Oaktree Capital and Qatar SWF Back Bipolar Treatment
Posted on 04/20/2022
BioXcel Therapeutics, Inc. (Nasdaq: BTAI) is a commercial-stage biopharmaceutical company utilizing artificial intelligence approaches to develop transformative medicines in neuroscience and immuno-oncology. Funds managed by Oaktree Capital Management, L.P and Qatar Investment Authority (QIA) via Q Boost Holding LLC agreed to provide up to US$ 260 million in gross funding to support BioXcel’s commercial activities of IGALMI (dexmedetomidine) sublingual film. In addition, the financing is intended to support the expansion of clinical development efforts of BXCL501, which includes a pivotal Phase 3 program for the acute treatment of agitation in patients with Alzheimer’s Disease (AD), and for BioXcel’s additional neuroscience and immuno-oncology clinical programs.
The long-term strategic financing process was led by Oaktree and is comprised of the following components:
Credit Agreement: Up to $135 million in a delayed draw term loan – senior secured term loan (Financing also includes warrants to purchase shares of BioXcel common stock and warrants to purchase LLC units in a subsidiary of BioXcel)
Revenue Interest Financing Agreement: Up to $120 million in a capped revenue interest on net sales of IGALMI and any other future BXCL501 products
Equity Investment: Up to $5 million purchase of BioXcel Therapeutics common stock
FDA
Under the agreement, BioXcel Therapeutics will receive $100 million in the first tranches of the strategic financing following approval by the U.S. Food and Drug Administration (FDA) of a New Drug Application (NDA) in respect of the use of the Company’s BXCL501 product for the acute treatment of agitation associated with schizophrenia or bipolar I or II disorder in adults. This condition was satisfied on April 5, 2022 with the FDA’s approval of IGALMI.
Key features of the financing include a credit facility with an interest-only period lasting through the duration of the facility of five years, which can be extended for an additional year at the Company’s option upon approval of BXCL501 by the FDA for the acute treatment of agitation associated with Alzheimer’s Disease. The credit facility includes substantial flexibility for future business development and monetization events, including BXCL701, BioXcel’s investigational, oral innate immunity activator.
Under the terms of the revenue interest financing agreement, Oaktree and QIA will receive tiered revenue interest financing payments on U.S. net sales of IGALMI and any other future BXCL501 products up to a capped return. The revenue interest financing rate ranges from 0.375% to 7.750% of annual net sales of IGALMI and any other future BXCL501 products in the U.S. The total revenue interest financing payable by BioXcel Therapeutics to Oaktree and QIA has a cap at 1.75x of the amount funded, with the ability to redeem the revenue interest financing agreement at lower multiples within the first three years from funding. The strategic financing also includes a potential equity investment of up to $5 million for shares of the Company’s common stock, to be made at the option of Oaktree and QIA, while the credit agreement is outstanding at a price per share equal to a 10% premium over the stock’s 30-day volume weighted average price leading up to the exercise by Oaktree and/or QIA of such option.
Upon closing of this transaction, and together with the Company’s cash balance and anticipated business plan, BioXcel Therapeutics is expected to have a substantial multi-year working capital runway. Full execution of this financing would result in cash runway into 2025 for the Company.
IGALMI (dexmedetomidine) sublingual film, previously known as BXCL501, is a proprietary, orally dissolving film formulation of dexmedetomidine indicated for the acute treatment of agitation associated with schizophrenia or bipolar I or II disorder in adults under supervision by a healthcare provider. The safety and effectiveness of IGALMI has not been established beyond 24 hours from the first dose. The April 5, 2022 U.S. Food and Drug Administration (FDA) approval of IGALMI is based on data from two pivotal randomized, double-blinded, placebo-controlled, parallel group Phase 3 trials evaluating IGALMI for the acute treatment of agitation associated with schizophrenia (SERENITY I) or bipolar I or II disorder (SERENITY II).
Advisors
BofA Securities acted as sole structuring advisor to BioXcel Therapeutics and Cooley LLP served as legal counsel to BioXcel Therapeutics. Sullivan & Cromwell LLP served as legal counsel to Oaktree and Shearman & Sterling LLP served as legal counsel to QIA.
