🔒New Haven’s BioXcel weathers turmoil to regain footing and market confidence

It’s rare for a company to go from ringing a stock exchange’s closing bell to facing delisting — and then to be invited back to ring the bell again. That’s the unusual journey New Haven-based BioXcel Therapeutics has taken in just two and a half years. That roller coaster ride illustrates life for bioscience companies, which face a long, hard road toward developing a new drug and bringing it to market. Assuming the drug makes it through all of its clinical trials, proves its safety and effectiveness and receives federal approval, that can take 10 to 15 years and as much as $2.6 billion, industry experts say. BioXcel Therapeutics’ road to approval, though, took about a third of that time. Its drug is Igalmi (dexmedetomidine), a thin film that dissolves in the mouth to treat acute agitation in patients with schizophrenia and bipolar disorder.

Since receiving U.S. Food and Drug Administration approval in April 2022, BioXcel has been working to expand Igalmi’s use to other disorders. While its most recent clinical trial produced positive results, there were some major potholes along the way. They included multiple job cuts, pay cuts for senior executives and the near delisting from the Nasdaq Stock Market — all tied, in part, to a fabricated email sent by an outside contractor during a clinical trial in December 2022. Meantime, the company has yet to turn a profit as it continues to invest in research and development, posting losses of $67.2 million in 2024 and $171.8 million in 2023. During a recent interview, Vimal Mehta, BioXcel’s co-founder, chairman and CEO, reflected on the past few years and summed them up this way: “Getting a drug approved is more difficult than launching a rocket,” he said.

AI assist

That was not necessarily the case for Igalmi, at least at the start. Founded in 2017 as a spinoff from data analytics firm BioXcel Corp., BioXcel Therapeutics uses proprietary machine-learning algorithms to comb through millions of scientific papers in search of older drugs that were overlooked or abandoned but could be repurposed to treat new diseases. The company used artificial intelligence to identify dexmedetomidine — a hospital sedative — as a potential treatment for agitation and advanced it from early trials to FDA approval in just under four years. The resulting product, Igalmi, is a sublingual film designed to quickly calm patients with schizophrenia or bipolar disorder. The drug officially hit the market in July 2022 and generated net revenue of $1.4 million and $2.3 million in 2023 and 2024, respectively, according to the company’s financial filings. Mehta said BioXcel’s innovation was using its AI platform to identify a drug sold commercially by Pfizer, called Precedex, that had long been used as a sedative and anesthetic. “When we looked at its properties, we saw that we could use microdoses to treat agitation,” he said, adding that making it in the form of a thin film is safer than approaching an agitated patient with a needle for an injection. The speed with which Igalmi gained FDA approval wasn’t the only unusual aspect of BioXcel’s early story. Mehta noted the company also bypassed traditional venture-capital rounds and moved directly into the public markets. “We didn’t do any VC financing or crossover funding,” he said. “We directly became public. Public investors thought that our model is interesting, that it can help bring medicine to the patient faster and cheaper.” For its initial public offering in March 2018, BioXcel sold 5.5 million shares at $11 each, raising nearly $60 million. Four years later, in April 2022, it announced strategic financing agreements with funds managed by Oaktree Capital Management and the Qatar Investment Authority to provide up to $260 million. By the end of that year, BioXcel Therapeutics was on the cusp of commercially marketing Igalmi, while also preparing for additional clinical trials to expand that market, including to those with Alzheimer’s.

The future looked bright for the company, which was invited by Nasdaq to ring the closing bell in February 2023. But that momentum quickly faded amid controversy.

Stock ‘craters’

On June 29, 2023, BioXcel disclosed in a U.S. Securities and Exchange Commission filing that it was investigating possible misconduct by the lead investigator at one of its Phase 3 Alzheimer’s trial sites. The company said the investigator may have fabricated email correspondence to make it appear that a serious adverse event had been reported to BioXcel’s safety vendor within the 24-hour window required by protocol. In reality, the email was fake, and the report had been submitted late. The incident followed a December 2022 FDA inspection at the same site, which cited lapses in informed-consent procedures, case documentation and timely reporting of safety events. Although BioXcel later determined that the adverse event in question occurred in a placebo patient, the findings raised broader concerns about data integrity and the reliability of the Alzheimer’s trial results. The market reaction to the June 29, 2023 SEC notice was swift. BioXcel’s stock, as one news outlet put it, “cratered” that day, plunging nearly 64% to close at $6.39 per share. Mehta said BioXcel had no choice but to make the matter public, even knowing it would create “doubt about the data integrity of the Alzheimer’s trial.” That doubt was nearly crippling. “We lost our ability to continue to raise capital, and we had debt,” Mehta said. In the wake of the disclosures, about a half-dozen class action lawsuits were filed in late 2023 and early 2024 in federal courts in Connecticut and Delaware, where BioXcel is incorporated. The lawsuits allege that company officials misled shareholders. One case was dismissed in June 2024 after a judge ruled the plaintiffs failed to show BioXcel intentionally deceived investors. In August 2023, the company announced plans to cut its workforce from 190 to 80 employees and suspend noncore programs in an effort to stabilize finances. BioXcel downsized again in 2024 — trimming its headcount to about 30 people, eliminating executive roles, and reducing pay for its three top officers. In September 2024, BioXcel filed another SEC notice stating that it faced possible delisting from Nasdaq for failing to meet minimum requirements for share price and market value.

Safe at home

In early February of this year, BioXcel implemented a 1-for-16 reverse stock split after its shares had fallen as low as 18 cents. The move succeeded in lifting the stock price above $1, restoring compliance with Nasdaq’s listing rules. BioXcel now trades comfortably above $2 per share. The following month, the company closed a $14 million registered direct offering of 4 million shares, providing fresh capital as it released a series of encouraging clinical results. In September, BioXcel reported positive findings from a pivotal study showing that Igalmi can be used safely by patients at home without medical supervision. With that data, BioXcel plans to file a supplemental new-drug application with the FDA in the first quarter of 2026 to expand Igalmi’s approved use, Mehta said. “That will be done in Q1 of 2026, and then we expect that approval can happen later in the year,” he said. When Igalmi was first developed, the company estimated it could address about 23 million “episodes” of agitation each year in hospitals and healthcare facilities. Approval for home use would vastly expand that market. “Now we project there will be about 55 to 77 million episodes” annually, Mehta said. “So, it’s a pretty large opportunity, a huge unmet need.” If cleared, Igalmi would become the first drug approved for at-home treatment of agitation tied to schizophrenia and bipolar disorder. September’s announcement of the in-home trial results — combined with BioXcel’s restored compliance with Nasdaq listing standards — prompted the exchange to invite company officials back to ring the closing bell on Oct. 14. Leigh Hixon, Nasdaq’s vice president of listings, welcomed BioXcel officials. “Today’s ceremony marks a moment of reflection and momentum, and this is a time for each of you to celebrate those milestones achieved and the breakthroughs yet to come,” she said. “Your team’s dedication to scientific rigor and patient-centric innovation is so inspiring, and we are absolutely proud to be your partner today to celebrate your continued mission with that.” For his part, Mehta believes the controversy made the company stronger. “I think our data is positive,” he said. “And the investment community sees that.” He said he’s also proud that, despite all the challenges, his core team has stayed with the company. “We believe there is a better way, and we are committed to making that better way a reality,” he said.