BioXcel Therapeutics, Inc. (NASDAQ:BTAI) has entered into a Fifth Amendment to its Credit Agreement, according to an 8-K filing with the SEC on Thursday. The amendment includes several significant changes to the company's financial covenants and capital raising requirements, as well as the issuance of new warrants to lenders.
The New Haven, Connecticut-based pharmaceutical company, specializing in the development of drugs for neuroscience and immuno-oncology, has modified the terms of its existing credit agreement with lenders. The amendment waives the requirement for a "going concern" qualification in its year-end financial statements, removes the minimum revenue covenant, and adjusts the capital raise conditions previously set for November 30, 2024.
Under the new terms, BioXcel must secure at least $7 million by November 27, 2024, followed by an additional $18 million by March 15, 2025, and a further $29 million by a date tied to the SERENITY At-Home Phase 3 trial results. The amendment also lowers the minimum liquidity requirement from $25 million to $7.5 million post the initial capital raise.
In addition, the company is required to make a one-time payment of $2.5 million by the end of 2024 and has agreed to a fixed interest rate of 13% per annum on its loans, retroactive to September 30, 2024. The interest payment can be partially capitalized for certain periods, and a new amortization schedule has been set starting March 31, 2026.
As part of the agreement, BioXcel's subsidiaries, OnkosXcel Therapeutics, LLC and OnkosXcel Employee Holdings, LLC, have provided security interests in their assets. The company has also committed to appointing a new independent board director and engaging an investment banker to explore strategic options.
Furthermore, the company has granted new warrants to lenders for the purchase of 5 million shares at an exercise price of $0.01 per share, expiring seven years post-issuance. Existing warrants have been amended to adjust the exercise price in line with the new warrants.
The 8-K filing also included the departure and appointment of certain officers and directors, with David Mack joining the Board of Directors effective November 21, 2024. Mack brings over 25 years of experience in legal, directorial, and investment roles to the company.
Lastly, the company reported an intellectual property update, stating that its '431 Patent has been listed in the FDA's Orange Book, marking the company's 13th patent inclusion.
In other recent news, BioXcel Therapeutics reported its third-quarter financial results, revealing a decrease in net revenue to $214,000 compared to the same quarter in the previous year. However, the company's nine-month revenue showed an overall increase, reaching $1.9 million. Additionally, the net loss was significantly reduced to $13.7 million from $50.5 million in Q3 2023. Mizuho (NYSE:MFG) Securities maintained its Neutral rating on BioXcel, citing unexpectedly low Igalmi sales and higher operating expenses, while expressing concerns about the firm's financial outlook. The company has launched the Phase 3 SERENITY At-Home study for Igalmi, hoping to enhance future revenues, and initiated two pivotal Phase 3 trials for drug candidate BXCL501. However, the need for additional funding to fully support these trials and its product IGALMI, along with immediate liquidity challenges, raises questions about the company's ability to continue operations. These are recent developments that continue to shape the company's trajectory. BioXcel is actively exploring strategic financing options and is in discussions with potential strategic partners to address these concerns.
InvestingPro Insights
BioXcel Therapeutics' recent financial maneuvers, as detailed in the SEC filing, reflect the company's efforts to navigate challenging financial waters. This is further illuminated by InvestingPro data, which shows a market capitalization of just $23.22 million and a significant price decline of 84.92% over the past year.
Despite these challenges, InvestingPro Tips highlight that analysts anticipate sales growth in the current year, which aligns with the company's strategic moves to secure additional funding and explore strategic options. The company's revenue growth of 83.25% in the last twelve months supports this optimistic outlook.
However, investors should note that BioXcel is not currently profitable, with a negative operating income of $74.22 million in the last twelve months. This context helps explain the company's urgent need for capital raises and debt restructuring as outlined in the amended credit agreement.
For those seeking a deeper understanding of BioXcel's financial position and future prospects, InvestingPro offers 5 additional tips that could provide valuable insights for investment decisions.
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