BioXcel Therapeutics said Thursday its dissolvable tablet significantly reduced agitation symptoms in Alzheimer's patients. But BTAI stock cratered after revealing a fraud investigation at its biggest study site.
On today's stock market, BioXcel shares plummeted 63.8% to close at 6.39.
The company said its treatment cut down on agitation symptoms by 39% relative to a placebo in patients with mild to moderate dementia. But in a Securities and Exchange Commission filing, BioXcel said it's investigating a fraudulent email chain from a clinical site that enrolled 40% of the patients in the study.
Chief Executive Vimal Mehta says the investigation won't change BioXcel's timeline for the tablet in the Alzheimer's population.
"This was a reporting requirement because we found something which was unfortunate and we wanted to make sure we provided the full disclosure around it," he told Investor's Business Daily. "All the work we have done in terms of our own audit, our processes, our data that we are reporting, we wouldn't report it if we didn't have the confidence that we believe in it."
The news sent BTAI stock to its lowest point since late 2019.
BTAI Stock Craters On Fraud Investigation
According to the SEC filing, the lead investigator in BioXcel's study may have fabricated an email chain suggesting the site reported a serious side effect in a timely manner. Later, the company found the side effect occurred in a placebo recipient.
An FDA inspection also found issues related to informed consent and recorded case histories for some patients. These issues cloud the future for BioXcel's tablet called Igalmi in Alzheimer's patients.
"The company's ongoing investigation and/or the planned independent audit may uncover new findings regarding the integrity of the (study) data from this principal investigator's site, the accuracy of safety or (effectiveness) findings, or the usability of the data in connection with a marketing application," BioXcel said in the filing.
Mizuho Securities analyst Graig Suvannavejh "came away very disappointed" in BioXcel's update.
"While the higher 60-microgram dose did demonstrate statistical significance (and hence a win on paper), in our view, we believe that in the worst case scenario, the ongoing FDA investigation calls into question the data where the clinical site enrolled 40% of patients," he said in a note to clients.
The FDA investigation overshadows the Igalmi development program and highlights lost confidence among BTAI stock investors in the company's managers, he said.
Suvannavejh kept his buy rating and 40 price target on BTAI stock.
Company Stands By Its Test Results
In a departure from the negative tone of the SEC filing, Mehta said the test results put BioXcel in a good position to request a supplemental approval for Igalmi in Alzheimer's patients with agitation.
The company tested a lower 60-microgram dose in 149 patients with Alzheimer's disease over 12 weeks. The study included 443 episodes of agitation. Patients who received Igalmi in assisted care or long-term living facilities had a statistically significant reduction in symptoms at one hour — but not 30 minutes — compared with the placebo group.
Mehta says the results are a "huge win" for BioXcel and patients. The Food and Drug Administration approved Lundbeck and Otsuka Pharmaceutical's Rexulti for agitation due to Alzheimer's disease in May. But Rexulti isn't approved as an on-demand treatment. It's a daily pill.
"It's a big milestone for our company, and these positive results really change the game for agitation," he said. "Currently, there's nothing approved for episodic agitation."
The drug will also allow patients with Alzheimer's disease to stay in their homes longer, he said. These episodes can be very taxing on family members and caregivers. Patients often end up in the emergency room. Instead, patients could soon take this drug at home for agitation episodes.
"If these agitation episodes are managed in a home setting or assisted-living setting, they won't escalate to the nursing home or injury to the patient or family member," he said. "It's a huge win for society."
BTAI Stock: 100 Million Episodes Annually
Igalmi works by slowing the heart rate and lowers blood pressure. The 60-microgram dose tested in Alzheimer's patients is lower than the approved 120- and 180-microgram doses approved for people with schizophrenia or bipolar disorders.
But that's because, physiologically speaking, there are differences between the elderly population typical of Alzheimer's disease and patients with schizophrenia or bipolar disorders, who tend to skew younger. BTAI stock analysts largely expected a lower dose to work in the Alzheimer's study.
Over the 12-week study, BioXcel says there were no falls related to the drug among Alzheimer's patients. That safety measure is key.
There's an estimated 100 million agitation episodes each year in the U.S. due to Alzheimer's, Mehta says. That expands the current market for Igalmi by three- to fourfold, Mizuho's Suvannavejh said in an earlier note.
BioXcel CEO Mehta says this puts the company on the path to requesting a supplemental approval for Igalmi in Alzheimer's agitation. The drug has a breakthrough therapy designation, which shortens the FDA review period to six months. But Mehta couldn't say when the company will file for approval.
BTAI Stock's Second Dive
This is the second time in two months BTAI stock has tumbled on news releases.
On May 25, shares plunged more than 25% after the company said the 60-microgram dose pass muster in a study of patients with schizophrenia or bipolar disorders. In this study, they were treated at home. Now, the company is working to test higher doses in the home setting for those patients.
BTAI stock has a middling Relative Strength Rating of 75. This puts shares in the top 25% of all stocks in terms of 12-month performance, according to IBD Digital.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
