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Item 1. Business

2024-03-22 compared with 2023-03-16 · 440 added, 394 removed, 717 unchanged (54% of the section changed)

BioXcel Therapeutics, Inc.

(“BTI” or the “Company”) is a biopharmaceutical company utilizing artificial intelligence (“AI”) approaches to develop transformative medicines in neuroscience and immuno-oncology.

(“BTI,” the “Company,” “we,” “us” or “our”) is a biopharmaceutical company utilizing artificial intelligence (“AI”) to develop transformative medicines in neuroscience and, through the Company’s wholly owned subsidiary, OnkosXcel Therapeutics LLC (“OnkosXcel”), immuno-oncology.

We are focused on utilizing cutting-edge technology and innovative research to develop high-value therapeutics aimed at transforming patients’ lives.

We employ a proprietary AI platform to reduce therapeutic development costs and potentially accelerate development timelines.

We employ various AI platforms to reduce therapeutic development costs and potentially accelerate development timelines.

Our approach leverages existing approved drugs and/or clinically evaluated product candidates together with big data and proprietary machine learning algorithms to identify new therapeutic indications.

We believe this differentiated approach has the potential to reduce the expense and time associated with drug development in diseases with substantial unmet medical needs.

On April 6, 2022, we announced that the U.S.

FDA approved IGALMI (dexmedetomidine or “Dex”) sublingual film for the acute treatment of agitation associated with schizophrenia or bipolar I or II disorder in adults.

IGALMI is approved to be self-administrated by patients under the supervision of a health care provider.

We deployed the first phase of our sales team for high priority targets in May 2022.

Furthermore, on July 6, 2022, we announced that IGALMI was commercially available in doses of 120 and 180 microgram (“mcg”) through the Company’s third-party logistics provider and was available for order through wholesalers.

Our most advanced clinical development program is BXCL501, an investigational proprietary, orally dissolving, film formulation of Dex for the treatment of agitation associated with psychiatric and neurological disorders.

We are conducting clinical trials for the at-home use of BXCL501 for agitation associated with bipolar disorders and schizophrenia.

We also continue to conduct clinical trials evaluating BXCL501 for the acute treatment of agitation in Alzheimer’s disease patients in residential care facilities and nursing homes and for adjunctive treatment of patients with Major Depressive Disorder (“MDD”).

Our advanced immuno-oncology asset, BXCL701, is an investigational, oral innate immune activator currently being developed as a potential therapy for the treatment of aggressive forms of prostate cancer, pancreatic cancer, and other solid and liquid tumors.

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

To date, we have not experienced any significant delays in any of our ongoing or planned clinical trials, except for occasional COVID-19 related disruptions to our TRANQUILITY II and PLACIDITY trials.

However, this could change rapidly.

On April 6, 2022, we announced that the United States (“U.S.”) Food and Drug Administration (“FDA”) approved IGALMI TM (dexmedetomidine (or “Dex”)) sublingual film for the acute treatment of agitation associated with schizophrenia or bipolar I or II disorder in adults.

IGALMI TM is approved to be self-administrated by patients under the supervision of a health care provider.

On July 6, 2022, we announced that IGALMI TM was commercially available in doses of 120 and 180 microgram (“mcg”).

Our most advanced neuroscience candidate is BXCL501.

In indications other than those approved by the FDA as IGALMI TM , BXCL501 is an investigational, proprietary, orally dissolving film formulation of Dex in development for the treatment of agitation associated with psychiatric and neurological disorders.

We are continuing to develop BXCL501 for the potential acute treatment of agitation associated with bipolar disorders or schizophrenia in the at-home setting and for the potential acute treatment of agitation (non-daily) associated with dementia due to probable Alzheimer’s disease in the at-home setting and in care facilities.

As described further below, we have deprioritized the development of BXCL501 for certain other proposed indications, including development of BXCL501 as a potential adjunctive treatment for major depressive disorder (“MDD”), as well as our BXCL701 program, except as noted under “Immuno-Oncology” below.

Our most advanced immuno-oncology candidate, BXCL701, is an investigational oral innate immune activator being developed by OnkosXcel as a potential therapy for the treatment of aggressive forms of prostate cancer, pancreatic cancer, and other solid and liquid tumors.

Our Neuroscience Strategy

Our goal is to become the leading AI-enabled neuroscience therapeutics company.

We continue to evaluate all strategic options available to us for our neuroscience assets, which could include licensing, partnering, and co-commercialization.

We continue to evaluate all strategic options for our neuroscience assets, which could include licensing, partnering, and co-commercialization.

Our Novel Drug Re-Innovation Approach

We aim to develop and implement, holistically throughout the drug development process, an AI ecosystem designed to rapidly identify medications related to our key focus areas of neuroscience and immuno-oncology.

We aim to deploy and implement, throughout the drug development process, an AI ecosystem designed to rapidly identify medications related to our key focus areas of neuroscience and immuno-oncology.

Our in-house, uniquely integrated AI-to-drug-development capability is complemented by the services and technology of BioXcel LLC, our former parent company.

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 provide the basis for stronger intellectual property positions.

Our AI team works closely with our Business Development team to prioritize the most valuable external opportunities in a data-driven manner.

It includes a labeled properties graph (also referred to as a “knowledge graph”) that visually relates collected big data in the form of entities and their properties that include neuropsychiatric symptoms, brain circuits, drug targets, and existing drugs.

We believe that understanding the relation between entities relevant to drug development may lead to novel potential uses for existing drugs.

Predictive algorithms or queries of the knowledge graph may uncover not only single drugs but potentially identify new combinations of drugs that we believe may be

more effective in treating disorders than single agents.

New combinations of drugs may lower tolerable doses of drugs and provide the basis for stronger intellectual property positions.

Our AI team works closely with our Business Development team to prioritize in a data-driven manner the most valuable external opportunities.

These opportunities may be found in new potential uses for launched drugs, in drugs that are part of pharmaceutical company pipelines 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 immuno-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 in identifying combinations that we believe may have a higher probability of success.

Traditional drug development is plagued with low success rates, long drug development cycles, and exorbitant development costs.

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

The pharmacological universe spans more than 27,000 active pharmaceutical agents, but 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 needs and recouping research and development investments.

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.

The remaining agents 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 sacrifice during clinical development.

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.

Traditional drug development is marred by low success rates, long drug development cycles, and exorbitant development costs that are increasing year over year.

In addition, many serious diseases remain unaddressed due to limitations of the current drug discovery paradigm.

The pharmacological universe spans more than 27,000 active pharmaceutical agents, of which only approximately 4,000 are approved and marketed.

Marketed drugs may not be exclusively effective in the indication for which they are approved but relevant to other indications, including rare diseases, and thus represent an untapped potential for addressing unmet medical needs and recouping research and development costs.

Many of the remaining agents are active clinical candidates that are shelved or have failed for reasons other than toxicity, which offers the opportunity to re-innovate for other indications or patient segments.

Such agents potentially represent an unrealized investment of billions of research and development dollars by the private and public sectors, while failing to remediate immeasurable patient suffering and sacrifice during clinical development.

Also, these compounds may have known pharmaco-dynamic and pharmaco-kinetic properties, potentially 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 we believe may contribute to high blood-brain barrier permeability, and therefore could 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 LLC 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.

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

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

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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 that our method of finding potential product candidates gives us a higher probability of success because it combines AI 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.

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

Our platform led to the identification and rapid development of IGALMI, as well as the advancement of other potential indications.

Our platform led to the identification of Dex, the rapid development of BXCL501, and its approval by the FDA as IGALMI TM , as well as the advancement of BXCL501 for other potential indications.

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

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

Below are estimated statistics associated with annual agitation episodes associated with bipolar disorders, schizophrenia, and Alzheimer’s disease in the U.S.

We estimate that in the United States, there are approximately 1.9 million patients diagnosed with Alzheimer’s disease-related dementia (“AAD”) and that those patients experience agitation at a rate of about six episodes per month, on average.

In addition, we estimate that there are approximately 1.6 million Americans diagnosed with schizophrenia or bipolar disorders and that those patients experience agitation at a rate of about three episodes per month, on average.

We, therefore, believe there is significant potential market opportunity for BXCL501 if approved for use in these patient populations in the at-home setting.

foregoing estimates of the incidence of each patient population and the number of agitation episodes experienced and potential market opportunity are based on management’s estimates and third-party data, which may be materially different from actual agitation episodes and actual treatable patients.

For additional information regarding risks associated with these estimates, see Part I, Item 1A, Risk Factors “— Our estimated number of episodes of agitation and our corresponding estimated total addressable market are subject to inherent challenges and uncertainties.

If we have overestimated the number of episodes or the size of our total addressable market for our current and potential future products or product candidates, or if any approval that we obtain is based on a narrower definition of the patient population, our revenue and ability to achieve profitability may be harmed.”

Treatments for Agitation

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

We believe that, based on the current method of administration of oral medicine for agitation, the orally dissolving, mucoadhesive film offers compliance advantages as it will more likely prevent patients from avoiding treatment.

We believe that, based on the current method of administration of oral medicine for agitation, an orally dissolving, mucoadhesive film could offer compliance advantages by making it less likely that patients will avoid treatment.

The sublingual or buccal route of administration is an accepted alternative to oral administration of drug delivery to the central nervous system when rapid onset or more controlled delivery is required.

Currently, there are six products approved for film administration, including our product, IGALMI.

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.

Currently, there are six products approved for film administration, including our product, IGALMI TM .

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

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

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α2a Adrenergic Receptor and NE Role in Acute Agitation

BXCL501 is designed to be easily administered and have a rapid onset of action.

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

BXCL501 is a sublingual formulation of Dex that is designed to be easily administered and have a rapid onset of action.

Dex is approved in the U.S.

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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 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 film and at much lower doses will allow for ease of administration in settings where rapid acute treatment of agitation is needed.

IGALMI Commercial Progress

Since the commercial launch of IGALMI in July 2022, our commercial progress has yielded more than 65 formulary wins.

Additionally, more than 600 hospital pharmacy and therapeutics (“P&T”) committees are scheduled to review and vote on IGALMI inclusion in their formularies over the next several months.

In addition, nearly 50% of target beds are now under group purchasing organization (“GPO”) contracts as of February 28, 2023.

We are in active discussions with other leading GPOs.

This has been primarily accomplished with our initial 26-person institutional sales force since our trade launch in July 2022.

We expanded our institutional sales force to 70 representatives in December 2022 to cover over 1,700 target hospitals as of February 28, 2023.

During the fourth quarter of 2022, our Corporate Account Director team was focused on 59 high-volume, high-control integrated delivery network (“IDN”) accounts.

Formulary voting is currently scheduled for approximately 70,000 (25%) of our target IDN beds, with approximately 7,000 (2%) now approved.

We believe the value proposition for IGALMI will continue to evolve as we learn from market response.

Staff shortages in the emergency departments (“EDs”) of hospitals, complicated by the potential for staff injuries due to agitated patients, are becoming increasingly concerning to hospital administration.

Due to limited agitation treatment options in the ED, IM injection is often used.

This approach can be both confrontational and coercive to agitated patients, often making their symptoms worse.

Moreover, these patients may occupy ED beds for extended periods due to unresponsive sedation, reducing throughput and increasing costs.

These conditions continue to reinforce the need for a drug with IGALMI’s profile.

We are seeing our marketing efforts continue to drive awareness through an extensive convention presence, peer influence programs, and digital marketing campaigns.

As of December 31, 2022, our peer-led IGALMI speaker programs have educated over 1,000 health care providers, while we have had over 350,000 web sessions on our branded health care provider website and additional touchpoints through other digital marketing efforts.

With our sales team expansion and as we begin to garner additional P&T formulary adoption, we plan extensive digital and peer-to-peer marketing efforts in the first half of 2023 to continue to raise awareness, reinforce key messages, and drive additional demand.

In addition, we have planned promotional presence at leading national and regional conferences in 2023.

If IGALMI is approved outside the U.S., we would consider launching the product through collaborations with third parties.

Our continued commercialization efforts for IGALMI are designed to build the foundation to launch additional potential follow-on indications, if any, paving the way for our expanding neuroscience business.

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

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

IGALMI TM Commercial Progress

We continue to support IGALMI™ in the hospital setting through limited and focused commercial activity.

On August 14, 2023, the Company announced it had implemented a shift in commercial strategy for IGALMI TM in the institutional setting, a reduction of in-hospital commercialization expenses, a suspension of programs no longer deemed core to the Company’s business, and a shift to focus on the development of BXCL501 for use in the at-home and care facilities in the treatment of acute agitation in schizophrenia and bipolar disorders, and in the treatment of acute agitation (non-daily) associated with dementia due to probable Alzheimer’s disease (collectively, the “Reprioritization”).

Following the Reprioritization, a small Corporate Account Director (“CAD”) team supports current customers and targeted Integrated Delivery Networks (“IDNs”) with educational support and contracting opportunities, while our trade operation supports customers with drug supply.

The goal of this approach is to help maintain current business and potentially broaden IGALMI TM utilization through volume contracting.

Over time, we believe the revised commercial effort is expected to allow the Company to continue to make inroads into the institutional market in a more cost-efficient manner.

Commercial efforts for the IGALMI TM launch were impacted significantly in the six months ended December 31, 2023 due to the reduction in force, which included the elimination of sales, marketing, and commercial operations staff.

The realigned CAD team generated $376,000 in net revenue for the three-month period ended December 31, 2023 through legacy sales and volume-based contracts, up from $341,000 for the three-month period ended September 30, 2023.

Net revenues from IGALMI™ product sales for the years ended December 31, 2023 and 2022 were $1.4 million and $375,000 respectively.

On October 30, 2023, we announced that the Centers for Medicare & Medicaid Services (“CMS”) assigned a new J-Code for IGALMI TM (J1105).

J-Codes are permanent codes used by healthcare providers, commercial insurance plans, and government payers to help standardize the reimbursement process.

A J-Code can help simplify claims submission as compared to use of a miscellaneous or unlisted code, which in turn can streamline the billing and reimbursement process.

The J-Code for IGALMI TM has been published online in the CMS HCPCS Application Summaries and Coding Recommendations, Third Quarter, 2023 HCPCS Coding Cycle.

We believe this J-Code, which became effective on January 1, 2024, will facilitate access to IGALMI TM for patients with agitation associated with bipolar disorder or schizophrenia.

If IGALMI TM is approved outside the U.S., we would consider launching the product through collaborations with third parties.

Our continued commercialization efforts for IGALMI TM are designed to build the foundation to launch additional potential follow-on indications, if any, paving the way for our expanding neuroscience business.

BXCL501 Development

In indications other than approved by the FDA as IGALMI, BXCL501 remains an investigational, proprietary, orally dissolving film formulation of Dex, a selective alpha-2 receptor agonist, targeting symptoms from stress-related

behaviors such as agitation.

BXCL501 is our most advanced neuroscience clinical program, being evaluated for at-home acute treatment of agitation related to schizophrenia and bipolar disorders, the acute treatment of agitation related to Alzheimer’s disease, and as an adjunctive treatment for MDD in conjunction with the use of Selective Serotonin Reuptake Inhibitors (“SSRIs”) or Serotonin Norepinephrine Reuptake Inhibitors (“SNRIs”) alone.

As a selective adrenergic agent with a sublingual or buccal route of administration, BXCL501 is designed to be easily administered and has shown a rapid onset of action in multiple clinical trials, including clinical trials studying patients with schizophrenia, bipolar disorders, and Alzheimer’s disease.

In indications other than those approved by the FDA as IGALMI TM , BXCL501 remains an investigational, proprietary, orally dissolving film formulation of Dex, a selective alpha-2 receptor agonist, targeting symptoms from stress-related behaviors such as agitation.

BXCL501 is our most advanced neuroscience clinical program, being evaluated for the at-home acute treatment of agitation related to bipolar disorders or schizophrenia and for the acute treatment of agitation (non-daily) in patients with dementia due to probable Alzheimer’s disease in care facilities and at-home settings.

As a selective adrenergic agent with a sublingual or buccal route of administration, BXCL501 is designed to be easily administered and, compared to medications that may take days or weeks, has shown a relatively rapid onset of action in multiple clinical trials, including those studying patients with bipolar disorders, schizophrenia, and Alzheimer’s disease.

We believe results from these studies suggest that BXCL501 has the potential to reduce agitation without producing excessive sedation.

We also believe BXCL501 is highly differentiated from antipsychotics, which often produce unwanted side effects such as excessive sedation or extrapyramidal motor effects, currently used as a standard of care to treat agitation.

We also believe BXCL501 is highly differentiated from antipsychotics, which are

currently used as first-line standard-of-care treatments despite often producing unwanted side effects such as excessive sedation or extra pyramidal motor effects.

Managing patient agitation in neuropsychiatric and neurodegenerative disorders represents a significant challenge for physicians and caregivers.

We believe BXCL501 has the potential to address these challenges while providing an efficient treatment regimen for patients.

We also believe that BXCL501, if approved for the respective indications, 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 I and II trials);

and 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 for which agitation is a symptom of the condition or underlying disease, including as an adjunctive treatment for MDD, opioid withdrawal (RELEASE trial), and post-traumatic stress disorder (“PTSD”).

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 for which agitation is a symptom of the condition or underlying disease, including opioid withdrawal and post-traumatic stress disorder (“PTSD”), which are being evaluated in clinical trials run by third-parties.

BXCL501 Clinical Trials

TRANQUILITY Program:

The TRANQUILITY I study of agitation in dementia concluded with a total of 46 subjects in Part B testing the 40mcg dose versus placebo.

The purpose of enrolling this additional cohort was to gather additional evidence supporting dose selection and to provide data for statistical powering of large multiple-site Phase 3 pivotal trials.

All patients were able to take the film themselves and properly place it.

There were no serious adverse events (“SAEs”) related to the drug, and no falls, loss of consciousness, or syncopal events reported.

There were also no local tolerability issues.

The adverse events (“AEs”) observed for 40mcg were consistent with those previously observed for 30mcg, 60mcg, and placebo doses.

The incidence of individual and categorical AEs for the 40mcg dose were lower than the 60mcg group, and similar to the 30mcg dose group.

Efficacy was measured by the change from pre-dose baseline Positive and Negative Syndrome Scale Excitatory Component (“PEC”) total score at two hours, the same primary endpoint utilized in prior pivotal trials of BXCL501.

The 40mcg dose showed statistically significant reductions in PEC total score at two hours and demonstrated statistically significant separation from placebo as early as one hour.

The magnitude of change in PEC total score was statistically greater for the 40mcg dose than that of 30mcg and somewhat less than the 60mcg dose in previous cohorts.

Overall, we believe the 40mcg data support continued evaluation of both 40mcg and 60mcg doses in Phase 3 pivotal trials.

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

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 dementia in assisted living or residential facilities and nursing homes.

Patient enrollment is complete for TRANQUILITY II.

● The program consists of two randomized, double-blind, placebo-controlled, adaptive, parallel group pivotal trials:

TRANQUILITY II and TRANQUILITY III.

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

Patients will self-administer 40mcg or 60mcg of BXCL501 or placebo whenever agitation episodes may occur.

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

Enrollment is complete and nearing completion of a three-month observation period.

We expect to announce top-line data in the second quarter of 2023.

● TRANQUILITY III enrolled patients with moderate to severe dementia who require moderate or greater assistance with activities of daily living.

This study initiated with the first patient dosed in December 2022.

● The studies are designed to assess agitation as measured by the changes from baseline in the PEC total score and total Pittsburgh Agitation Scale scores.

For both studies, the primary efficacy endpoint will be the change in PEC total score from baseline measured at two hours after the initial dose.

● 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 of BXCL501 in continued use.

This study is expected to initiate in the second half of 2023 .

Bipolar or Schizophrenia-related Agitation (At-Home Use)

We met with the FDA in July 2022 to discuss the design of a registrational study to support potential expansion of BXCL501’s approved indication to enable at-home use for the acute treatment of agitation related to schizophrenia and bipolar disorders.

We believe we reached alignment with the FDA on key design features with respect to our SERENITY III study, which consists of two parts.

The first part is comparable to the pivotal SERENITY I and II studies.

Using similar inclusion and exclusion criterion in an inpatient setting, acutely agitated patients with schizophrenia or bipolar disorders will be randomized to self-administer either 60mcg of BXCL501 or placebo in a double-blind placebo-controlled trial.

The primary endpoint of Part 1 of the study is the PEC total score change from baseline at two hours post-dose.

The secondary objective is to assess safety and tolerability.

The first part of SERENITY III initiated with the first patients dosed in December 2022.

Part 1 enrollment was completed in March 2023, with top-line efficacy results also expected in the second quarter of 2023.

Part 2 of the study is expected to initiate in the second quarter of 2023.

The primary objective is to assess the safety of a 60mcg dose when self-administered in an at-home setting.

Patients with schizophrenia or bipolar disorders and a history of agitation will be randomized to self-administer 60mcg of BXCL501, or placebo, when they may experience an episode of acute agitation at-home over a period of three months.

Patients will return for regularly scheduled outpatient visits where investigators will review information collected from patients and reliable informants to determine and characterize any adverse effects.

Major Depressive Disorder

We expanded our development pipeline to evaluate BXCL501 as a potential adjunctive treatment for MDD.

The initial clinical study in this program is a double-blind, placebo-controlled, multiple ascending dose trial designed to evaluate the safety and tolerability of daily doses of BXCL501 in healthy volunteers.

We expect to report top-line results in the second quarter of 2023.

As of February 28, 2023, seven dosing cohorts of healthy adult volunteers have been completed, including cohorts receiving 30mcg, 60mcg, 80mcg, or 120mcg BXCL501 (or placebo) once daily for seven days, and with cohorts receiving twice-a-day dosing of 30mcg in the morning and 60mcg in the evening (or placebo).

A cohort of subjects received 40mcg in the morning and 80mcg in the evening (or placebo).

The final cohort tested 60mcg in the morning and 80mcg in the evening (or placebo) plus twice daily 30 milligrams (“mg”) duloxetine in the morning and evening.

BXCL501 has been generally well tolerated across completed cohorts.

We anticipate that the safety and tolerability results of this study will enable dose selection for a Phase 2 proof-of-confidence trial in MDD.

Acute Agitation Associated with Dementia due to Probable Alzheimer’s Disease (AAD)

On June 29, 2023, we announced positive topline results from TRANQUILITY II, a randomized, double-blind, placebo-controlled, parallel group trial that evaluated the safety and efficacy of BXCL501 for the acute treatment of Alzheimer’s-related agitation in adults 65 years and older with mild to moderate dementia in assisted living facilities (“ALFs”) and residential care settings who required minimal assistance with activities of daily living.

The trial dosed 149 patients.

Randomized patients self-administered 40 mcg or 60 mcg of BXCL501 or placebo for agitation episodes that occurred over a 12-week period.

The primary endpoint was the change from pre-dose in PEC total score at 2 hours post-dose for the first treated episode of agitation.

The key secondary efficacy endpoints were PEC change from pre-dose at 1-hour post-dose of study treatment for the first treated episode of agitation, and PEC change from pre-dose at 30 minutes post-dose of study treatment for the first treated episode of agitation.

The Phase 3 trial met its primary efficacy endpoint with the 60 mcg dose;

a statistically significant and clinically meaningful 7.5 point reduction from baseline in Positive and Negative Syndrome Scale-Excitatory Component (“PEC”) total score was observed at 2 hours versus 5.4 with placebo (p=0.0112).

The 60 mcg dose also met the first key secondary endpoint of reducing agitation symptoms at 1 hour during the first episode of agitation (p=0.0185) but did not meet the other key secondary endpoint of change from baseline in PEC score at 30 minutes.

Efficacy for this dose was supported by several secondary measures, including CGI-Improvement and Agitation-Calmness Evaluation Scale.

Most patients (76%) responded to the first 60 mcg dose and were determined to be “Very Much” or “Much Improved” (CGI-I of 1 or 2, respectively) compared to 50% with placebo.

The primary endpoint was not met for the 40 mcg dose, with a 5.7 point reduction from baseline in PEC score.

On June 29, 2023, we also announced that we had learned that an investigator in this study, who enrolled approximately 40% of the patients, engaged in misconduct.

Since that time, we have taken steps to further investigate and evaluate the conduct of the TRANQUILITY II trial at this clinical site.

Based on these steps to date, we believe that there have been no further instances of misconduct or fraud or other findings that adversely impact the data integrity or reliability of the eligibility, safety, and efficacy data obtained at the clinical trial site in question.

Our TRANQUILITY III trial was designed to evaluate the safety and efficacy of BXCL501 in patients residing predominantly in nursing homes with moderate to severe dementia due to Alzheimer’s disease who require moderate or greater assistance with activities of daily living.

We halted additional enrollment in this Phase 3 after initial enrolled patients were observed to have more frequent episodes of agitation than originally anticipated, suggesting that agitation may present chronically in this population.

Due to the chronic nature of agitation episodes observed in this population thus far, we believe that continued evaluation of BXCL501 in this population would require a different development program targeting more frequent or chronic use.

We have chosen to focus our development efforts on the urgent need for episodic treatment in the care facility and at-home setting.

In a Type B/Breakthrough Therapy designation meeting with the FDA on October 11, 2023, we reviewed our

TRANQUILITY clinical trial program and discussed the data package required to support submission of an sNDA for the potential approval of BXCL501 for the acute treatment of agitation in patients with mild to moderate dementia due to probable Alzheimer’s disease in the ALF and at-home settings.

Specifically, we sought feedback from the FDA as to whether our data package consisting of TRANQUILITY I and II, along with the clinical pharmacology and toxicology programs previously discussed with the FDA, would be sufficient to support an sNDA submission for the potential use of BXCL501 to treat agitation in patients with mild to moderate dementia due to probable Alzheimer’s disease in either the at-home or ALF setting, or, if not, what additional data would be required.

Based on the FDA’s feedback in this meeting, we understand that the FDA will require additional efficacy data, including repeat efficacy data, and that it requested long-term safety data.

We therefore requested another meeting with the FDA to further discuss the additional data that would be required to support an sNDA submission.

On February 20, 2024, we held a Type B/Breakthrough Therapy designation meeting with the FDA.

The original purpose of this meeting was to obtain feedback on the design of a proposed at-home study that did not include caregiver-collected efficacy endpoints, based on our belief that obtaining caregiver assessments of efficacy would be challenging.

We believe there are no validated caregiver endpoints for assessing efficacy in Alzheimer’s disease patients in the at-home setting.

As a result, we focused on requesting feedback from the FDA regarding our proposal for an at-home clinical study with safety as the primary objective, and to better understand what additional data would be required to submit an sNDA to support labeling for BXCL501 to include the acute treatment of agitation associated with dementia in probable Alzheimer’s disease or, in the alternative, in this population in the care setting only.

In its preliminary responses, the FDA reiterated its prior comments that we generate additional efficacy data, including repeat-dose efficacy data, to support an sNDA submission, as the FDA indicated that our proposed efficacy database, which currently includes the 70 patients who have been treated with 60 mcg of BXCL501 in TRANQUILITY I and TRANQUILITY II, would not contain substantial evidence of effectiveness absent additional data.

The FDA advised that we generate the necessary efficacy data in care facilities prior to conducting any trials in the at-home setting.

In addition, the FDA indicated the need to generate long-term safety data to support an sNDA submission, including from probable Alzheimer’s disease patients exposed to BXCL501, for up to one year.

We have received the final meeting minutes from the FDA, which we believe are consistent with the FDA’s preliminary responses and the subsequent meeting discussion.

Based on the FDA’s feedback, we are currently planning to generate additional Phase 3 efficacy and safety data, in a variety of relevant care-facility settings and across severity of dementia using the Positive and Negative Syndrome Scale-Excitatory Component (“PEC”) as the primary efficacy measure, as used in the prior TRANQUILITY II study.

In addition, we plan to discuss the details of the requirement for long-term safety data at a future meeting with the FDA.

Also, although we announced in November 2023 that we were planning to conduct a Phase 3 trial in the at-home setting, with safety as the primary objective (TRANQUILITY At Home), given the priority to expand the database to generate additional efficacy and safety data in care facilities, we are re-evaluating the timing for initiating TRANQUILITY At Home.

SERENITY Program:

Agitation Associated with Bipolar Disorders I and II and Schizophrenia (at-home use)

We initiated the SERENITY III clinical study of BXCL501 in patients with agitation associated with bipolar disorders or schizophrenia in SERENITY III, which consists of two parts.

The first part was comparable to our pivotal SERENITY I and II studies.

Using similar inclusion and exclusion criterion under a well-controlled in-patient setting, acutely agitated patients with schizophrenia or bipolar disorders were randomized to self-administer either 60 mcg of BXCL501 or placebo in a double-blind placebo-controlled trial.

The primary endpoint of Part I was efficacy, as measured by the change in PEC score change from baseline at two hours post-dose.

The secondary objectives of Part I were safety and tolerability.

On May 25, 2023, we reported topline results from Part I of the study.

Although the trial did not meet its primary efficacy endpoint, we believe the efficacy results, observed with the 60 mcg dose, representing half of the lowest approved dose of IGALMI TM for in-patient use (120 mcg), were promising.

Specifically, greater than 50% of individuals were responders, defined as those patients who achieved a 40% or greater reduction in PEC score.

Furthermore, this population responder rate was consistent and dose-proportionate to the same response rates observed in the larger SERENITY I and II trials.

Although the primary efficacy endpoint as a group mean change in PEC score from baseline at 2 hours was not statistically significant at the primary endpoint at 2 hours (p=0.077), BXCL501 statistically separated from placebo at 4 hours (p=0.049).

Part II of the SERENITY III study was designed to evaluate the same dose tested in Part I, 60 mcg (with an optional additional 60 mcg dose), but in the at-home setting and focusing on safety only.

However, because the trial did not meet its primary efficacy endpoint using this 60 mcg dose in Part I, we paused continuation of Part II of the study pending feedback from the FDA.

We held a Type C meeting on November 8, 2023 with the FDA to discuss changes to Part II of our SERENITY III study.

We proposed the evaluation of an 80 mcg dose based on previous clinical experience with this dose during our Phase 1b trial in schizophrenia patients with agitation, and pharmacokinetic and pharmacodynamic modeling suggesting that use of an 80 mcg dose of BXCL501 could provide an optimal balance between safety and efficacy for at-home use.

Based on feedback from the FDA during the meeting, we made the decision to evaluate a 120 mcg dose in the at-home setting.

The 120 mcg dose has already demonstrated efficacy based on the approved conditions of use for IGALMI TM (when administered under the supervision of a healthcare provider, for a single agitation episode), so we sought further feedback from the FDA regarding the proposed design of this study amendment in a request for a follow-up meeting with the FDA, which was held on March 6, 2024.

Based on the FDA’s feedback in advance of and during the March 6, 2024 meeting, we plan to move forward to evaluate at-home use of the 120 mcg dose of BXCL501, with safety as the primary objective and efficacy measures as exploratory endpoints to support continued efficacy in the at-home setting as recommended by the FDA in the November 8, 2023 meeting, for the acute treatment of agitation in bipolar disorders or schizophrenia.

We also plan to conduct a clinical study designed to enroll approximately 30 patients to evaluate the correlation between patient-reported or informant-reported efficacy with trained rater-reported efficacy using PEC measurements, which the FDA had previously recommended.

IGALMI TM is already approved at the 120 mcg dose based on efficacy data that we previously generated in treating a single episode of agitation.

Consistent with the data generated to date, the label for IGALMI TM currently includes a limitation on use (“LOU”), noting the lack of efficacy or safety data beyond 24 hours following the first dose.

During our March 6, 2024 Type C meeting with the FDA, we discussed, among other things, whether evaluating the at-home use of BXCL501 120 mcg, with safety as the primary objective and efficacy measures as exploratory endpoints, if successful, could support the submission of an sNDA seeking expansion of the current label for IGALMI TM 120 mcg to allow at-home use and labeling without the current LOU.

Based on FDA feedback, we believe that our ability to seek labeling without the current LOU will depend, in part, on the number of agitation episodes we observe during our planned study period.

We plan to provide further guidance regarding our plans for the SERENITY program following receipt of the final meeting minutes from the FDA.

Adjunctive treatment in Major Depressive Disorder (“MDD”)

We were previously evaluating BXCL501 as an adjunctive treatment for MDD.

The initial clinical study in this program was a double-blind, placebo-controlled, multiple ascending dose (“MAD”) trial to evaluate the safety and tolerability of daily doses of BXCL501 in healthy volunteers.

On May 16, 2023, we reported positive topline results from a MAD study.

It enrolled 125 healthy adult volunteers across seven different cohorts in a 2:1 randomization to BXCL501 or placebo film.

Healthy volunteers were dosed for 7 consecutive days.

Both safety and pharmacokinetics were assessed.

The study included 7 cohorts.

Four distinct cohorts received 30 mcg, 60 mcg, 80 mcg, or 120 mcg doses of BXCL501 or placebo once daily.

Two additional dosing cohorts received twice-daily (BID) BXCL501 at either 30 mcg in the morning and 60 mcg in the evening, or 40 mcg in the morning and 80 mcg in the evening.

The final escalation cohort evaluated BXCL501 at 60 mcg in the morning and 80 mcg in the evening in combination with 30 mg of duloxetine BID.

BXCL501 was generally well tolerated across all dosing cohorts.

Based upon pre-specified stopping criteria, a maximum tolerated dose was not reached.

All adverse events were reported as mild or moderate.

As part of the Reprioritization announced on August 14, 2023, we have paused our plan to develop a Phase 2 human proof-of-concept trial design to investigate BXCL501 as a potential adjunctive treatment and its potential accelerant effect in combination with first-line selective serotonin reuptake inhibitors or serotonin-norepinephrine reuptake inhibitors.

Pediatric Study

In June 2021, we initiated a global clinical trial designed to evaluate the safety and efficacy of BXCL501 in the acute treatment of agitation associated with pediatric schizophrenia and bipolar disorders, in part to fulfill pediatric study requirements agreed to with the FDA in connection with IGALMI’s approval.

The trial protocol has been reviewed by

the FDA, as well as by the European Medicines Agency (“EMA”), to fulfill potential commitments to study the effects of BXCL501 in pediatric patients ages 13-17 with schizophrenia and ages 10-17 with bipolar disorders.

The trial protocol has been reviewed by the FDA, as well as by the European Medicines Agency, to fulfill potential commitments to study the effects of BXCL501 in pediatric patients ages 13 to 17 with schizophrenia and ages 10 to 17 with bipolar disorders.

Enrollment of patients with schizophrenia, schizoaffective disorder, bipolar I, and bipolar II disorder is ongoing in this multisite, double-blind, placebo-controlled parallel group trial.

Approximately 54% of the 150 total subjects have been enrolled in the U.S.

and several European sites are planned to initiate enrollment in the second quarter of 2023.

and 81 of such subjects have completed the clinical trial.

In July 2023, we stopped activities in the European region as enrollment and site recruitment was unproductive.

Similar to our registration trials in schizophrenia and bipolar disorder (SERENITY I and II), the primary endpoint is the change from baseline PEC total score at two hours.

portion of this program remains active following the Reprioritization.

Additional Neuroscience Opportunities

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

The Pharmacotherapies for Alcohol and Substance Use Disorders Alliance (“PASA”) is funded by the Congressionally Directed Medical Research Programs as part of its Alcohol and Substance Use Disorder Research Program.

The goal of PASA is to fund research for developing new medications that can improve treatment outcomes for alcohol and substance use disorders;

especially as related to post-traumatic stress disorder (“PTSD”) and other psychological disorders.

In December 2020, the Veterans Affairs Connecticut Healthcare System and Yale University Medical School were awarded a grant by PASA to evaluate BXCL501 in patients with PTSD who suffer from alcohol use disorder (“AUD”).

This study is currently underway and the Company is providing BXCL501 for the study to evaluate whether BXCL501 has the potential to treat AUD in this patient population.

As announced on August 1, 2022, the National Institutes of Health (“NIH”) National Institute on Drug Abuse awarded a grant to Columbia University, as part of the NIH’s Helping to End Addiction Long-term (“HEAL”) initiative, to fund clinical testing of BXCL501 as a potential treatment for opioid withdrawal.

The goal of the NIH HEAL Initiative program is to support preclinical and clinical research studies that will have high impact and quickly yield the necessary results to advance medications closer to FDA approval to prevent and treat opioid use disorder and overdose.

The Company will supply the drug product for the conduct of this multi-site study;

the first patient was recently dosed in this study, which is expected to be completed in 2024.

We are currently conducting studies designed to develop algorithms for wearable technologies that are designed to detect early signs of agitation.

We completed a study in October 2022 using wearable technologies (i.e., smart watches and phones) in an effort to detect signals related to agitation in healthy subjects that were administered Yohimbine, a compound that can elicit a mild hyper-arousal in humans;

hyper-arousal is related to agitation.

Data from this study were analyzed and identified a robust signal that differentiated Yohimbine-treated subjects from those that received a placebo.

We plan to utilize the data from this study to train an algorithm to predict emergence of agitation in patients, which we believe, if successful, may allow for early treatment and prevention of agitation.

Government-Supported Investigator-Initiated Trial Programs

The Company has been awarded key opportunities for the development of BXCL501 in post-traumatic stress disorder (“PTSD”), alcohol use disorder (“AUD”), and opioid use disorder (“OUD”).

These are being funded through Cooperative Agreements with the U.S.

Department of Defense Congressionally Directed Medical Research Program and National Institute on Drug Abuse (“NIDA”).

Clinical and regulatory responsibilities are led by clinical researchers and regulatory staff at the Veterans Affairs Connecticut Healthcare System, Yale University Medical School, RTI International, Columbia University New York State Psychiatric Institute, and NIDA.

The Company has retained all rights to commercialization of BXCL501 in all potential indications evaluated in clinical trials supported by the U.S.

Opioid Use Disorder Program

As previously announced, NIDA awarded a grant to Columbia University to fund clinical testing of BXCL501 as a potential treatment for opioid withdrawal in patients diagnosed with OUD.

The original 160-patient, three-site, four-arm study is a randomized, double-blind, double-dummy inpatient study comparing BXCL501 (180 mcg and 240 mcg BID), lofexidine (as a positive control), and placebo.

The study’s goal is to evaluate the safety and efficacy of BXCL501 relative to lofexidine and placebo in subjects with OUD.

A majority of OUD patients participating in the study are anticipated to be exposed to fentanyl adulterated or associated with xylazine .

To date, a ll three initial sites have recruited, enrolled, and dosed patients diagnosed with OUD who are physically dependent on opioids, including prescription opioids.

The Company is supplying the drug product for the conduct of this study, which is sponsored by Columbia University .

We expect that the results from current study will be used to select a recommended dose of BXCL501 to compare to placebo in a later outpatient Phase 3 study sponsored by NIDA.

On November 6, 2023, we announced that NIDA has requested Columbia University, the trial coordinator, to add a fourth site to target trial completion in 2024.

The patient screening and enrollment process for the fourth site commenced in March 2024.

Pending favorable results, after completion of the trial, we plan to seek FDA feedback on potential registrational paths.

Alcohol Use Disorder with Comorbid Post-traumatic Stress Disorder Program

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

Department of Defense’s Congressionally Directed Medical Research Program with the

overall objective to evaluate BXCL501 in patients who suffer from AUD with comorbid PTSD.

The Company provided BXCL501 for the inpatient Alcohol Interaction Study, which has been completed.

We understand Yale is currently seeking approval from its IRB and allowance from the FDA to proceed with a trial evaluating the effects of up to 80 mcg BID of BXCL501 per day for 28 days on alcohol consumption, PTSD symptoms, cognitive function, memory, sleep, and mood in patients diagnosed with mild, moderate, or severe AUD and who meet Criterion A for comorbid PTSD.

The new outpatient study has received funding approval from the Pharmacotherapies for Alcohol and Substance Use Disorders Alliance (funded through a Cooperative Agreement between the U.S.

Department of Defense Congressionally Directed Medical Research Program and RTI International).

We believe the results from this study will be used to inform a Phase 3 study intended to commence with support by the alliance.

Algorithms for Wearable Technologies

The Company completed a healthy volunteer study designed to train an algorithm to detect a state of hyper-arousal, which often precedes agitated behaviors.

In hyper-aroused healthy volunteers, robust signals were measured using wearable technology (phones and watches).

As part of the Reprioritization announced on August 14, 2023, we deprioritized our plan to develop wearable technology.

BXCL502 Development

We identified a second neuropsychiatric drug candidate, BXCL502, through our AI-based platform.

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 or other stress-related illnesses.

We identified a second neuropsychiatric drug candidate, BXCL502 − Latrepirdine (Dimebon) − through our AI-based platform.

We plan to evaluate BXCL502 initially as a monotherapy and possibly in combination with BXCL501 for the chronic treatment of agitation in patients with dementia and acute stress disorder.

The active pharmaceutical ingredient (“API”) underlying BXCL502 is designed to affect serotonergic signaling in the brain.

Our preclinical data suggests BXCL502 has the potential to treat stress-related neuropsychiatric symptoms in dementia or other illness.

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

Formulation and clinical development planning are currently under way with BXCL502.

Our preclinical data suggests BXCL502 has the potential to treat stress-related neuropsychiatric symptoms in dementia and other stress-related disorders.

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

Formulation and further clinical development planning are currently under way with BXCL502 and are expected to continue in 2024.

Other Product Candidates Leveraging the AI Platform

We are targeting neuropsychiatric disorders with high unmet medical needs.

Our focus is on treating stress-related symptoms, such as agitation, that are responsible for increased levels of healthcare burden.

We are also using AI approaches and machine learning to identify new candidates for rare neurological diseases and to re-innovate late-stage drug candidates, such as BXCL503, targeting apathy in dementia, and BXCL504, targeting aggression in dementia.

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.

The agents identified must be those we believe can enter the clinic with the potential for an efficient development path (similar to BXCL501).

We are also developing an AI-based research and development platform to help identify potential product candidates and indications across a range of treatment areas.

Neuroscience Competition

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

The neuroscience and rare disease segments of the industry

are highly competitive.

The neuroscience and rare disease segments of the industry are highly competitive.

While we believe that our technology, development experience, and scientific knowledge provide competitive advantages, we face potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical, and biotechnology companies, academic institutions, governmental agencies, and public and private research institutions.

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Mergers and acquisitions in the pharmaceutical, biotechnology, and diagnostic industries may result in even more resources being concentrated among a smaller number of our competitors.

These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and in establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to or necessary for our programs.

These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and in

establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to or necessary for our programs.

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

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Any product candidates that we successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future.

IGALMI and any of our other product candidates that are approved, if any, will compete with the drugs discussed below, in addition to any other drugs currently in development.

IGALMI TM and any of our other product candidates that are approved, if any, will compete with the drugs discussed below, in addition to any other drugs currently in development.

Drugs used for the acute treatment of agitation related to schizophrenia and bipolar disorder are antipsychotics frequently administered via IM injection that typically requires patient restraint.

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We currently rely on strategic manufacturing partners, in particular ARx, LLC (“ARx”), and expect to continue to rely on third parties for the manufacture of our product candidates for clinical research and our products for commercialization efforts.

ARx has agreed to exclusively manufacture and supply all of our worldwide supply of film formulation of dexmedetomidine to be used for the commercial supply of IGALMI and for ongoing clinical trials of BXCL501, subject to certain alternative supply provisions.

ARx has agreed to exclusively manufacture and supply all of our worldwide supply of film formulation of dexmedetomidine to be used for the commercial supply of IGALMI TM and for ongoing clinical trials of BXCL501, subject to certain alternative supply provisions.

BXCL501 drug product is manufactured using commercially available components and packaging materials.

The equipment employed for manufacture and analysis are consistent with standard pharmaceutical production.

The equipment employed for manufacture and analysis is consistent with standard pharmaceutical production.

Neuroscience Commercialization

We plan to retain worldwide commercialization rights for IGALMI and other approved product candidates, if any, but could consider collaboration opportunities to maximize returns or facilitate commercialization efforts in foreign jurisdictions.

For additional information regarding our commercialization efforts for IGALMI, see above under “IGALMI Commercial Progress.”

We have limited experience commercializing products, however, in connection with the FDA approval of IGALMI, we have built out our in-house commercial organization and capabilities.

We intend to leverage our in-house commercial organization, and will add to it where necessary, to support any additional approved product candidates.

We may consider partnerships, joint ventures, and other business transactions and structures for markets outside the U.S.

We plan to retain worldwide commercialization rights for IGALMI TM and other approved product candidates, if any, but could consider collaboration opportunities to maximize returns or facilitate commercialization efforts in foreign jurisdictions.

For additional information regarding our commercialization efforts for IGALMI TM , see above under “IGALMI TM Commercial Progress.”

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

Clinical data, the size of the development programs, the size of the target market, the required commercial infrastructure, and manufacturing needs may all influence global commercialization strategies.

Credit Facilities

In April 2022, we entered into financing agreements with affiliates of Oaktree Capital Management, L.P.

and Qatar Investment Authority that provides for up to $260 million in gross funding to support the Company’s commercial activities of IGALMI sublingual film and the expansion of clinical development efforts of BXCL501, which includes a Phase 3 program for the acute treatment of agitation in patients with Alzheimer’s disease, and for general corporate purposes.

Neuroscience Intellectual Property

Our policy is to protect and enhance the proprietary technologies, inventions, and improvements that are commercially important to our business by filing patent applications in the U.S.

and other jurisdictions related to our proprietary technology, inventions, improvements, and product candidates.

and other jurisdictions related to our

proprietary technology, inventions, improvements, and product candidates.

We also rely on trademarks, trade secrets, and know-how relating to our proprietary technologies and product candidates, continuing innovation, and in-licensing technology and products.

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We also plan to rely on data exclusivity, market exclusivity, and patent term extensions when available.

We have multiple patent families filed to protect our neuroscience portfolio including the BXCL501 program.

As of January 31, 2023, our neuroscience patent portfolio included four Patent Cooperation Treaty (“PCT”) applications not yet in the national phase, 13 U.S.

utility applications, five issued U.S.

utility patents, four U.S.

provisional patent applications, 87 pending non-U.S.

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

patents (including three in Japan), one design patent application, which is a U.S.

design application, and 34 allowed or registered design patents (including two in Japan).

patents (U.S.

and 11,517,524), directed to our proprietary sublingual film formulation of Dex and issued between 2020 and 2022 with an expiration date no earlier than 2039 are now listed in the FDA's Approved Drug Products with Therapeutic Equivalence Evaluations (the “Orange Book”).

In the same family, we also have allowed/granted patents in mainland China, Taiwan, Australia, Mexico, Europe, and other countries in Asia, and pending applications in the U.S., China, and other major markets.

We have multiple patent families filed to protect our Neuroscience program, including BXCL501.

As of March 15, 2024, our neuroscience patent portfolio included two Patent Cooperation Treaty (“PCT”) applications not yet in national phase, 19 U.S.

utility applications, seven U.S.

provisional applications, one allowed US application, ten issued U.S.

utility patents, 112 pending non-U.S.

utility applications, 18 allowed or granted non-U.S.

patents (including three in Japan), one pending U.S.

design patent application, and 34 allowed or registered design patents (including two in Japan).

utility patents, directed to our proprietary sublingual film formulation of Dex and methods of treating agitation, are now listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (commonly known as the “Orange Book”) for IGALMI™ with expiration dates between 2039 and 2043.

In the formulation family, we also have a granted patent in China, two granted patents in Eurasia, and pending applications in the U.S., China, and other major markets.

We expect that patents issued in this family will expire no earlier than 2039.

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We have applications pending in the U.S., 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 16 regions, including the U.S., 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 2042.

We have one U.S.

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.

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

We also have applications filed in 16 regions/countries, including the U.S., Europe, Japan, and China, directed to methods of treating agitation.

We expect that patents issued from these applications, if any, will expire between 2039 and 2043.

We also have one PCT application directed to treating mania and another to treating depression.

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

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

In March 2024, the Company announced that the European Patent Office granted the Company’s European Patent No.

3,562,486 (the “’486 patent”), which covers the use of dexmedetomidine administered sublingually to treat agitation in individuals with dementia.

The ‘486 patent encompasses a broad range of dosage forms, including films such as BXCL501 (sublingual dexmedetomidine), wafers, and tablets, at dexmedetomidine doses ranging from 3 mcg to 100 mcg.

The ‘486 patent will expire no earlier than December 29, 2037.

In February 2024, the Company announced that the United States Patent and Trademark Office (“USPTO”) had allowed U.S.

Patent Application No.

17/496,470 with claims pertaining to a method of treating agitation in patients with Alzheimer’s disease using the oromucosal administration of 60 mcg of dexmedetomidine in a water-soluble dosage form.

The broad claims encompass film formulations such as BXCL501 (sublingual dexmedetomidine), tablets, or wafers.

The patent, when issued, is expected to have an expiration date of December 29, 2037, subject to patent term adjustment (“PTA”), patent term extension (“PTE”) and terminal disclaimers.

In February 2024, the Company also announced the USPTO issued U.S.

11,890,272 (the “'272 Patent”) on February 6, 2024.

The '272 Patent claims a method of treating agitation associated with schizophrenia or bipolar disorder through oromucosal administration of about 120 mcg to about 180 mcg of dexmedetomidine where the patient has a QT interval of less than 470 msec.

The '272 Patent has an expiration date of July 17, 2040, subject to PTA, PTE and terminal disclaimers.

The '272 Patent has been accepted for listing in the FDA Approved Drug Products with Therapeutic Equivalence Evaluations (commonly known as the “Orange Book”).

In February 2024, the Company also received notice that the USPTO had allowed U.S.

Patent Application No.

18/216,890 with claims pertaining to a method of treating agitation using an oromucosal formulation of dexmedetomidine or a pharmaceutically acceptable salt thereof through the administration of an initial dose of 60 mcg, 80 mcg, 90 mcg, 120 mcg or 180 mcg of dexmedetomidine and, after at least two hours, administering an oromucosal formulation of dexmedetomidine or a pharmaceutically acceptable salt thereof in a second dose of 40 mcg, 60 mcg, 80 mcg or 90 mcg of dexmedetomidine, where the patient has a QT interval of less than 470 msec.

The patent, when issued, is expected to have an expiration date of July 17, 2040, subject to PTA, PTE and terminal disclaimers.

The Company expects that this patent, when issued, will be submitted for listing in the Orange Book with the eight currently listed U.S.

patents for IGALMI™ (dexmedetomidine) sublingual film.

Collectively, these nine patents will in general extend patent protection for IGALMI TM until January 12, 2043.

The term of individual patents depends upon the legal term for patents in the countries in which they are obtained.

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However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date.

The patent term restoration period is generally one-half the time between the effective date

of an investigational new drug, and the submission date of a new drug application (“NDA”), plus the time between the submission date of an NDA and the approval of that application.

The patent term restoration period is generally one-half the time between the effective date of an IND, and the submission date of a new drug application (“NDA”), plus the time between the submission date of an NDA and the approval of that application.

Only one patent applicable to an approved drug is eligible for the extension, and the application for extension must be made prior to patent expiration.

Patent and Trademark Office (“USPTO”), in consultation with the FDA, reviews and approves the application for any patent term extension or restoration.

The USPTO, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration.

In the future, we intend to apply for restorations of patent term for some of our currently owned or licensed patents to add patent life beyond their current expiration date, depending on the expected length of clinical trials and other factors involved in the submission of the relevant NDA.

The term of a patent can also be extended by Patent Term Adjustment (“PTA”) established in 35 USC 154(b).

The intention of the PTA is to accommodate for delays caused by the USPTO during the prosecution of a U.S.

utility or plant patent application.

The term of a patent can also be extended by Patent Term Adjustment (“PTA”) established in 35 U.S.C.

The intention of the PTA is to accommodate for delays caused by the USPTO during the prosecution of a US utility or plant patent application.

Under PTA, the USPTO delay is divided into three types:

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A terminal disclaimer is a statement filed by a patent owner in which the owner disclaims or dedicates to the public the terminal part of the term of a patent.

Often, the terminal disclaimer is filed in cases where at least one claim of a pending application would have been obvious in light of at least one claim in an earlier-filed patent, AKA non-statutory obviousness-type double patenting rejection.

Often, the terminal disclaimer is filed in cases where at least one claim of a pending application would have been obvious in light of at least one claim in an earlier-filed patent, (or non-statutory obviousness-type double patenting rejection).

The patent positions of companies such as ours are generally uncertain and involve complex legal and factual questions.

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Changes in either the patent laws or their interpretation in the U.S.

and other countries may diminish our ability to protect our technology or product candidates and enforce the patent rights that we license and could affect the value of such intellectual property.

and other countries may diminish our ability to protect our technology or product candidates and enforce the patent rights that we license, and also could affect the value of such intellectual property.

In particular, our ability to stop third parties from making, using, selling, offering to sell, or importing products that infringe our intellectual property will depend in part on our success in obtaining and enforcing patent claims that cover our technology, inventions, and improvements.

With respect to both licensed and company owned intellectual property, we cannot guarantee that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications we may file in the future, nor can we be sure that any patents that may be granted to us in the future will be commercially useful in protecting our products, the methods of use, or the manufacture of those products.

In addition, if a pending patent application is granted, it is possible that only a subset of the claims that are currently contained in the pending patent application will be issued.

Further, the coverage claimed in a patent application can be significantly reduced before the patent is issued, and its scope can be reinterpreted after issuance.

Patent and other intellectual property rights in the pharmaceutical and biotechnology space are evolving and involve many risks and uncertainties.

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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 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 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 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.

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.

For additional information regarding intellectual property regulations and risks, see below under “Immuno-Oncology Intellectual Property” and Part I, Item 1A, “Risk Factors - Risks Related to Our Intellectual Property.”

Immuno-Oncology

On April 19, 2022, we announced the formation of a wholly owned subsidiary, OnkosXcel Therapeutics, LLC (“OnkosXcel”) to develop potentially transformative medicines in oncology.

OnkosXcel is our clinical-stage biopharmaceutical subsidiary using proprietary AI capabilities to drive the capital-efficient development of innovative anti-cancer therapeutics.

Our approach to drug discovery leverages the application and methodology of EvolverAI, a proprietary AI-based research and development platform utilized in the successful development of IGALMI with the aim of efficiently identifying and developing immuno-oncology product candidates.

We believe that BXCL701 reflects the

potential of this discovery approach in immuno-oncology.

On April 19, 2022, we announced the formation of a wholly owned subsidiary, OnkosXcel to develop potentially transformative medicines in oncology.

OnkosXcel uses proprietary AI capabilities to drive the capital-efficient development of innovative anti-cancer therapeutics.

On March 14, 2023, we announced that OnkosXcel had confidentially submitted a draft registration statement on Form S-1 with the SEC relating to the proposed initial public offering of its common stock following its conversion into a corporation.

The Company is continuing to evaluate strategic options for OnkosXcel.

With the Company’s Reprioritization announcement on August 14, 2023, further work on the immuno-oncology programs described below have generally been paused, except as noted below.

Our approach to drug discovery leverages the application and methodology of our proprietary AI-based research and development platform, complemented by EvolverAI, utilized in the successful development of IGALMI TM with the aim of efficiently identifying and developing immuno-oncology product candidates.

We believe that BXCL701 reflects the potential of this discovery approach in immuno-oncology.

BXCL701 is an investigational, oral innate immune activator which demonstrated a 25% composite response rate in a Phase 2a clinical trial to treat patients with small cell neuroendocrine (“SCNC”)-phenotype metastatic castration-resistant prostate cancer (“mCRPC”).

We intend to initiate a Phase 2b trial in mCRPC patients with SCNC phenotype in the second half of 2023 following planned meetings with the FDA.

mCRPC is often characterized as a “cold” tumor, that is, a tumor with an immunosuppressive tumor microenvironment (“TME”) and poor immune cell infiltration.

Currently approved checkpoint inhibitors (“CPIs”) that target programmed cell death 1 (“PD-1”), or cytotoxic T-lymphocyte-associated protein 4 have failed to demonstrate meaningful single-agent activity against such difficult-to-treat tumor types, including mCRPC.

BXCL701 is designed to promote an immune induced inflammatory response in the TME primarily via inhibition of dipeptidyl peptidases (“DPP”) 8 and 9, which we believe can provide for enhanced CPI therapeutic utility.

We believe that BXCL701 can potentially provide significant benefits for the approximately 20% of the estimated 288,300 men who will be diagnosed with prostate cancer in the U.S.

in 2023 and are expected to progress to the more aggressive mCRPC form of the disease, including approximately 20% (or approximately 11,532) of those patients who will develop the SCNC phenotype, for which there are currently limited treatment options.

On February 12, 2024, the Company announced that the FDA has designated as a Fast Track development program the investigation of BXCL701 in combination with a checkpoint inhibitor for the treatment of patients with metastatic SCNC with progression on chemotherapy and no evidence of microsatellite instability.

We intend to finalize a potential registrational trial design in mCRPC patients with SCNC phenotype following planned meetings with the FDA in the first half of 2024.

However, the start of any such trial is paused following our Reprioritization.

mCRPC is often characterized as a “cold” tumor, which is a tumor with an immunosuppressive tumor microenvironment (“TME”) and poor immune cell infiltration.

Currently approved checkpoint inhibitors (“CPIs”) that target programmed cell death 1 (“PD-1”) or cytotoxic T-lymphocyte-associated protein 4 (“CTLA-4") have failed to demonstrate meaningful single-agent activity against such difficult-to-treat tumor types, including mCRPC.

BXCL701 is designed to promote an immune-induced inflammatory response in the TME primarily via inhibition of dipeptidyl peptidases (“DPP”) 8 and 9, which we believe can provide enhanced CPIs therapeutic utility.

We believe BXCL701 can potentially provide significant benefits for the approximately 20% of the estimated 299,010 men who will be diagnosed with prostate cancer in the U.S.

in 2024 and are expected to progress to the more aggressive mCRPC form of the disease, including approximately 20%, or 11,960, of those patients who develop the SCNC phenotype, for which there are currently limited treatment options.

Immune checkpoints represent a myriad of inhibitory pathways that act to regulate the duration and intensity of an antigen-induced immune response and factor prominently in mediating immune tolerance.

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As a result, other targets and pathways can be exploited by the tumor to create a TME that can evade the enhanced immunological response enabled by approved CPIs.

While numerous agents designed to target the earlier stages of an immune response are in development for use in combination with CPIs, their activity is restricted to a single component of the immune response.

While numerous agents designed to target the earlier stages of an immune response are in development for use in combination with CPIs, their activity is restricted to a single

component of the immune response.

In contrast, we have developed BXCL701 to simultaneously address multiple components of the immune response, including:

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induction of formation of CTLs and NK cells expressing tumor-killing perforins and granzymes, as well as the formation of memory T cells that can selectively kill returning tumor cells.

Accordingly, we believe BXCL701 may have utility in stimulating increased activation, proliferation, and infiltration of tumor cells by immune effector cells, enabling its potential application in combination with currently approved CPIs, across a range of hematological malignancies and solid tumors, to potentially:

Accordingly, we believe BXCL701 may have utility in stimulating increased activation, proliferation, and infiltration of tumor cells by immune effector cells, enabling its potential application in combination with currently approved CPIs, across a range of solid tumors and hematological malignancies, to potentially:

● Convert immunological cold tumors into ones sensitive to CPIs;

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Central to our drug discovery initiatives are proprietary, AI-driven platform technologies we employ to identify novel therapeutic uses for approved therapeutics and candidates in clinical evaluation.

The first and more advanced of our AI-driven discovery programs is our innate immune modulation program, which supported the pursuit of BXCL701 as a development candidate.

The first and most advanced of our AI-driven discovery programs is our innate immune modulation program, which supported the pursuit of BXCL701 as a development candidate.

We believe the application of this program provides us actionable insights into the inflammasome, a component of the innate immune system responsible for activation of the inflammatory response.

We also believe that novel therapeutic approaches to indications of unmet medical need may also emerge from the intersection of innate immunity modulation and synthetic lethality, an approach focused on the identification of cancer-promoting gene pairs with driver mutations whose concomitant disruption activates PD-1.

We are working to develop our second AI-driven product candidate, BXCL702, by leveraging our innate immunity modulation program and/or our synthetic lethality program, via re-innovation or in-licensing and we intend to nominate a candidate by 2025.

We are working to develop our second AI-driven product candidate, BXCL702, by leveraging our innate immunity modulation program via re-innovation or in-licensing and we intend to nominate a candidate by 2025.

Our Immuno-Oncology Programs

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We believe our product candidates, if successfully developed and approved, have the potential to become compelling treatment options for their respective indications.

With our Strategic Reprioritization announcement on August 14, 2023, further work on our immuno-oncology program has been paused, other than as noted below.

An Overview of the Immune System

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The innate immune system involves an immediate, non-specific response to infected or diseased cells.

Triggering its activation are pathogen-associated and damage-associated molecular patterns recognized by pattern recognition receptors (“PRRs”), which reside on the surface of various types of leukocytes, or white blood cells, which make up the innate immune system including phagocytes, eosinophils, and natural killer cells.

Triggering its activation are pathogen-associated and damage-associated molecular patterns recognized by pattern-recognition receptors, which reside on the surface of various types of leukocytes, or white blood cells, making up the innate immune system including phagocytes, eosinophils, and natural killer cells.

The innate immune response also participates in promoting activity of the adaptive immune system.

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T cells participate primarily in the cell-mediated immune response while B cells are involved in the humoral immune response.

T lymphocytes can be further segregated into distinct cell types, with the primary types

being CD8, or cytotoxic, T cells and CD4 T cells.

T lymphocytes can be further segregated into distinct cell types, with the primary types being CD8, or cytotoxic, T cells and CD4 T cells.

CTLs directly eliminate cells that are infected with viruses or other pathogens or are otherwise damaged or dysfunctional.

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Immune checkpoints represent a myriad of inhibitory pathways that act to regulate the duration and intensity of antigen-induced immune responses and factor prominently in mediating immune tolerance.

A number of checkpoint molecules have been identified and studied in cancer therapy in the past decades.

checkpoint molecules have been identified and studied in cancer therapy in the past decades.

Two of the more well-characterized immune checkpoint molecules are CTLA-4 and PD-1, and its related ligand, PD-L1.

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These factors bias the immune response towards anergy and senescence rather than activation and proliferation.

Certain tumors coopt these pathways and overexpress immune checkpoint molecules on their cell surface to camouflage themselves to evade detection and destruction by the immune system.

Certain tumors co-opt these pathways and overexpress immune checkpoint molecules on their cell surface to camouflage themselves to evade detection and destruction by the immune system.

Immunotherapy and the Emergence of Checkpoint Inhibitors

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clinical benefit is generally viewed to be limited to between 13% and 30% of cancer patients and the duration of response to treatment is often short.

CPIs require the infiltration of anti-tumor CD8 T cells for therapeutic activity, and patients whose tumors are characterized by a TME that lacks

activated TILs, typically fail to respond to therapy.

CPIs require the infiltration of anti-tumor CD8 T cells for therapeutic activity, and patients whose tumors are characterized by a TME that lacks activated TILs, typically fail to respond to therapy.

Moreover, the expression of positive costimulatory signals is critical to the amplification and diversification of a TIL-based response following initial activation, without which treatment durability is limited.

We are focused on advancing therapeutic candidates designed to overcome these challenges and enhance the sensitivity of immunologically inaccessible, or cold, tumors to an efficacious immune response.

We are focused on advancing therapeutic candidates designed to overcome these challenges and

enhance the sensitivity of immunologically inaccessible, or cold, tumors to an efficacious immune response.

The chart below shows the single agent objective response rate (“ORR”) of CPIs by different cancer types and clinical trial.

Immuno-Oncology Clinical Trials

Leveraging the insights enabled by the application and methodology of EvolverAI, a proprietary AI-based platform used to identify novel therapeutic uses for approved therapeutics and product candidates in clinical evaluation, and our internal industry expertise, we are pursuing two proprietary discovery programs to advance our goal of developing anti-cancer therapeutics.

Leveraging the insights enabled by the application and methodology of our proprietary AI-based platform complemented by EvolverAI, which was used to identify novel therapeutic uses for our approved therapeutics and product candidates in clinical evaluation, and our industry expertise, we are pursuing two proprietary discovery programs to advance our goal of developing anti-cancer therapeutics.

The first program, which encompasses BXCL701 across a range of indications, is based on the application of innate immune modulation technology.

This program has been constructed to embrace key distinguishing characteristics of the innate immune system and we believe it is supported by our development efforts.

This approach has driven the development of BXCL701, which we are currently evaluating in a Phase 2 clinical trial as a potential treatment for mCRPC with SCNC phenotype.

This approach has driven the development of BXCL701, which we are currently evaluating in a Phase 1b/2a clinical proof-of-concept trial as a potential treatment for mCRPC with either SCNC or adenocarcinoma phenotype.

Fundamental to the innate immune modulation program is BXCL701’s potential to:

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● Restore CPI sensitivity to tumors which had previously been responsive.

Encouraged by the positive results of BXCL701 in our Phase 2a trial, we are working towards nomination of a next-generation DPP8/9 inhibitor for the same indications and to target additional difficult-to-treat solid and liquid tumors.

We believe that novel therapeutic approaches to indications of unmet medical need may also emerge from the intersection of innate immunity modulation and synthetic lethality, an approach focused on the identification of cancer-promoting gene pairs with driver mutations whose concomitant disruption activates PD-1.

We are working to develop our second AI-driven product candidate, BXCL702, leveraging our innate immunity modulation program and/or our

synthetic lethality program, via re-innovation or in-licensing.

We anticipate nominating a clinical candidate in this program by 2025, at which time we intend to submit an investigational new drug application (“IND”) to the FDA.

BXCL701 Innate Immune Activator

BXCL701 (talabostat) is an oral small molecule inhibitor of a class of enzymes called DPPs, specifically DPP8/9 and DPP4.

BXCL701 is an oral small molecule inhibitor of a class of enzymes called DPPs, specifically DPP8/9 and DPP4.

Inhibition of DPP8/9 initiates activation of the inflammasome and ultimately activation of the innate immune system.

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● Orally bioavailable, potentially sole inhibitor of both DPP8/9 and DPP4, key regulators of the inflammasome directed innate immune response, currently in clinical development for cancer.

● Novel proposed mechanism of action may complement CPI activity, enabling therapeutic access to immunologically cold tumors as well as other difficult-to-treat cancers, including relapsed or refractory tumor types.

● Novel proposed mechanism of action may complement CPIs activity, enabling therapeutic access to immunologically cold tumors as well as other difficult-to-treat cancers, including relapsed or refractory tumor types.

● Phase 2 clinical proof-of-concept achieved in treating mCRPC patients with either adenocarcinoma or SCNC phenotype.

Initial focus on mCRPC with SCNC phenotype designed to provide for a more efficient clinical development pathway than current industry standards.

The initial focus on mCRPC with SCNC phenotype is designed to provide for a more efficient clinical development pathway than current industry standards.

BXCL701 as a Potential Treatment for mCRPC

Prostate cancer is the most common malignancy and the second-leading cause of cancer-related deaths in men in the U.S.

According to the American Cancer Society, approximately 288,300 men will be diagnosed with, and more than 34,700 men will die of, prostate cancer in 2023.

The majority of these cases will be classified as adenocarcinomas and involve low risk, localized or regional disease for which the five-year survival rate ranges from 60% to 99%.

According to the American Cancer Society, approximately 299,010 men will be diagnosed with, and 35,250 men will die of, prostate cancer in 2024.

The majority of these cases are classified as adenocarcinomas and involve low risk, localized or regional disease for which the five-year survival rate ranges from 60% to 99%.

However, an estimated 20% of these newly diagnosed cases will progress to the more aggressive metastatic disease.

The five-year survival rate for men with metastatic prostate cancer drops significantly, to approximately 30%.

Approximately 20% of patients with mCRPC will develop SCNC phenotype, which is characterized by poor prognosis and low survival rate with a five-year life expectancy of 14%.

Approximately 20% of patients with mCRPC will develop the SCNC phenotype, which is characterized by poor prognosis and low survival rate with a five-year life expectancy of 14%.

Prostate function requires the presence of various androgens, such as testosterone.

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XTANDI has been approved to treat CRPC and metastatic castration-sensitive prostate cancer.

Virtually all patients who respond to ZYTIGA and XTANDI are expected to progress to even more aggressive forms of prostate cancer requiring further treatment.

Virtually all patients who initially respond to ZYTIGA and XTANDI are expected to progress to even more aggressive forms of prostate cancer requiring further treatment.

Patients whose disease has progressed after treatment with these second-generation targeted endocrine therapies are administered a docetaxel containing drug regimen that provides a survival benefit of only 10 months.

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As such, an unmet medical need remains for patients with mCRPC who are not eligible for PARP inhibitor treatment after treatment with the targeted endocrine therapy and docetaxel.

In addition, a number of men, both newly diagnosed patients and men whose disease has progressed after second-generation targeted endocrine therapy, will develop an aggressive tumor that expresses very little AR and accordingly does not respond to therapeutics targeting the AR signaling pathway.

In addition, a number of men, both newly diagnosed patients and men whose disease has progressed after second-generation targeted endocrine therapy, will develop an aggressive tumor that typically expresses very little AR and accordingly does not respond to therapeutics targeting the AR signaling pathway.

Prostate cancer with this phenotype is referred to as SCNC, for which there is currently no effective treatment.

The incidence of SCNC is increasing with the widespread use

of AR inhibitor therapy.

The incidence of SCNC is increasing with the widespread use of AR inhibitor therapy.

Treatment protocols for patients with SCNC typically involve cytotoxic chemotherapies despite their short duration of response and considerable toxicities.

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mCRPC is often characterized as a cold tumor, or a tumor with an immunosuppressive TME and poor immune cell infiltration.

Currently approved CPIs, which target PD-1 and CTLA-4, have not demonstrated significant single-agent therapeutic utility.

Currently approved CPIs, which target PD-1 and CTLA-4, have not demonstrated significant single-agent therapeutic activity.

For instance, a Phase 2 investigator sponsored trial (“IST”) to assess the efficacy of the PD-L1 inhibitor avelumab, marketed by EMD Serono and Pfizer as BAVENCIO â , to treat mCRPC with SCNC phenotype, as well as aggressive variant prostate cancer with adenocarcinoma histology, generated an ORR of 6.7% (representing 1 of 15 patients who was known to be microsatellite instability-high, an established marker of response to CPIs).

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We elected to pursue mCRPC as an indication for BXCL701 due to its enrichment for DPP mutations, which are especially prevalent in tumors with SCNC phenotype.

BXCL701 is being evaluated in the Phase1b/2 clinical proof-of-concept trial that we are sponsoring, to investigate its efficacy when used in combination with pembrolizumab.

We intend to initiate the Phase 2b portion of the trial in the second half of 2023.

We are also planning to meet with the FDA in the second half of 2023 to discuss the ability of our Phase 2b trial to serve as a potential registrational trial.

The Phase 1b portion of our Phase 1b/2 clinical trial was a dose escalation safety lead-in which employed a standard 3 x 3 trial design to determine the recommended Phase 2 dose.

BXCL701 is being evaluated in a Phase 1b/2a clinical proof-of-concept trial that we are sponsoring to investigate its potential efficacy when used in combination with pembrolizumab.

Enrollment in this trial is complete.

We received initial comments from the FDA on our proposed clinical development plan, and we plan to meet with the FDA in an End-of-Phase 2 meeting in the first half of 2024 to discuss the development path forward.

However, the start of any such additional trial is paused following the Company’s Reprioritization.

The Phase 1b portion of our Phase 1b/2 clinical trial was a dose escalation safety lead-in which employed a standard 3 x 3 trial design to determine the recommended Phase 2 dose (“RP2D”).

During each 21-day treatment cycle, 200 mg of pembrolizumab were administered intravenously on day one, with BXCL701 taken twice daily on days one through 14, for a minimum of two cycles.

The results of this Phase 1b trial, which were presented at The Society for Immunotherapy of Cancer’s 35th Anniversary Annual Meeting, allowed us to establish 0.3mg, taken twice daily, as the recommended Phase 2 dose.

The results of this Phase 1b trial, which were presented at The Society for Immunotherapy of Cancer’s 35 th Anniversary Annual Meeting, allowed us to identify 0.3 mg, taken twice daily, as the RP2D.

The Phase 2a portion of the trial was segregated into two 28-patient trial cohorts, one cohort consisting of mCRPC patients with SCNC phenotype and a second cohort consisting of mCRPC patients with adenocarcinoma phenotype.

Initially, we focused on mCRPC with SCNC phenotype as the primary indication for BXCL701, since DPP9 is amplified in approximately 17% of treatment-emergent mCRPC with SCNC phenotype, compared to 5% or less in the broader prostate cancer population.

However, we also observed responses in mCRPC patients with adenocarcinoma phenotype who were microsatellite stable in our Phase 1b trial.

Initially, we focused on mCRPC with SCNC phenotype as the primary patient population for BXCL701, since DPP9 is amplified in approximately 17% of treatment-emergent mCRPC with SCNC phenotype, compared to 5% or less in the broader prostate cancer population.

However, we also observed responses in mCRPC patients with adenocarcinoma phenotype who were microsatellite stable in the Phase 1b portion of the trial.

On this basis, we widened our Phase 2a trial to include relapsed mCRPC patients with either SCNC or adenocarcinoma phenotype.

Both cohorts employed a Simon two-stage trial design of 15 trial participants followed by 13 additional patients.

The primary endpoint of the Phase 2a portion of this trial was a composite response rate, determined as either a RECIST 1.1 response (defined as a reduction in RECIST score of 30% or more), a reduction in prostate specific antigen (“PSA”) level of 50% or more, or conversion in circulating tumor cells (“CTCs”) from 5 or more CTCs/7.5 milliliter (“ml”) to less than 5 CTCs/7.5ml.

Secondary endpoints included duration of response, progression free survival, changes in circulating cytokines and certain disease-specific biomarkers.

Based on these results, we intend to pursue expansion of the Phase 2a trial involving mCRPC patients with SCNC phenotype into a Phase 2b trial, which we expect would enroll 60 patients subject to further changes as we seek regulatory guidance.

We intend to meet with the FDA in the second half of 2023 to discuss our plan to design the Phase 2b trial to serve as a potential registrational trial.

We believe the final results observed in the Phase 2a trial of BXCL701 administered in combination with pembrolizumab support further development.

Our Phase 2a study is not a controlled study comparing the safety and efficacy of pembrolizumab alone against BXCL701 and pembrolizumab for the treatment of SCNC.

The primary endpoint of the Phase 2a portion of this trial was a composite response rate, determined as either a RECIST 1.1 response (defined as a reduction in RECIST score of 30% or more), and/or a reduction in prostate specific antigen (“PSA”) level of 50% or more, and/or a conversion in circulating tumor cells (“CTCs”) from 5 or more CTCs/7.5 milliliter (“ml”) to less than 5 CTCs/7.5 ml.

Secondary endpoints included duration of response, progression-free survival, overall survival, changes in circulating cytokines, and certain disease-specific biomarkers.

We believe the results observed in the Phase 2a trial of BXCL701 administered in combination with pembrolizumab support further development.

We were particularly encouraged by the results observed in the cohort consisting of mCRPC patients with SCNC phenotype.

Final Phase 2a results for the SCNC cohort were presented at the 2023 Genitourinary Cancers Symposium of the American Society of Clinical Oncology (“ASCO GU 2023”).

Updated Phase 2a results for the SCNC cohort were presented at the 30 th Annual Prostate Cancer Foundation Scientific Retreat (PCF 2023).

BXCL701 in combination with pembrolizumab demonstrated a 25% (seven out of 28 evaluable patients) composite response rate in mCRPC patients with SCNC phenotype, for whom there is no standard of care.

As of December 19, 2022, the median duration of response for the seven composite responders was 6+ months (range 1.3 – 17.4 months).

Five of these responders were RECIST 1.1 responders (four confirmed responses and one unconfirmed) with decreases in tumor size ranging from 42% to 67% and a median duration of response of 6+ months (range 1.3 – 17.4 months).

The sixth responder was a CTC and PSA50 responder, with a PSA decrease of 73%.

The seventh responder was a PSA50 responder, with a PSA decrease of 50%.

The Phase 2a results for the SCNC cohort presented at ASCO GU 2023 demonstrated that, as of December 19, 2022, among the 28 evaluable patients, 25 of whom had RECIST measurable disease, the composite response rate was 25% (with RECIST response rate of 20%, disease control rate of 48% and CTC conversion rate of 25%).

Of note, based on published data from mCRPC patients with SCNC phenotype, a response to pembrolizumab monotherapy has generally been limited to those patients whose tumors are remarkable for their high levels of genetic mutations associated with microsatellite instability, yet only one responder in the adenocarcinoma cohort, had this molecular predictor of pembrolizumab response, and all seven responders in the SCNC cohort were microsatellite stable and/or tumor mutational burden low.

We believe the response rates in the absence of a high tumor mutational burden observed in our Phase 2a trial results reinforce the synergistic interaction between BXCL701 and pembrolizumab.

Presented below are the results (as of February 8, 2023) for the 25 evaluable mCRPC patients with SCNC phenotype with RECIST measurable disease.

These results were presented at ASCO GU 2023.

As of a data cutoff of September 6, 2023, five of these responders were RECIST 1.1 responders (four confirmed responses and one unconfirmed response) with decreases in tumor size ranging from -45% to -67% and a median duration of response of 7.6 months.

AEs consistent with cytokine activation, including fever, nausea, chills, fatigue, headache, and dizziness were observed during the trial and were generally mild to moderate.

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The table below summarizes treatment-related AEs observed in the SCNC cohort as of December 19, 2022.

On October 10, 2023, we reported positive overall survival (OS) results from the Phase 2a portion of the trial in SCNC patients.

BXCL701 in combination with pembrolizumab demonstrated a compelling median OS and 12-month survival rate.

As of a data cutoff of September 6, 2023, evaluable patients with SCNC (n = 28) showed a median OS of 13.6 months (95% CI 10.9–NR), and a 12-month survival rate of 56.5%.

On February 12, 2024 the Company announced that the FDA designated as a Fast Track development program the investigation of BXCL701 in combination with a checkpoint inhibitor for treatment of patients with metastatic SCNC with progression on chemotherapy and no evidence of microsatellite instability.

The Phase 2a trial has also been completed for the adenocarcinoma cohort.

Preliminary results for this trial cohort were presented at the 2022 ASCO Genitourinary Cancers Symposium.

In contrast to the typical low single digit response rate with the use of pembrolizumab as a standalone therapy in mCRPC patients seen in publications to date, we noted that among the 29 patients in the adenocarcinoma treatment arm who were evaluable for a composite response, all of whom received BXCL701 plus pembrolizumab, the composite response rate achieved was 21%.

This included 22% who achieved a RECIST-defined partial response and a disease control rate, which reflects those patients with either a complete response, a partial response or stable disease, of 83%.

Patients who stayed on therapy for at least two cycles of treatment and underwent at least the initial disease assessment at nine weeks were considered response evaluable for this trial, as specified in the trial protocol.

Presented below are the preliminary results of this combination therapy in patients with measurable disease.

Those patients with bone disease only, common among patients with metastatic prostate cancer, were excluded from this analysis, as bone lesions are considered non-target lesions in RECIST 1.1.

The majority of AEs experienced by patients in the adenocarcinoma cohort were low grade.

Updated results for this trial cohort were also presented at PCF 2023.

BXCL701 in combination with pembrolizumab demonstrated a 21% (six out of 29 evaluable patients) composite response rate in mCRPC patients with adenocarcinoma phenotype, for whom there are limited treatment options.

As of a cutoff date of September 6, 2023, five of these composite responders were RECIST 1.1 responders (four confirmed responses and one unconfirmed response) with decreases in tumor size ranging from -30% to -99% and a median duration of response to 19 months.

As of the cutoff date of December 19, 2022, the majority of AEs experienced by patients in the adenocarcinoma cohort were low grade.

AEs consistent with cytokine activation were observed, including fever, myalgia, nausea, chills, fatigue, dyspnea, headache and dizziness.

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The table below summarizes treatment-related AEs observed in the adenocarcinoma cohort.

On November 8, 2023, we reported positive OS results from the Phase 2a portion of the trial in patients with adenocarcinoma.

As of a data cutoff of September 6, 2023, among evaluable patients with adenocarcinoma (n = 29) BXCL701 in combination with pembrolizumab demonstrated a median OS of 15.5 months (95% CI 9.6–NR), and a 12-month survival rate of 59.3%.

BXCL701 as a Potential Treatment for Small Cell Lung Cancer (“SCLC”)

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Approximately 60-70% of these patients present with extensive disease, and first-line therapy for a majority of these patients involves the combination of a CPI with platinum-based chemotherapy or etoposide.

We are encouraged by the therapeutic potential of BXCL701 for SCLC given the activity it has demonstrated in the ongoing SCNC clinical trial, and we plan to initiate clinical trials targeting this indication.

We are planning to conduct a Phase 1b/2 trial designed to be a dose escalation safety lead-in to establish a recommended Phase 2 dose (“RP2D”).

The Phase 2 portion of the trial is anticipated to involve 45 patients administered the RP2D of BXCL701 plus atezolizumab for nine treatment cycles over a six-month period.

Should the combination of BXCL701 and atezolizumab achieve a rate of progression-free survival superior to that achieved using the standard of care in the Phase 2 proof-of-concept portion of the trial, we intend to advance BXCL701 into a Phase 3 clinical trial in SCLC.

We currently expect to initiate the Phase 1b portion of the trial in the second half of 2023 and the Phase 2 proof-of-concept portion of the trial in 2024.

We are encouraged by the therapeutic potential of BXCL701 for SCLC given the activity it has demonstrated in the ongoing SCNC clinical trial.

We are preparing the protocol for a Phase 1b/2 trial design to be a dose-escalation safety lead-in to establish a RP2D.

However, the start of any such trial is paused following the Reprioritization.

BXCL701 as a Potential Treatment for Other Cancers

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As such, we envision the potential therapeutic benefit of BXCL701 increasing the sensitivity of cold tumors to CPI therapy, enabling the potential treatment of a range of cancers including pancreatic cancer, breast cancer, colorectal cancer, and ovarian cancer, as well as enhancing the depth of response to CPIs in other cancers.

In addition, based on the preclinical observation that BXCL701 showed direct cytotoxic activity against certain leukemic cells, we have initiated clinical development targeting relapsed or refractory acute myeloid leukemia (“AML”).

In addition, based on the preclinical observation that BXCL701 showed direct cytotoxic activity

against certain leukemic cells, we have initiated clinical development targeting relapsed or refractory acute myeloid leukemia (“AML”).

Pancreatic Cancer

The American Cancer Society estimates that in 2023, about 64,050 cases of pancreatic cancer will be diagnosed in the U.S.

We are supporting a Phase 2 IST sponsored by the Georgetown Lombardi Comprehensive Cancer Center (“Georgetown Lombardi”), designed to evaluate the use of BXCL701 along with pembrolizumab to treat pancreatic cancer.

Few therapeutic options are available for patients with this indication, which has a five-year survival rate of less than 10%, among the lowest of all cancers.

The American Cancer Society estimates that in 2024, approximately 66,440 cases of pancreatic cancer will be diagnosed in the U.S.

We are supporting a Phase 2 IST sponsored by Georgetown Lombardi Comprehensive Cancer Center (“Georgetown Lombardi”), designed to evaluate the use of BXCL701 along with pembrolizumab to treat pancreatic cancer.

Few therapeutic options are available for patients with this disease, which has a five-year survival rate of less than 10%, among the lowest of all cancers.

Pancreatic cancer has among the highest levels of overexpression and amplification of DPPs.

Preclinical models demonstrated synergy between DPP inhibition with BXCL701 and anti-PD-1 antibody in the pancreatic cancer tumor microenvironment.

Based on these preclinical observations, Georgetown Lombardi intends to assess the safety of BXCL701 when administered in combination with pembrolizumab, as well as estimate the 18-week progression-free survival rate.

This trial is expected to begin in the second quarter of 2023.

Based on these preclinical observations, Georgetown Lombardi has initiated a Phase 2 IST to assess the safety of BXCL701 when administered in combination with pembrolizumab (safety lead-in), as well as to estimate the 18-week progression-free survival rate (primary objective of the efficacy phase) in previously treated metastatic pancreatic ductal adenocarcinoma.

This trial started in the third quarter of 2023.

On February 6, 2024, we announced the completion of patient enrollment in the safety lead-in portion of the trial.

As part of the trial’s safety lead-in, the first six patients have been enrolled and will be observed for a six-week safety window period.

The trial is then expected to enroll approximately 39 patients in its efficacy phase in a Simon 2-stage single-arm, open-label design (19 patients in stage 1 and 20 patients in stage 2).

Patients will be monitored radiographically and by tumor markers for response assessment.

Tumor biopsies and blood samples will also be collected over the course of treatment to better understand the potential mechanism of action for the combination.

The human proof of concept portion of the trial is expected to start in the first half of 2024.

Relapsed or Refractory AML

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DPP8/9 inhibition has been shown to be cytotoxic to THP-1 cells, monocytic cancer cells cultured from a patient with AML, but not other cell lines, suggesting a specific vulnerability of AML to these inhibitors which we believe can be exploited for therapeutic benefit.

Based on these preclinical observations, Dana-Farber has initiated a Phase 1b trial to determine the maximum tolerated dose or the recommended Phase 2 dose of BXCL701 as a single agent, and to assess the safety of BXCL701.

This trial began in the first quarter of 2023.

Subject to successful completion of this Phase 1b trial, it is anticipated that Dana-Farber will conduct further studies to determine BXCL701's objective response rate in AML in combination with the standard of care.

Based on these preclinical observations, Dana-Farber has initiated a Phase 1b trial to assess the safety of BXCL701 and to determine the maximum tolerated dose or the RP2D of BXCL701 as a single agent.

This trial started in the first quarter of 2023.

Subject to successful completion of this Phase 1b trial, we anticipate that Dana-Farber will conduct further studies to determine BXCL701's objective response rate in AML in combination with the standard of care.

Other Potential Anti-cancer Programs

We collaborated with the University of Texas MD Anderson Cancer Center in a Phase 2a IST to evaluate the potential efficacy of BXCL701 administered in combination with pembrolizumab in patients with advanced solid cancer.

The design of this open label trial includes two cohorts and incorporates a two-stage configuration, which allows for an expansion of patient enrollment to a total of 17 patients in each cohort if a RECIST 1.1 complete response or partial response is observed in at least one of the initial nine patients.

The design of this open label trial included two cohorts and incorporated a two-stage configuration, which allowed for an expansion of patient enrollment to a total of 17 patients in each cohort if a RECIST 1.1 complete response or partial response was observed in at least one of the initial nine patients.

The first cohort enrolled patients who previously had not received CPI therapy, with a second cohort consisting of patients that were either refractory to CPI therapy or had relapsed while on CPI therapy, meaning that no further response to CPI treatment is anticipated among patients in the second cohort.

Trial participants received 200mg of pembrolizumab on day 1 of a 21-day cycle, with 0.2mg BXCL701 administered twice-daily (“BID”) on days 1 through 7, the dose increasing to 0.3mg BID on Days 8 through 14.

Trial participants received 200 mg of pembrolizumab on day 1 of a 21-day cycle, with 0.2 mg of BXCL701 administered twice-daily (“BID”) on days 1 through 7 during the first cycle, the dose increasing to 0.3 mg BID on Days 8 through 14 during the first and the subsequent cycles.

Evaluable trial participants were required to receive a minimum of two treatment cycles.

A preliminary assessment of BXCL701 dosed in combination with a CPI, as of completion of the first stage, noted responses in one patient in each of the CPI naïve and CPI refractory/relapsed cohorts, including a partial response in CPI-naïve, microsatellite stable endometrial carcinoma, PD-L1 negative (CPS <1) and a partial response in CPI-refractory uveal melanoma.

These preliminary results were presented at the 2021 American Society of Clinical Oncology annual meeting.

These preliminary results were presented at the 2021

American Society of Clinical Oncology annual meeting (ASCO 2021).

Patient enrollment in this trial was completed in the third quarter of 2022.

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We are also actively engaged in the identification and development of predictive biomarkers that we believe could be used in conjunction with BXCL701 to predict the likelihood of patient response to therapy across the range of targeted indications.

As summarized in the preliminary data from AML patients presented below, we believe DPP9 copy number could correlate to BXCL701 response rate, with a greater likelihood of BXCL701 cytotoxicity in patients with increased DPP9 copy number.

We are pursuing its use in our biomarker discovery activities as a potential companion

Once our current efficacy trials are completed, we plan to retrospectively analyze correlation between DPP9 copy number and response.

BXCL701 lifecycle management considerations

We envision employing computational and medicinal chemistry approaches to advance development of a next-generation BXCL701 molecule to introduce enhanced life cycle management capabilities.

We anticipate that a next-generation molecule may embrace characteristics such as the simultaneous inhibition of DPP8/9 and DPP4, while providing an improved orally bioavailable pharmacokinetic profile, including a linear pharmacokinetic, a half-life of between 12 and 48 hours, with multiple mechanisms of elimination that are clearly understood and are not burdened with potential drug-drug interaction liabilities.

This next generation molecule would be intended to demonstrate anti-cancer activity as either a monotherapy or in combination with an approved CPI.

Based on preliminary data from AML patients, we believe DPP9 copy number could correlate to BXCL701 response rate, with a greater likelihood of BXCL701 cytotoxicity in patients with increased DPP9 copy number.

We are pursuing its use in our biomarker discovery activities as a potential companion diagnostic.

At the Society for Immunotherapy of Cancer’s 38 th Annual Meeting (SITC 2023), we presented data from the Phase 2a trial in SCNC patients, which indicated DPP9 overexpression is a potential response-predictive biomarker of BXCL701 and pembrolizumab combination treatment in mCRPC patients with SCNC phenotype.

Immuno-Oncology Manufacturing

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In addition, many small biotechnology companies have formed collaborations with large, established companies to (i) obtain support for their research, development, and commercialization of products or (ii) combine several treatment approaches to develop longer lasting or more efficacious treatments that may potentially directly compete with our current or future product candidates.

We anticipate that we will continue to face increasing competition as new therapies and combinations thereof, technologies, and data emerge within the field of immunotherapy and, furthermore, within the treatment of infectious diseases and cancers.

We anticipate that we

will continue to face increasing competition as new therapies and combinations thereof, technologies, and data emerge within the field of immunotherapy and, furthermore, within the treatment of infectious diseases and cancers.

In addition to the current standard of care treatments for patients with infectious diseases or cancers, numerous commercial and academic preclinical studies and clinical trials are being undertaken by a large number of parties to assess novel technologies and product candidates in the field of immunotherapy.

Results from these studies and trials have fueled increasing levels of interest in the field of immunotherapy.

Large pharmaceutical companies that have commercialized or are developing immunotherapies to treat cancer include AstraZeneca AB, Bristol-Myers Squibb Company, Merck & Co., Inc., Novartis AG, Pfizer Inc.

Hoffmann-La Roche Ltd.

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Our commercial opportunity could be reduced or eliminated if one or more of our competitors develop and commercialize products that are safer, more effective, better tolerated, or of greater convenience or economic benefit than our proposed product offerings.

Our competitors also may be in a position to obtain FDA or other regulatory approval for their products more rapidly, resulting in a stronger or dominant market position before we are able to enter

Our competitors also may be in a position to obtain FDA or other regulatory approval for their products more rapidly, resulting in a stronger or dominant market position before we are able to enter the market.

The key competitive factors affecting the success of all of our programs are likely to be product safety, efficacy, convenience and treatment cost.

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Intellectual property is of vital importance in our field and in biotechnology generally.

We seek to protect and enhance proprietary technology, inventions, and improvements that are commercially important to the development of our business by seeking, maintaining, and defending patent rights, whether developed internally or licensed from third parties.

We seek to protect and enhance proprietary technology, inventions, and improvements that are commercially important to the development of our business by seeking, maintaining, enforcing, and defending patent and other intellectual property rights, whether developed internally or licensed from third parties.

We will also seek to rely on regulatory protection afforded through inclusion in expedited development and review, data exclusivity, market exclusivity, and patent term extensions where available.

As of January 31, 2023, we have multiple patent families filed to protect our Immuno-Oncology portfolio, including our core patent family directed to methods of using BXCL701 with immune checkpoint inhibitors, which has granted/allowed patents in the U.S., Japan, Australia, Canada, Russia, China, Mexico, and South Africa, with pending applications in the U.S., Mexico, the Republic of Korea, the UAE, New Zealand, Russia, Australia, Brazil, Hong Kong, and Europe.

Patents issuing from this family are expected to expire no earlier than 2036.

Our current immuno-oncology portfolio includes one issued utility patent in the U.S., one in Japan, eight in other countries, as well as seven pending utility patent applications in the U.S.

including one received Notice of Allowance, 35 pending non-U.S.

utility patent applications, and five pending U.S.

provisional applications directed to novel formulations of BXCL701, various dosing regimens, methods of use, biomarker, and combination therapies.

We expect that those issued/granted patents and patents issuing from these applications, if any, will expire from 2039 to 2043.

As of February 29, 2024, we have multiple patent families filed to protect our immuno-oncology program, including our core patent family directed to methods of using BXCL701 with immune checkpoint inhibitors, which is granted in the U.S., Japan, Australia, Canada, Russia, China, South Africa, Mexico, New Zealand, and United Arab Emirates, and

with at least one pending application in the U.S., China, Mexico, the Republic of Korea, New Zealand, Russia, Australia, Brazil, Hong Kong, and Europe.

Patents issued from this family, if any, are expected to expire no earlier than 2036.

We have one additional patent issued in the U.S.

directed to a method of selecting patients based on a biomarker, with an expected expiration date no earlier than 2039.

Additional applications are directed to administering BXCL701 in combinations with various other molecules, biomarkers, and dosing regimens.

We also have four provisional applications directed to novel formulations of BXCL701, various dosing regimens, methods of use, and combination therapies.

We expect that patents issued from these applications, if any, will expire from 2039 to 2044.

We expect to file additional patent applications in support of current and new immuno-oncology clinical candidates as well as new platform and core technologies.

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will continue indefinitely, as agreed upon by the parties.

These services are primarily for drug discovery, chemical, manufacturing and controls (“CMC”) cost and general and administrative support.

These services include certain intellectual property prosecution and management and research and development activities.

The Company has an option, exercisable until December 31, 2024, 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, its proprietary pharmaceutical discovery and development engine.

To maintain the ability to exercise the foregoing option, pursuant to an amendment to the Services Agreement effective as of April 19, 2022, the Company has agreed to pay BioXcel LLC $18,000 per month from March 13, 2023 to December 31, 2024.

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 milestone payments shall not exceed $10 million in the aggregate and not be payable prior to proof of concept in humans and (ii) commercialization milestone payments 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.

Service charges recorded under the Services Agreement were $1.4 million for each of the years ended December 31, 2022 and 2021.

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 milestone payments shall not exceed $10 million in the aggregate and not be payable prior to proof of concept in humans and (ii) commercialization milestone payments 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.

Service charges recorded under the Services Agreement were $1.3 million and $1.4 million for the years ended December 31, 2023 and 2022, respectively.

Government Regulation

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Prior to beginning the first clinical trial with a product candidate in the U.S., a sponsor must submit an IND to the FDA.

An IND is a request for authorization from the FDA to administer an investigational new drug product to humans.

An IND is a request for allowance from the FDA to administer an investigational new drug product to humans.

The central focus of an IND submission is on the general investigational plan and the protocol(s) for clinical studies.

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In such a case, the IND may be placed on clinical hold and the IND sponsor and the FDA must resolve any outstanding concerns or questions before any clinical trials can begin.

Submission of an IND may or may not result in FDA authorization to begin a clinical trial.

Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators in accordance with GCPs, which include the requirement that all research subjects provide their informed consent for their participation in any clinical study.

Submission of an IND may or may not result in FDA allowance to begin a clinical trial.

Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators in accordance with GCPs, which include among other things, the requirement that all research subjects provide their informed consent for their participation in any clinical study.

Clinical trials are conducted under protocols detailing, among other things, the objectives of the study, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated.

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The product candidate is administered to an expanded patient population to further evaluate dosage, to provide statistically significant evidence of clinical efficacy and to further test for safety, generally at multiple geographically dispersed clinical trial sites.

These clinical trials are intended to establish the overall risk/benefit ratio of the investigational product and to provide an adequate basis for product approval.

These clinical trials are intended to establish the overall risk/benefit ratio of the investigational product and to provide an adequate basis for product labeling.

In some cases, the FDA may require, or companies may voluntarily pursue, additional clinical trials after a product is approved to gain more information about the product.

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These interactions 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 alignment 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 drug.

Review and Approval Process

Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, preclinical and other non-clinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted on the chemistry of the drug, proposed labeling and other relevant information are submitted to the FDA as part of an NDA requesting approval to market the product.

Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, including results from preclinical and other non-clinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted on the chemistry of the drug, proposed labeling and other relevant information are submitted to the FDA as part of an NDA requesting approval to market the product.

Data can come from company-sponsored clinical studies intended to test the safety and effectiveness of a use of the product, or from a number of alternative sources, including studies initiated by independent investigators.

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

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

In issuing the CRL, the FDA may recommend actions that the applicant might take to place the NDA in condition for approval, including requests for additional information or clarification.

The FDA may delay or refuse approval of an NDA if applicable regulatory criteria are not satisfied, require additional testing or information and/or require post-marketing testing and surveillance to monitor safety or efficacy of a product.

A CRL usually describes the specific deficiencies in the NDA identified by the FDA and may require additional clinical data, including additional clinical trials, or other significant and time-consuming requirements related to clinical trials, nonclinical studies or manufacturing.

If a CRL is issued, the sponsor must resubmit the NDA or, address all of the deficiencies identified in the letter, or withdraw the application.

Even if such data and information are submitted, the FDA may decide that the NDA does not satisfy the criteria for approval.

If regulatory approval of a product is granted, such approval will be granted for specific indications and may entail limitations on the indicated uses for which such product may be marketed.

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.

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.

The FDA may also require one or more Phase 4 post- market studies and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization and may limit further marketing of the product based on the results of these post-marketing studies.

The FDA may also require one or more post-market studies and additional surveillance programs to further assess and monitor the product’s safety and effectiveness after commercialization and may limit further marketing of the product based on the results of these post-marketing studies.

In addition, the Pediatric Research Equity Act (“PREA”), requires a sponsor to conduct pediatric clinical trials for most drugs, for a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration.

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The FDA must send a non-compliance letter to any sponsor that fails to submit the required assessment, keep a deferral current or fails to submit a request for approval of a pediatric formulation.

Regulation of Combination Products in the U.S.

Certain products are comprised of components, such as drug components and device components, which would normally be subject to different regulatory frameworks by the FDA and frequently regulated by different centers at the FDA.

These products are known as combination products.

Under the FDCA, the FDA is charged with assigning a center with primary jurisdiction, or a lead center, for review of a combination product.

The determination of which center will be the lead center is based on the “primary mode of action” of the combination product.

Thus, if the primary mode of action of a drug-device combination product is attributable to the drug product, the FDA center responsible for premarket review of the drug product would have primary jurisdiction for the combination product.

The FDA has also established the Office of Combination Products to address issues surrounding combination products and provide more certainty to the regulatory review process.

That office serves as a focal point for combination product issues for agency reviewers and industry.

It is also responsible for developing guidance and regulations to clarify the regulation of combination products, and for assignment of the FDA center that has primary jurisdiction for review of combination products where the jurisdiction is unclear or in dispute.

A combination product with a primary mode of action attributable to the drug component generally would be reviewed and approved pursuant to the drug approval processes set forth in the FDCA.

In reviewing the NDA for such a product, however, FDA reviewers would consult with their counterparts in the device center to ensure that the device component of the combination product met applicable requirements regarding safety, effectiveness, durability and performance.

In addition, under FDA regulations, combination products are subject to cGMP requirements applicable to both drugs and devices, including the Quality System Regulations (“QSR”) applicable to medical devices.

Expedited Development and Review Programs

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The Breakthrough Therapy designation includes the Fast Track program features, as well as more intensive FDA interaction and guidance beginning as early as Phase 1 and an organizational commitment to expedite the development and review of the product candidate, including involvement of senior managers.

Any 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 FDA review programs intended to expedite the FDA review and approval process, such as priority review and accelerated approval.

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 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.

Additionally, product candidates studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions may receive accelerated approval upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.

As a condition of accelerated approval, the FDA will generally require the sponsor to perform adequate and well-controlled post-marketing clinical studies to verify and describe the anticipated effect on irreversible morbidity or mortality or other clinical benefit.

Additionally, depending on the design of the applicable clinical studies, product candidates studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions may receive accelerated approval upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.

As a condition of accelerated approval,

the FDA will generally require the sponsor to perform adequate and well-controlled confirmatory clinical studies to verify and describe the anticipated effect on irreversible morbidity or mortality or other clinical benefit, and may require that such confirmatory studies be underway prior to granting accelerated approval.

Products receiving accelerated approval may be subject to expedited withdrawal procedures if the sponsor fails to conduct the required confirmatory studies or if such studies fail to verify the predicted clinical benefit.

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Orphan Drug Designation and Exclusivity

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 U.S., or a

patient population greater than 200,000 individuals in the U.S.

and when there is no reasonable expectation that the cost of developing and making available the drug in the U.S.

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

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.

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

In addition, orphan drug exclusive marketing rights in the U.S.

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Failure to comply with these requirements can result in, among other things, adverse publicity, warning letters, corrective advertising and potential civil and criminal penalties.

Physicians may prescribe, in their independent professional medical judgment, legally available products for uses that are not described in the product’s labeling and that differ from those tested by us and approved by the FDA.

Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances.

The FDA does not regulate the behavior of physicians in their choice of treatments.

The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of their products.

The FDA does, however, restrict manufacturers’ communications on the subject of off-label use of their products.

However, companies may share truthful and not misleading information that is otherwise consistent with a product’s FDA-approved labelling.

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An ANDA provides for marketing of a generic drug product that has the same active ingredients, dosage form, strength, route of administration, labeling, performance characteristics and intended use, among other things, to a previously approved product.

ANDAs are termed "abbreviated"

because they are generally not required to include preclinical (animal) and clinical (human) data to establish safety and efficacy.

Instead, generic applicants must scientifically demonstrate that their product is bioequivalent to, or performs in the same manner as, the innovator drug through in vitro, in vivo, or other testing.

ANDAs are termed "abbreviated" because they are generally not required to include preclinical (animal) and clinical (human) data to establish safety and efficacy.

Instead, generic applicants must scientifically demonstrate that their product is

bioequivalent to, or performs in the same manner as, the innovator drug through in vitro, in vivo, or other testing.

The generic version must deliver the same amount of active ingredients into a subject's bloodstream in the same amount of time as the innovator drug and can often be substituted by pharmacists under prescriptions written for the reference listed drug.

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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.

If the ANDA or 505(b)(2) NDA applicant has provided a paragraph IV certification to the FDA, the applicant

must send notice of the paragraph IV certification to the NDA and patent holders once the application has been accepted for filing by the FDA.

If the ANDA or 505(b)(2) NDA applicant has provided a paragraph IV certification to the FDA, the applicant must send notice of the paragraph IV certification to the NDA and patent holders once the application has been accepted for filing by the FDA.

The NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice of the paragraph IV certification.

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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.

The Hatch-Waxman Act establishes periods of non-patent 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 non-patent data exclusivity upon approval of a new drug containing new chemical entities that have not been previously approved by the FDA.

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However, an ANDA or 505(b)(2) NDA may be submitted after four years if it contains a certification of patent invalidity or non-infringement.

The Hatch-Waxman Act also provides three years of marketing exclusivity to the holder of an NDA (including a 505(b)(2) NDA) for a particular condition of approval, or change to a marketed product, such as a new formulation for a previously approved product, if one or more new clinical studies (other than bioavailability or bioequivalence studies) was essential to the approval of the application and was conducted or sponsored by the applicant.

The Hatch-Waxman Act also provides three years of non-patent exclusivity to the holder of an NDA (including a 505(b)(2) NDA) for a particular condition of approval, or change to a marketed product, such as a new formulation for a previously approved product, if one or more new clinical studies (other than bioavailability or bioequivalence studies) was essential to the approval of the application and was conducted or sponsored by the applicant.

This three-year exclusivity period protects against FDA approval of ANDAs and 505(b)(2) NDAs for the condition of the new drug's approval.

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In August 2014, the FDA issued final guidance clarifying the requirements that apply to approval of therapeutic products and in vitro companion diagnostics.

According to the guidance, if the FDA determines that a companion diagnostic device is essential to the safe and effective use of a novel therapeutic product or indication, the FDA generally will not approve the therapeutic product or new therapeutic product indication if the companion diagnostic device is not approved or cleared for that indication.

According to the guidance, if the FDA determines that a

companion diagnostic device is essential to the safe and effective use of a novel therapeutic product or indication, the FDA generally will not approve the therapeutic product or new therapeutic product indication if the companion diagnostic device is not approved or cleared for that indication.

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 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.

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A not approvable letter will outline the deficiencies in the application and, where practical, will identify what is necessary to make the PMA approvable.

The FDA may also determine that additional clinical trials are necessary, in which case the PMA may be delayed for several months or years while the trials are conducted and then the data submitted in an amendment to the PMA.

The FDA may also determine that additional clinical trials are necessary, in which case the PMA may be delayed for several

months or years while the trials are conducted and then the data submitted in an amendment to the PMA.

If the FDA concludes that the applicable criteria have been met, the FDA will issue a PMA for the approved indications, which can be more limited than those originally sought by the applicant.

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Device manufacturers must also establish registration and device listings with the FDA.

A medical device manufacturer’s manufacturing processes and those of its suppliers are required to comply with the applicable portions of the QSR, which cover the methods and documentation of the design, testing, production, processes, controls, quality assurance, labeling, packaging and

shipping of medical devices.

A medical device manufacturer’s manufacturing processes and those of its suppliers are required to comply with the applicable portions of the QSR, which currently cover the methods and documentation of the design, testing, production, processes, controls, quality assurance, labeling, packaging and shipping of medical devices.

Domestic facility records and manufacturing processes are subject to periodic unscheduled inspections by the FDA.

The FDA also may inspect foreign facilities that export products to the U.S.

In January 2024, the FDA announced that it intends to initiate the process to reclassify most in vitro diagnostic tests (“IVDs”) that are currently Class III into Class II, including companion diagnostics.

If such reclassification efforts occur, any companion diagnostics that are the subject of the down-classification may no longer require premarket approval, but rather may become subject to the generally less burdensome 510(k) clearance process.

International Regulations

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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.

Non-clinical (pharmaco-toxicological) studies must be conducted in compliance with the principles of good laboratory practice (“GLP”) as set forth in EU Directive 2004/10/EC (unless otherwise justified for certain particular medicinal products, e.g., radio-pharmaceutical precursors for radio-labeling purposes).

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.

Clinical trials of medicinal products in the EU must be conducted in accordance with EU and national regulations and the International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use (“ICH”) guidelines on 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.

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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.

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.

While the EU Clinical Trials Directive required a separate clinical trial application (“CTA”) to be submitted in each member state in which the clinical trial takes place, 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 for multi-center trials.

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.

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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 could choose to submit a CTA under either the Clinical Trials Directive or the CTR until January 31, 2023 and, if authorized, those are 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.

Clinical trials for which an application was submitted (i) prior to January 31, 2022 under the EU Clinical Trials Directive, or (ii) between January 31, 2022 and January 31, 2023 and for which the sponsor has opted for the application of the EU Clinical Trials Directive remain governed by said Directive until January 31, 2025.

After this date, all clinical trials (including those which are ongoing) will become subject to the provisions of the CTR.

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

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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 to any future marketing authorization (“MA”) application (“MAA”) of the product concerned.

Advice is not legally binding to any future MA application (“MAA”) of the product concerned.

Marketing Authorization

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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 MA, the maximum timeframe for the evaluation of a MAA by the EMA is 210 days.

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.

This excludes so-called clock stops, during which additional written or oral information is to be provided by the applicant in response to questions asked by the CHMP.

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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.

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.

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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The EU also provides opportunities for market exclusivity.

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

Upon receiving an MA, reference product generally receives 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.

The overall 10-year market exclusivity period can be extended to a maximum of 11 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.

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

Orphan designation entitles a party to incentives such fee reductions or fee waivers, protocol assistance, and access to the Centralized MA process.

Orphan designation entitles a party to incentives such as fee reductions or fee waivers, protocol assistance, and access to the Centralized MA process.

Upon grant of a MA, orphan medicinal products are entitled to 10 years of market exclusivity for the approved therapeutic indication.

During the 10-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.

During the 10-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”).

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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.

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 Iceland, Liechtenstein, Norway, Switzerland and Turkey, as well as cooperating countries Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia.

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 January 1, 2021.

Since the end of the Brexit transition period on January 1, 2021, Great Britain (England, Scotland and Wales) has not been directly subject to EU laws, however under the terms of the Ireland/Northern Ireland Protocol, EU laws generally apply to Northern Ireland.

The EU laws that have been transposed into UK law through secondary legislation remain applicable in Great Britain, however new legislation such as the EU CTR is not applicable in Great Britain (“GB”).

The Trade and Cooperation Agreement (“TCA”) became effective on 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.

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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).

The regulation of companion diagnostics is subject to requirements of the in-vitro medical diagnostic devices Regulation (No 2017/746) (“IVDR”).

The IVDR was fully effective May 26, 2022, but there is 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.

In the EU, in vitro diagnostic medical devices were regulated by Directive 98/79/EC, which regulated 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 had to comply with the requirements provided for in the Directive, and with further requirements implemented at national level (as the case may be).

The regulation of companion diagnostics is subject to further requirements since in-vitro medical diagnostic devices Regulation (No 2017/746) (“IVDR”) became applicable on May 26, 2022.

The IVDR applies since May 26, 2022, but there is 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 introduced 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 MA process for the authorization of medicines, or the medicinal product is already authorized through the Centralized MA process, or a MAA for the medicinal product has been submitted through the Centralized MA process.

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

Before it can issue an EU 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 process for the authorization of medicines, or the medicinal product is already authorized through the centralized procedure process, or an MAA for the medicinal product has been submitted through the centralized procedure process.

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

The aforementioned EU rules are generally applicable in the EEA.

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To raise sufficient financial resources to commercialize our approved products and continue to advance our product candidates, we will need to address pricing pressures and potential third-party reimbursement coverage for our approved products and product candidates.

and elsewhere, sales of pharmaceutical products depend in significant part on the availability of reimbursement to the consumer from third-party payors, such as government and private insurance plans.

and elsewhere, sales of pharmaceutical products depend in significant part on the availability of reimbursement to the consumer from third-party payors, such as government payors, like Medicare and Medicaid, and private insurance plans.

Third-party payors are increasingly challenging the prices charged for medical products and services.

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We participate in the Medicaid Drug Rebate Program and other federal and state government pricing programs in the U.S., and we may participate in additional government pricing programs in the future.

government and other governments have shown significant interest in pursuing health care reform, which has resulted in changes to these programs and impacts IGALMI and our product candidates that may be approved.

For example, in March 2010, the Patient Protection and Affordable Care Act (“ACA”), as amended by the Health Care and Education Reconciliation Act,

was enacted and this health care reform law substantially changed the way health care is financed in the U.S.

government and other governments have shown significant interest in pursuing health care reform, which has resulted in changes to these programs and impacts IGALMI TM and our product candidates that may be approved.

For example, in March 2010, the Patient Protection and Affordable Care Act (“ACA”) was enacted and substantially changed the way health care is financed in the U.S.

by both government and private insurers.

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On June 17, 2021, the U.S.

Supreme Court dismissed the judicial challenge to the ACA without specifically ruling on the constitutionality of the ACA.

Prior to the U.S.

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 health care, 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.

Supreme Court dismissed the most recent judicial challenge to the ACA without specifically ruling on the constitutionality of the ACA.

Thus, the ACA will remain in effect in its current form.

In addition, we expect that federal, state, and local governments in the U.S.

will continue to consider legislation to limit the growth of health care costs, including the cost of prescription drugs.

Future legislation could limit payments for pharmaceuticals such as IGALMI and the product candidates that we are developing.

Other legislative changes have been proposed and adopted since the ACA was enacted, including aggregate reductions of Medicare payments to providers, which will remain in effect through 2032 with the exception of a temporary suspension from May 1, 2020 through March 31, 2022, absent additional congressional action.

Future legislation could limit payments for pharmaceuticals such as IGALMI TM and the product candidates that we are developing.

In January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to several providers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

In addition, in March 2021, Congress enacted the American Rescue Plan Act of 2021, which, among other things, eliminated the statutory cap on drug manufacturers’ Medicaid Drug Rebate Program rebate liability, effective January 1, 2024.

Moreover, there has recently been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed and enacted legislation designed, among other things, to bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs and reform government program reimbursement methodologies for pharmaceutical products.

On August 16, 2022, the Inflation Reduction Act of 2022, or IRA, was into law.

Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023), and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).

The IRA permits the Secretary of the Department of Health and Human Services to implement many of these provisions through guidance, as opposed to regulation, for the initial years.

For that and other reasons, it is currently unclear how the IRA will be effectuated.

In addition, individual states in the United States have also become increasingly active in implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures and, in some cases, mechanisms to encourage importation from other countries and bulk purchasing.

More recently, in March 2021, Congress enacted the American Rescue Plan Act of 2021, which, among other things, eliminated the statutory Medicaid drug rebate cap, effective January 1, 2024.

The rebate was previously capped at a drugs average manufacturer price.

Most significantly, on August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law.

This statute marks the most significant action by Congress with respect to the pharmaceutical industry since adoption of the ACA in 2010.

Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap;

imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023);

and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).

The IRA permits the Secretary of the Department of Health and Human Services (HHS) to implement many of these provisions through guidance, as opposed to regulation, for the initial years.

On August 29, 2023, HHS announced the list of the first ten drugs that will be subject to price negotiations.

HHS has issued and will continue to issue guidance implementing the IRA, although the Medicare drug price negotiation program is currently subject to legal challenges.

impact of the IRA on the pharmaceutical industry and our business cannot yet be fully determined, it is likely to be significant.

In addition, individual U.S.

states have also become increasingly active in implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures and, in some cases, mechanisms to encourage importation from other countries and bulk purchasing.

Furthermore, there has been increased interest by third-party payors and governmental authorities in reference pricing systems and publication of discounts and list prices.

Future legislation could limit payments for pharmaceuticals such as IGALMI and the product candidates that we are developing.

Future legislation could limit payments for pharmaceuticals such as IGALMI TM and the product candidates that we are developing.

We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our products or additional pricing pressures.

The implementation of cost containment

measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our products.

The implementation of cost-containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our products.

Other Health Care Laws and Compliance Requirements

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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 (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.

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.

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Our Employees

We grew our overall headcount over 100% compared to last year to a team of 183 full-time employees as of December 31, 2022.

The headcount increases in 2022 were primarily related to building out our commercial team, as well as adding employees in general and administrative functions to support the growth of our business and commercialization of IGALMI.

In August 2023, our Board of Directors approved the Reprioritization.

Following a comprehensive review of the business, we determined to focus on high-potential agitation-market opportunities using our innovative, AI-based clinical drug development platforms.

We intend to reduce more than 50% of our cash burn, as compared to our cash burn levels during the second quarter of 2023, to approximately $80 million on a go-forward annualized basis.

As part of the Reprioritization, our Board of Directors approved a reduction of approximately 60% of our workforce, from approximately 190 to 80 employees.

These actions also included a shift in commercial strategy for IGALMI™ in the institutional setting, a reduction of in-hospital commercialization expenses, a suspension of programs no longer deemed core to our business, and a shift in focus to develop BXCL501 for use in the at-home setting in the treatment of agitation in schizophrenia, bipolar disorders, and in patients with mild to moderate dementia due to probable Alzheimer’s disease.

We recorded restructuring costs of $4.2 million in the year ended December 31, 2023, including severance and benefit costs of $4.1 million and contract termination costs of $0.1 million, substantially all of which were paid in 2023.

As of December 31, 2023, we had 74 full-time employees.

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

We expect to continue to hire additional employees in 2023 as we expand our commercialization and increase our clinical and preclinical efforts.

We believe that the success of our human capital management investments is evidenced by our low employee turnover, a number which is regularly reviewed by our Board of Directors as part of their oversight of our human capital strategy.

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Employee and Visitor Safety Protocols

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

We follow health and safety guidelines to protect the well-being of our employees and visitors.

Diversity & Inclusion

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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