidelines on Good Clinical Practices, or GCP, as well as the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

Additional GCP guidelines from the European Commission, focusing in particular on traceability, apply to clinical trials of advanced therapy medicinal products, or ATMPs.

Non-Clinical Studies and Clinical Trials

Similarly to the U.S., the various phases of non-clinical and clinical research in the European Union (“EU”) are subject to significant regulatory controls.

Non-clinical studies are performed to demonstrate the health or environmental safety of new chemical or biological substances.

Non-clinical studies must be conducted in compliance with the principles of good laboratory practice (“GLP”) as set forth in EU Directive 2004/10/EC.

In particular, non-clinical studies, both in vitro and in vivo, must be planned, performed, monitored, recorded, reported and archived in accordance with the GLP principles, which define a set of rules and criteria for a quality system for the organizational process and the conditions for non-clinical studies.

These GLP standards reflect the Organization for Economic Co-operation and Development requirements.

Clinical trials of medicinal products in the EU must be conducted in accordance with EU and national regulations and the International Conference on Harmonization (“ICH”) guidelines on Good Clinical Practices (“GCP”) as well as the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

If the sponsor of the clinical trial is not established within the EU, it must appoint an EU entity to act as its legal representative.

The sponsor must take out a clinical trial insurance policy, and in most EU countries, the sponsor is liable to provide ‘no fault’ compensation to any study subject injured in the clinical trial.

Prior to commencing a clinical trial, the sponsor must obtain a clinical trial authorization from the competent authority, and a positive opinion from an independent ethics committee.

The regulatory landscape related to clinical trials in the EU has been subject to recent changes.

The EU Clinical Trials Regulation (“CTR”) which was adopted in April 2014 and repeals the EU Clinical Trials Directive, became applicable on January 31, 2022.

Unlike directives, the CTR is directly applicable in all EU member states without the need for member states to further implement it into national law.

The CTR notably harmonizes the assessment and supervision processes for clinical trials throughout the EU via a Clinical Trials Information System, which contains a centralized EU portal and database.

While the Clinical Trials Directive required a separate clinical trial application (“CTA”) to be submitted in each member state, to both the competent national health authority and an independent ethics committee, much like the FDA and IRB respectively, the CTR introduces a centralized process and only requires the submission of a single application to all member states concerned.

The CTR allows sponsors to make a single submission to both the competent authority and an ethics committee in each member state, leading to a single decision per member state.

The CTA must include, among other things, a copy of the trial protocol and an investigational medicinal product dossier containing information about the manufacture and quality of the medicinal product under investigation.

Currently, CTAs must be submitted to the competent authority in each EU member state in which the trial will be conducted.

Under the new Regulation on Clinical Trials, which is currently expected to take effect by early 2022, there will be a centralized application procedure where one national authority takes the lead in reviewing the application and the other national authorities have only limited involvement.

Any substantial changes to the trial protocol or other information submitted with the CTA must be notified to or approved by the relevant competent authorities and ethics committees.

Medicines used in clinical trials must be manufactured in accordance with GMP.

Other national and European Union-wide regulatory requirements may also apply.

During the development of a medicinal product, the EMA and national regulators provide the opportunity for dialogue and guidance on the development program.

At the EMA level, this is usually done in the form of scientific advice, which is given by the Scientific Advice Working Party of the Committee for Medicinal Products for Human Use, or CHMP.

The assessment procedure of the CTA has been harmonized as well, including a joint assessment by all member states concerned, and a separate assessment by each member state with respect to specific requirements related to its own territory, including ethics rules.

Each member state’s decision is communicated to the sponsor via the centralized EU portal.

Once the CTA is approved, clinical study development may proceed.

The CTR foresees a three-year transition period.

The extent to which ongoing and new clinical trials will be governed by the CTR varies.

For clinical trials whose CTA was made under the Clinical Trials Directive before January 31, 2022, the Clinical Trials Directive will continue to apply on a transitional basis for three years.

Additionally, sponsors may still choose to submit a CTA under either the Clinical Trials Directive or the CTR until January 31, 2023 and, if authorized, those will be governed by the Clinical Trials Directive until January 31, 2025.

By that date, all ongoing trials will become subject to the provisions of the CTR.

During the development of a medicinal product, the European Medicines Agency (“EMA”) and national regulators provide the opportunity for dialogue and guidance on the development program.

At the EMA level, this is usually done

in the form of scientific advice, which is given by the Scientific Advice Working Party of the Committee for Medicinal Products for Human Use (“CHMP”).

A fee is incurred with each scientific advice procedure.

Advice from the EMA is typically provided based on questions concerning, for example, quality (chemistry, manufacturing and controls testing), nonclinical testing and

clinical trials, and pharmacovigilance plans and risk-management programs.

Advice from the EMA is typically provided based on questions concerning, for example, quality (chemistry, manufacturing and controls testing), nonclinical testing and clinical trials, and pharmacovigilance plans and risk-management programs.

Advice is not legally binding with regard to any future marketing authorization application of the product concerned.

Marketing Authorizations

In the European Union, medicinal products can only be placed on the market after obtaining a Marketing Authorization, or MA.

To obtain regulatory approval of an investigational drug in the EU, we must submit a marketing authorization application, or MAA.

Marketing Authorization

In order to market our product candidates in the EU and many other foreign jurisdictions, we must obtain separate regulatory approvals.

More concretely, in the EU, medicinal products candidates can only be placed on the market after obtaining a marketing authorization (“MA”).

To obtain regulatory approval of a product candidate in the EU, we must submit a MA application (“MAA”).

The process for doing this depends, among other things, on the nature of the medicinal product.

The centralized procedure results in a single MA, issued by the European Commission, based on the opinion of the EMA’s CHMP, which is valid across the entire territory of the EU.

The centralized procedure is compulsory for human medicines that are:

(i) derived from biotechnology processes, such as genetic engineering, (ii) contain a new active substance indicated for the treatment of certain diseases, such as HIV/AIDS, cancer, diabetes, neurodegenerative diseases, autoimmune and other immune dysfunctions and viral diseases, (iii) designated orphan medicines and (iv) advanced therapy medicinal products, or ATMPs, such as gene therapy, somatic cell therapy or tissue-engineered medicines.

The centralized procedure may at the request of the applicant also be used in certain other cases.

It is very likely that the centralized procedure would apply to the products we are developing.

There are two types of MAs:

● “Centralized MAs” are issued by the European Commission through the centralized procedure based on the opinion of the EMA’s CHMP, and are valid throughout the EU.

The centralized procedure is compulsory for certain types of medicinal products such as:

(i) medicinal products derived from biotechnology processes, such as genetic engineering, (ii) medicinal products containing a new active substance indicated for the treatment of certain diseases, such as HIV/AIDS, cancer, diabetes, neurodegenerative diseases, autoimmune and other immune dysfunctions and viral diseases, (iii) designated orphan medicinal products and (iv) advanced therapy medicinal products (“ATMPs”) such as gene therapy, somatic cell therapy or tissue-engineered medicines.

The centralized procedure is optional for product candidates containing a new active substance not yet authorized in the EU, or for product candidates that constitute a significant therapeutic, scientific or technical innovation or which are in the interest of public health in the EU.

● “National MAs” are issued by the competent authorities of the EU member states, only cover their respective territory, and are available for product candidates not falling within the mandatory scope of the centralized procedure.

Where a product has already been authorized for marketing in an EU member state, this national MA can be recognized in another member state through the mutual recognition procedure.

If the product has not received a national MA in any member state at the time of application, it can be approved simultaneously in various member states through the decentralized procedure.

Under the decentralized procedure an identical dossier is submitted to the competent authorities of each of the member states in which the MA is sought, one of which is selected by the applicant as the reference member state.

Under the centralized procedure, the maximum timeframe for the evaluation of a MAA by the EMA is 210 days.

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It is based on increased interaction and early dialogue with companies developing promising medicines, to optimize their product development plans and speed up their evaluation to help them reach patients earlier.

Product developers that benefit from PRIME designation can expect to be eligible for accelerated assessment, but this is however not guaranteed.

The benefits of a PRIME designation include the appointment of a CHMP rapporteur before submission of a MAA, early dialogue and scientific advice at key development milestones, and the potential to qualify products for accelerated review earlier in the application process.

There are also two other possible routes to authorize medicinal products in several EU member states, which are available for investigational medicinal products that fall outside the scope of the centralized procedure:

the decentralized procedure and the mutual recognition procedure.

Under the decentralized procedure, an applicant may apply for simultaneous authorization in more than one EU member state for medicinal products that have not yet been authorized in any EU member states.

Under the mutual recognition procedure, a medicine is first authorized in one EU member state, in accordance with the national procedures of that country.

Following a national authorization, the applicant may seek further marketing authorizations from other EU member states under a procedure whereby the countries concerned agree to recognize the validity of the original national marketing authorization.

Many benefits accrue to sponsors of product candidates with PRIME designation, including but not limited to, early and proactive regulatory dialogue with the EMA, frequent discussions on clinical trial designs and other development program elements, and accelerated MAA assessment once a dossier has been submitted.

Importantly, a dedicated contact and rapporteur from the CHMP is appointed early in the PRIME scheme facilitating increased understanding of the product at EMA’s committee level.

An initial meeting initiates these relationships and includes a team of multidisciplinary experts at the EMA to provide guidance on the overall development and regulatory strategies.

MAs have an initial duration of five years.

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Once renewed, the MA is valid for an unlimited period unless the European Commission or the national competent authority decides, on justified grounds relating to pharmacovigilance, to proceed with one additional five-year renewal.

Data and Marketing Exclusivity

The EU also provides opportunities for market exclusivity.

Upon receiving MA, reference product generally receive eight years of data exclusivity and an additional two years of market exclusivity.

If granted, the data exclusivity period prevents generic or biosimilar applicants from relying on the pre-clinical and clinical trial data contained in the dossier of the reference product when applying for a generic or biosimilar MA in the EU during a period of eight years from the date on which the reference product was first authorized in the EU.

The market exclusivity period prevents a successful generic or biosimilar applicant from commercializing its product in the EU until 10 years have elapsed from the initial MA of the reference product in the EU.

The overall 10-year market exclusivity period can be extended to a maximum of eleven years if, during the first eight years of those 10 years, the MA holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies.

However, there is no guarantee that a product will be considered by the EU’s regulatory authorities to be a new chemical entity, and products may not qualify for data exclusivity.

Orphan Medicinal Products

The criteria for designating an “orphan medicinal product” in the European Union are similar in principle to those in the United States.

The criteria for designating an “orphan medicinal product” in the EU are similar in principle to those in the United States.

A medicinal product may be designated as orphan if (1) it is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition;

(2) either (a) such condition affects no more than

five in 10,000 persons in the European Union when the application is made, or (b) the product, without the benefits derived from orphan status, would not generate sufficient return in the European Union to justify investment;

and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the European Union, or if such a method exists, the product will be of significant benefit to those affected by the condition.

(2) either (a) such condition affects no more than five in 10,000 persons in the EU when the application is made, or (b) the product, without the benefits derived from orphan status, would not generate sufficient return in the EU to justify investment;

and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the EU, or if such a method exists, the product will be of significant benefit to those affected by the condition.

The application for orphan drug designation must be submitted before the MAA.

Orphan medicinal products are eligible for financial incentives such as reduction of fees or fee waivers and are, upon grant of a MA, entitled to ten years of market exclusivity for the approved therapeutic indication.

During the ten-year market exclusivity period, the EMA cannot accept a MAA, or grant a MA, or accept an application to extend a MA, for the same indication, in respect of a similar medicinal product.

An orphan medicinal product can also obtain an additional two years of market exclusivity in the European Union for pediatric studies.

Orphan designation entitles a party to incentives such fee reductions or fee waivers, protocol assistance, and access to the centralized procedure.

Upon grant of a MA, orphan medicinal products are entitled to ten years of market exclusivity for the approved therapeutic indication.

During the ten-year market exclusivity period, the competent authorities cannot accept a MAA, or grant a MA, or accept an application to extend a MA, for the same indication, in respect of a similar medicinal product.

The period of market exclusivity is extended by two years for orphan medicinal products that have also complied with an agreed pediatric investigation plan (“PIP”).

No extension to any supplementary protection certificate can be granted on the basis of pediatric studies for orphan indications.

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or (3) the applicant cannot supply enough orphan medicinal product.

Approval and Regulation of Companion Diagnostics

In the EU, in vitro diagnostic medical devices are regulated by Directive 98/79/EC which regulates the placing on the market, the CE-marking, the essential requirements, the conformity assessment procedures, the registration obligations for manufactures and devices as well as the vigilance procedure.

Failure to comply with EU and member state laws that apply to the conduct of clinical trials, manufacturing approval, MA of medicinal products and marketing of such products, both before and after grant of the MA, manufacturing of pharmaceutical products, statutory health insurance, bribery and anti-corruption or with other applicable regulatory requirements may result in administrative, civil or criminal penalties.

These penalties could include delays or refusal to authorize the conduct of clinical trials, or to grant MA, product withdrawals and recalls, product

seizures, suspension, withdrawal or variation of the MA, total or partial suspension of production, distribution, manufacturing or clinical trials, operating restrictions, injunctions, suspension of licenses, fines and criminal penalties.

The aforementioned EU rules are generally applicable in the European Economic Area (“EEA”) which consists of the 27 EU member states plus Norway, Liechtenstein and Iceland.

The United Kingdom (“UK”) left the EU on January 31, 2020, following which existing EU medicinal product legislation continued to apply in the UK during the transition period under the terms of the EU-UK Withdrawal Agreement.

The transition period, which ended on December 31, 2020, maintained access to the EU single market and to the global trade deals negotiated by the EU on behalf of its members.

The transition period provided time for the UK and EU to negotiate a framework for partnership for the future, which was then crystallized in the Trade and Cooperation Agreement (“TCA”) and became effective on the January 1, 2021.

The TCA includes specific provisions concerning pharmaceuticals, which include the mutual recognition of Good Manufacturing Practice (“GMP”) inspections of manufacturing facilities for medicinal products and GMP documents issued, but does not foresee wholesale mutual recognition of UK and EU pharmaceutical regulations.

Other Foreign Regulations

For other countries outside of Europe, such as countries in Eastern Europe, Latin America or Asia, the requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country.

In all cases, again, the clinical trials are conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.

Regulation of Companion Diagnostics

In the EU, in vitro diagnostic medical devices are regulated by Directive 98/79/EC which regulates the placing on the market, the CE marking, the essential requirements, the conformity assessment procedures, the registration obligations for manufacturers and devices as well as the vigilance procedure.

In vitro diagnostic medical devices must comply with the requirements provided for in the Directive, and with further requirements implemented at national level (as the case may be).

Companion diagnostics can also be considered “combination products” which are governed by a different regulatory pathway depending on the mode of action of the products.

A combination medicine/device product could either be regulated as a medicinal product or a medical device based on its primary mode of action.

In principle, if a medical device incorporates a substance which, if used separately, is likely to be considered as a medicinal product and act on the human body by an action ancillary to that of the device, the device must be evaluated and authorized in accordance with the medical device regulations.

However, if the medicinal substance constitutes the main function of the product then the product is considered as a medicinal product.

Currently, for such combination products, the manufacturer will have to consult, prior to obtaining the CE marking of the device, the EMA or national competent authorities to obtain scientific advice on the quality and safety of the medicinal substance, including the benefit/risk profile of its incorporation into the device.

The regulation of companion diagnostics will be subject to further requirements as of the entry into force of the in-vitro diagnostic devices Regulation (No 2017/746) which introduces a new classification system for companion diagnostics which are now specifically defined as diagnostic tests that support the safe and effective use of a specific medicinal product, by identifying patients that are suitable or unsuitable for treatment.

The regulation of companion diagnostics will be subject to further requirements once the in-vitro medical diagnostic devices Regulation (No 2017/746) (“IVDR”) will become applicable on 26 May 2022.

However, on October 14, 2021, the European Commission proposed a “progressive” roll-out of the IVDR to prevent disruption in the supply of in vitro diagnostic medical devices.

The European Parliament and Council voted to adopt the proposed regulation on December 15, 2021 and the regulation entered into force on January 2022.

The IVDR will fully apply on May 26, 2022 but there will be a tiered system extending the grace period for many devices (depending on their risk classification) before they have to be fully compliant with the regulation.

The IVDR introduces a new classification system for companion diagnostics which are now specifically defined as diagnostic tests that support the safe and effective use of a specific medicinal product, by identifying patients that are suitable or unsuitable for treatment.

Companion diagnostics will have to undergo a conformity assessment by a notified body.

Before it can issue a CE certificate, the notified body must seek a scientific opinion from the EMA on the suitability of the companion diagnostic to the medicinal product concerned if the medicinal product falls exclusively within the scope of the centralized procedure for the authorization of medicines, or the medicinal product is already authorized through the centralized procedure, or a marketing authorization application for the medicinal product has been submitted through the centralized procedure.

Before it can issue a CE certificate, the notified body must seek a scientific opinion from the EMA on the suitability of the companion diagnostic to the medicinal product concerned if the medicinal product falls exclusively within the scope of the centralized procedure for the authorization of medicines, or the medicinal product is already authorized through the centralized procedure, or a MAA for the medicinal product has been submitted through the centralized procedure.

For other substances, the notified body can seek the opinion from a national competent authorities or the EMA.

The aforementioned EU rules are generally applicable in the European Economic Area, or EEA, which consists of the 27 EU member states plus Norway, Liechtenstein and Iceland.

The United Kingdom, or UK, formally left the EU on January 31, 2020, commonly referred to as “Brexit”.

The post-Brexit transition period, during which EU pharmaceutical laws continued to apply to the UK, expired on December 31, 2020.

This means that since January 1, 2021, the UK operates under a distinct regulatory regime.

EU pharmaceutical laws now only apply to the UK in respect of Northern Ireland (as laid out in the Protocol on Ireland and Northern Ireland, including but not limited to MAAs).

Since January 1, 2021, EU laws which have been transposed into UK law through secondary legislation continue to be applicable as “retained EU law”.

The aforementioned EU rules are generally applicable in the EEA.

Pharmaceutical Coverage, Pricing and Reimbursement

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Since its enactment, there have been judicial, executive and Congressional challenges to certain aspects of the ACA.

For example, the Tax Cuts and Jobs Act, or the Tax Act, was enacted in 2017, which, among other things, removes penalties for not complying with the ACA’s individual mandate to carry health insurance.

On December 14, 2018, a U.S.

District Court Judge in the Northern District of Texas, ruled that the individual mandate is a critical and inseverable feature of the ACA, and therefore, because it was repealed as part of the Tax Act, the remaining provisions of the ACA are invalid as well.

On December 18, 2019, the U.S.

Court of Appeals for the 5th Circuit upheld the District Court’s decision that the individual mandate was unconstitutional but remanded the case back to the District Court to determine whether the remaining provisions of the ACA are invalid as well.

Supreme Court is currently reviewing the case, although it is unclear how the Supreme Court will rule.

It is unclear how these decisions, subsequent appeals, if any, or other efforts to challenge, repeal or replace the ACA will impact the law, or our business or financial condition.

On June 17, 2021, the United States Supreme Court dismissed the judicial challenge to the ACA without specifically ruling on the constitutionality of the ACA.

Prior to the United States Supreme Court’s decision, President Biden issued an executive order to initiate a special enrollment period from February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace.

The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA.

In addition, we expect that federal, state and local governments in the United States will continue to consider legislation to limit the growth of healthcare costs, including the cost of prescription drugs.

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Different pricing and reimbursement schemes exist in other countries.

In the European Union, governments influence the price of pharmaceutical products through their pricing and reimbursement rules and control of national health care systems that fund a large part of the cost of those products to consumers.

Member states are free to restrict the range of pharmaceutical products for which their national health insurance systems provide reimbursement, and to control the prices and reimbursement levels of pharmaceutical products for human use.

In the EU, governments influence the price of pharmaceutical products through their pricing and reimbursement rules and control of national health care systems that fund a large part of the cost of those products to consumers.

Member states are free to restrict the range of pharmaceutical products for which their national health insurance systems provide reimbursement, and to control the

prices and reimbursement levels of pharmaceutical products for human use.

Some jurisdictions operate positive and negative list systems under which products may only be marketed once a reimbursement price has been agreed.

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Other Healthcare Laws and Compliance Requirements

If we obtain regulatory approval for any of our product candidates, we may be subject to various federal and state laws targeting fraud and abuse in the healthcare industry.

If we obtain regulatory approval for any of our product candidates, we may be subject to various federal, state and foreign laws targeting fraud and abuse in the healthcare industry.

Such laws include, without limitation, U.S.

federal and state anti-kickback, fraud and abuse, false claims, consumer fraud, pricing reporting, data privacy and security, and transparency laws and regulations with respect to drug pricing and payments and other transfers of value made to physicians and other healthcare professionals, as well as similar foreign laws in the jurisdictions outside the U.S.

federal and state anti-kickback, fraud and abuse, false claims, consumer fraud, data privacy and security, and transparency laws and regulations with respect to drug pricing and payments and other transfers of value made to physicians and other healthcare professionals, as well as similar foreign laws in the jurisdictions outside the U.S.

The federal Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce either the referral of an individual, or the furnishing, recommending, or arranging for a good or service, for which payment may be made under a federal healthcare program, such as the Medicare and Medicaid programs.

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The “qui tam” provisions of the False Claims Act allow a private individual to bring civil actions on behalf of the federal government alleging that the defendant has submitted a false claim to the federal government, and to share in any monetary recovery.

various states have enacted false claims laws analogous to the False Claims Act.

In addition, various states have enacted false claims laws analogous to the False Claims Act.

Many of these state laws apply where a claim is submitted to any third-party payer and not merely a federal healthcare program.

When an entity is determined to have violated the False Claims Act, it may be required to pay up to three times the actual damages sustained by the government, plus significant civil penalties for each separate false claim.

Also, the Health Insurance Portability and Accountability Act of 1996, or HIPAA, created several federal crimes, including healthcare fraud, and false statements relating to healthcare matters.

The health care fraud statute prohibits knowingly and willfully executing a scheme to defraud any health care benefit program, including private third-party payers.

Also, the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), created several federal crimes, including healthcare fraud, and false statements relating to healthcare matters.

The health care fraud statute prohibits knowingly and willfully executing a scheme to defraud any health care benefit program, including private third-party

The false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for health care benefits, items or services.

Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation.

The Physician Payment Sunshine Act, or the Sunshine Act, which was enacted as part of the ACA, requires applicable manufacturers of drugs, devices, biologicals, or medical supplies covered under Medicare, Medicaid or the Children’s Health Insurance Program, to report annually to the Secretary of the Department of Health and Human Services payments or other transfers of value made by that entity, or by a third party as directed by that entity, to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other healthcare providers starting in 2022, and teaching hospitals, or to third parties on behalf of such providers, during the course of the preceding calendar year.

The Physician Payment Sunshine Act, or the Sunshine Act, which was enacted as part of the ACA, requires applicable manufacturers of drugs, devices, biologicals, or medical supplies covered under Medicare, Medicaid or the Children’s Health Insurance Program, to report annually to the Secretary of the Department of Health and Human Services payments or other transfers of value made by that entity, or by a third party as directed by that entity, to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician providers including physician assistants and nurse practitioners, and teaching hospitals, or to third parties on behalf of such providers, as well as ownership and investment interests held by physicians and their immediate family members during the course of the preceding calendar year.

Failure to comply with the reporting requirements can result in significant civil monetary penalties for any payment or other transfer of value that is not reported.

Moreover, analogous state and foreign laws and regulations may be broader in scope than the provisions described above and may apply regardless of payor.

Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and relevant federal government compliance guidance;

require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers, many of which differ from each other in significant ways, thus further complicating compliance efforts;

and restrict marketing practices or require disclosure of marketing expenditures and pricing information.

Violations of any of these laws or any other governmental laws and regulations that may apply include, without limitation, significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion of products from government funded healthcare programs, such as Medicare and Medicaid, disgorgement, contractual damages, reputational harm, diminished profits and the curtailment or restructuring of our operations.

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In addition, certain state and non-U.S.

laws, such as the California Consumer Privacy Act, or CCPA, the California Privacy Rights Act, or CPRA, and the EU General Data Protection Regulation, or GDPR, govern the privacy and security of personal information, including health-related information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

laws, such as the California Consumer Privacy Act (“CCPA”), the California Privacy Rights Act (“CPRA”), and the EU General Data Protection Regulation (“GDPR”), govern the privacy and security of personal information, including health-related information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation.

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marketing, manufacturing, regulatory, finance and other important functions that are critical to our success.

We also leverage certain experts in drug development employed by our BioXcel to provide flexibility for our business needs.

We also leverage certain experts in drug development employed by BioXcel LLC to provide flexibility for our business needs.

We expect to continue to hire additional employees in 2022 with a focus on expanding our expertise and bandwidth in clinical and preclinical research and development, marketing and sales and finance.

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We believe that our future success largely depends upon our continued ability to attract and retain highly skilled employees.

We provide our employees with competitive salaries and bonuses, and opportunities for equity ownership.

We provide our employees with competitive salaries, bonuses, opportunities for equity ownership and other comparable benefits for our industry.

Employee and Visitor Safety Protocols.

The Company follows health and safety guidelines to protect the well-being of our employees and visitors.

Diversity & Inclusion .

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Our Corporate Information

We were incorporated as a Delaware corporation on March 29, 2017 as a wholly owned subsidiary of BioXcel.

The Company was incorporated as a Delaware corporation on March 29, 2017.

Our principal executive offices are located at 555 Long Wharf Drive, New Haven, CT 06511 and our telephone number is (475) 238-6837.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business