Small AI biotech BioX­cel surges on pos­i­tive PhI­II re­sults, set­ting up de­men­tia and Alzheimer’s test

A small biotech added a few hun­dred mil­lion dol­lars in mar­ket val­ue Mon­day morn­ing af­ter an­nounc­ing pos­i­tive Phase III re­sults from their lead neu­rol­o­gy drug.

The drug, known as BX­CL501, comes from BioX­cel, one of a slate of biotechs that has raised mil­lions in re­cent years on the promise of us­ing ar­ti­fi­cial in­tel­li­gence and oth­er ad­vanced com­pu­ta­tion­al tech­niques to speed up the slug­gish pace of drug de­vel­op­ment. Sim­i­lar to the more promi­nent Re­cur­sion, the com­pa­ny aimed to use its tech to find com­pounds that oth­er com­pa­nies or re­searchers had val­i­dat­ed to some de­gree and re­pur­pose them, par­tic­u­lar­ly in the ar­eas of neu­rode­gen­er­a­tion, men­tal health and im­muno-on­col­o­gy.

Now, in a pair of near­ly 400-per­son Phase III tri­als for bipo­lar dis­or­der and schiz­o­phre­nia, the lead drug ef­fec­tive­ly calmed pa­tients’ ag­i­ta­tion, as mea­sured by a stan­dard scor­ing sys­tem. It al­so hit sec­ondary end­points, show­ing the ef­fect be­gan as ear­ly as 20 min­utes af­ter dos­ing.

The com­pa­ny said it plans to sub­mit for ap­proval in the first quar­ter of 2021. Their stock soared 31%, from $52.99 to $69.40 pre-mar­ket on the news.

“In our view, these da­ta are very com­pelling,” Guggen­heim Part­ners’ Yatin Sune­ja wrote in a note to in­vestors, “and we ex­pect ap­proval in both in­di­ca­tions.”

Sune­ja said the re­sults looked “in-line or bet­ter” than Ada­suve, the Alexza drug used as the stan­dard of care for ag­i­ta­tion. She pre­dict­ed $500 mil­lion in peak sales.

When BioX­cel filed for its IPO in 2017, though, the com­pa­ny spent as much time talk­ing about its lead drug’s po­ten­tial in Alzheimer’s and de­men­tia as it did about schiz­o­phre­nia. Al­though fur­ther be­hind, that in­di­ca­tion — so sought out by biotech in re­cent years — re­mains the com­pa­ny’s largest mar­ket po­ten­tial. A Phase I/II tri­al is now un­der­way.

“The larg­er fo­cus for in­vestors is de­men­tia, larg­er mar­ket than schiz­o­phre­nia/bipo­lar,” Sun­Trust’s Robyn Kar­nauskas wrote in a note to in­vestors.

She said the Phase III num­bers sup­port­ed $800 mil­lion in peak sales, while point­ing to even greater po­ten­tial in neu­rode­gen­er­a­tion. “We be­lieve da­ta helps val­i­date tar­get­ing a cen­tral mech­a­nism re­lat­ed to acute ag­i­ta­tion and as such, should help ex­pand BX­CL501 in­to ad­di­tion­al in­di­ca­tions,” she said.

That mech­a­nism in­volves a re­for­mu­la­tion of Pifz­er’s 21-year-old se­da­tion drug Pre­cedex. BioX­cel cre­at­ed a sub­lin­gual ver­sion of the drug that can be giv­en eas­i­ly and pro­duce a calm­ing ef­fect with­out knock­ing a pa­tient out. Specif­i­cal­ly, it ac­ti­vat­ed the al­pha-2 re­cep­tor, the path­way through which nor­ep­i­neph­rine, among oth­er neu­ro-chem­i­cals, trav­els.

In the Phase III stud­ies, the drug re­duced pa­tients’ “ex­cite­ment” score on the Pos­i­tive and Neg­a­tive Syn­drome Scale for schiz­o­phre­nia and bipo­lar dis­or­der. Across 381 schiz­o­phre­nia pa­tients, those on the high dose had 10.3 point re­duc­tion af­ter 2 hours, com­pared with 8.5 on the low dose and 4.8 on place­bo. Across 378 bipo­lar pa­tients, the high dose arm and 10.4 point re­duc­tion, com­pared with 9.1 on the low dose and 5 on place­bo.

Pa­tients al­so showed sta­tis­ti­cal­ly sig­nif­i­cant im­prove­ments on the Ag­i­ta­tion and Calm­ness Eval­u­a­tion Scale (ACES), and clin­i­cal glob­al im­pres­sion.

So­cial im­age: Vi­mal Mehta, BioX­cel CEO

Biogen CEO Michel Vounatsos (via Getty Images)

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Jason Kelly, Ginkgo Bioworks CEO (Kyle Grillot/Bloomberg via Getty Images)

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Bahija Jallal (file photo)

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Vivek Ramaswamy (Jeff Rumans/JPM 2020)

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Vas Narasimhan, Novartis CEO (Jason Alden/Bloomberg via Getty Images)

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John Maraganore, Alnylam CEO (Scott Eisen/Bloomberg via Getty Images)

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