On Wednesday, UBS downgraded shares of BioXcel Therapeutics (NASDAQ:BTAI) from Buy to Neutral, significantly lowering the price target to $4 from the previous $9. The downgrade reflects growing uncertainties regarding the company's future, particularly its ability to secure necessary funding for continued operations. BioXcel Therapeutics recently retracted a proposed $60 million equity raise approximately one week after its announcement on February 8, 2024, and has been seeking alternative financing options for several months.
The company currently holds around $62 million in cash as of January 31, 2024, which is projected to fund operations until mid-2024, according to third-quarter 2023 earnings per share reports. Management has expressed confidence in their ability to raise capital through partnerships and monetizing their product '701, which they consider non-dilutive options.
Another point of concern highlighted by UBS analyst is the Food and Drug Administration's (FDA) pending approval of trial designs and data use for BioXcel's TRANQUILITY AT-HOME study, which is aimed at addressing Alzheimer's agitation. The company is expected to meet with the FDA in February 2024 to finalize trial designs, with results anticipated in the first quarter of 2025. However, the FDA has not yet confirmed if data from a previous trial site, which had conduct issues, can be used to support the efficacy of BioXcel's drug Igalmi in treating Alzheimer's agitation.
The market demand for Igalmi, specifically for Alzheimer's agitation, is also in question. The drug's launch for schizophrenia and bipolar agitation did not meet initial sales expectations, generating approximately $1.4 million in sales five quarters after its release in July 2022. Moreover, the potential introduction of a novel therapeutic from Bristol Myers (NYSE:BMY) Squibb (KarXT), with registrational data expected around 2026 or later, adds to the competitive landscape and uncertainty.
UBS noted the lack of significant catalysts for BioXcel Therapeutics in 2024, with the next major development, the TRANQUILITY AT-HOME study readout, not expected until the first quarter of 2025. This forecast suggests a year focused on execution and preparation rather than immediate growth or breakthroughs for the company.
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