Teva’s (TEVA) $125 Million BioXcel Bid Offers Upside, but FDA and Auction Risks Remain

Teva Pharmaceutical Industries Limited (NYSE: TEVA ) has agreed to serve as the stalking-horse bidder for substantially all of BioXcel Therapeutics, Inc. (NASDAQ:BTAI)'s assets in a transaction valued at up to $125 million. The deal is structured as an upfront payment of $57.5 million followed by up to an additional $67.5 million in conditional milestone payments. Teva will be the party that establishes the initial baseline bid in a court-supervised Section 363 auction process under US bankruptcy law, allowing other buyers to compete for the assets before the sale is completed.

On August 27, BioXcel Therapeutics, Inc. (NASDAQ:BTAI) filed for Chapter 11 bankruptcy protection, following a weeks-long cash crisis. The company had informed investors that it didn't have enough money to fund operations beyond the end of August, and it had acquired an emergency loan earlier in the week before filing for bankruptcy, citing a lack of a sustainable solution to its financial troubles. To continue operating during the court process, BioXcel secured $19 million in debtor-in-possession funding from current lenders. Following the bankruptcy filing, BioXcel Therapeutics, Inc. (NASDAQ:BTAI) shares dropped by more than 70% to roughly $0.19.

The deal focuses on BioXcel's neuroscience portfolio, which includes two related assets. The first is Igalmi, a dexmedetomidine sublingual film that is already approved and commercially available as a treatment for acute agitation related to schizophrenia or bipolar I or II disorder in adults. BioXcel Therapeutics, Inc. (NASDAQ:BTAI) has stated that Igalmi will remain commercially available to patients during the bankruptcy process. The second is the pending label expansion for BXCL501, the dexmedetomidine sublingual film marketed as Igalmi for its currently approved indication. The FDA is reviewing an sNDA for potential at-home use in the acute treatment of agitation associated with schizophrenia or bipolar I or II disorder in adults, with a PDUFA target action date of November 14.

Teva Pharmaceutical Industries Limited (NYSE:TEVA) has been steadily rebuilding its neuroscience portfolio as part of what the company calls its "Pivot to Growth" strategy, and business development executive vice president Evan Lippman linked the deal to that effort, stating that business development is critical to boosting the strategy and that the BioXcel Therapeutics, Inc. (NASDAQ:BTAI) assets reflect a planned approach to seeking out innovative products with clear strategic fit and long-term growth potential. This isn't Teva's only recent neuroscience acquisition either. Back in April, the company signed a separate formal agreement to acquire Emalex Biosciences, including its lead asset, ecopipam, for $700 million. The transaction was completed in June.