BTAIQ 10-K & 10-Q changes, risk factors and insider trading

We will need substantial additional funding, and if we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts or otherwise seek strategic alternatives. In addition, the failure to raise additional financing in accordance with the minimum capital raising requirements of our Credit Agreement (as defined herein) would trigger an event of default thereunder.

Restrictive covenants in the Credit Agreement place limits on our ability to conduct our business. The Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness, and dividends and other distributions, subject to certain exceptions, including specific exceptions with respect to product commercialization and development activities. In addition, certain events, including receipt of a warning letter from the FDA, may constitute an event of default. We must also comply with certain covenants under the Credit Agreement, including a financial covenant that requires we maintain certain minimum cash liquidity amounts. In addition, certain events, including certain regulatory events and any “going concern” or similar qualification in a report of the Company’s independent registered public accountants relating to the Company’s annual financial statements (except for the years ended December 31, 2023, 2024 and 2023,2025, respectivelywhich have been waived pursuant to the Ninth Amendment), constitute an event of default under the Credit Agreement. The report of our independent registered public accounting firm included in this Annual Report on Form 10-K contains a “going concern” explanatory paragraph. The Credit Agreement also includes other covenants relating to certain change of control events can also trigger an event of default under the Credit Agreement, including control by any entity or group of entities, other than BioXcel LLC and its affiliates, that acquires 35% or more of our voting capital stock.

Our ability to make scheduled payments or payments to maintain compliance with covenants or to restructure or refinance these and other outstanding debt obligations depends on our financial and operating performance, including growth in revenue from IGALMI® and BXCL501, which will be affected by prevailing economic, industry and competitive conditions and by financial, business and other factors beyond our control. A failure to pay our debt, fixed costs and other obligations or a breach of our contractual obligations or other event of default could result in a variety of adverse consequences, including the acceleration of our obligations or the exercise of remedies by our creditors and lessors.lessors or otherwise exercise the rights of a secured creditor. In such a situation, it is unlikely that we would be able to cure our breach, fulfill our obligations, make required payments or otherwise cover our fixed costs, which would have a material adverse effect on our business, results of operations and financial condition.

In addition, historically we have relied on debt and equity financings as our primary sources of liquidity. If our future cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay expenditures, sell assets, seek additional capital or seek to restructure or refinance our indebtedness. Additionally, under the terms of the Ninth Amendment, following receipt of aggregated gross proceeds from Capital Raise Activities, we have agreed to make a prepayment of the loans under the Credit Agreement in an aggregate principal amount equal to 50% of such gross cash proceeds, together with accrued interest thereon and any fees or premia (including prepayment premium) payable in connection therewith; provided that such prepayment requirement shall not be applicable (A) with respect to the first $2.5 million gross proceeds received from Capital Raise Activities and (B) once the aggregate principal amount of the prepaid pursuant to one or more of such prepayments equals $2.5 million. Any refinancing or restructuring of our indebtedness could be at higher interest rates and may require us to comply with more onerous covenants. These alternative measures may not be successful and may not permit us to meet our scheduled or any accelerated debt service obligations. In the absence of such cash flows and resources, we could face substantial liquidity problems and might be required to sell material assets or pursue other strategic alternatives to attempt to meet our debt service obligations.

Following our discovery of principal investigator misconduct at one of the clinical sites in our TRANQUILITY II Phase 3 clinical trial, we initiated an investigation into the issues associated with the trial. This principal investigator had previously been subject to a December 2022 FDA inspection of her clinical site in connection with the TRANQUILITY II clinical trial. At the conclusion of this inspection, the FDA issued an FDA Form-483 identifying three inspectional observations. These observations related to the principal investigator’s failure to adhere to the informed consent form approved by the Institutional Review Board for a limited number of subjects whose records the FDA reviewed, maintain adequate case histories for certain patients whose records the FDA reviewed, and adhere to the investigational plan in certain instances. For example, the FDA cited the principal investigator’s delay in informing the sponsor’s medical monitor or pharmacovigilance safety vendor of an SAE, for one of the subjects, which report was made to our vendor outside of the 24 hour time period prescribed by the clinical trial protocol. The principal investigator for this clinical site responded to the FDA observations within the time period requested. The FDA concluded that the inspection of a single site in its TRANQUILITY II Phase 3 trial is closed under 21 C.F.R.20.64(d)(3) and released the Establishment Inspection Report. The FDA has designated “Voluntary Action Indicated” for the site.site, which means objectionable conditions or practices were found without significant public health risks, but the agency is not prepared to take or recommend any administrative or regulatory action.

The primary efficacy endpoint in TRANQUILITY II was the change in PEC score, which is a measurement of agitation severity captured by trained raters during an agitation episode. While change in PEC score has been used to support the approval of IGALMI® for the acute treatment of agitation associated with schizophrenia or bipolar I or II disorder in adults, it has not been used as a primary endpoint to support the approval of a drug candidate for the treatment of agitation associated with Alzheimer’s Disease. Prior to initiating our TRANQUILITY II trial, we believe we reached alignment with FDA regarding the use of PEC scores as a primary endpoint to assess individual agitation episodes in dementia patients. In the normal course, we have been in communication with the FDA regarding the data and information needed to further support the consistency of the measurement of PEC ratings, and we believe that we have generated sufficient data to demonstrate such consistency. Following submission of certain data on PEC score from a separate study of raters assessing video vignettes, the FDA expressed certain concerns with respect to the reliability of PEC scores in that study. The FDA has requested that we provide additional information to support the consistency of the measurement of PEC ratings to assess the treatment of agitation associated with Alzheimer’s Disease. While we believe that we have generated sufficient data to demonstrate such consistency, and we plan to submit these data and analyses to the FDA, if the FDA disagrees, it may require that we provide more information to demonstrate reliability in the measurement of PEC scores and/or may require that we generate additional data to support the reliability of PEC score measurements in our TRANQUILITY II trial. There can be no assurances that any information or and data we provide to FDA will sufficiently demonstrate the consistency and reliability of the PEC-score data from our TRANQUILITY II trial, or that our PEC-score data will not represent a potential review issue in connection with any application we may submit to FDA.

We have limited clinical data supporting potential safety or efficacy of BXCL501 for use in the at-home setting in the acute treatment of agitation in patients with dementia due to probable Alzheimer’s disease.disease and patients with schizophrenia and bipolar patients.

In August 2023, we announced our intention to pursue the Clinical Reprioritization, including among other things, a shift in focus to primarily develop BXCL501 for use in expanded settings, including the at-home setting and care facilities, for the acute treatment of agitation in patients with dementia due to probable Alzheimer’s disease and the acute treatment of agitation in schizophrenia and bipolar patients in the at-home setting. Although we have conducted several clinical trials that evaluated BXCL501 in the institutional setting, and we arehave conductingconducted the SERENITY At-Home Phase 3 trial evaluating the safety of BXCL501 for the acute treatment of agitation associated with bipolar disorders or schizophrenia in the at-home setting, but we have not conducted a clinical trial evaluating the at-home use of BXCL501 in the acute treatment of agitation in patients with dementia due to probable Alzheimer’s disease.

Although we will seek additional feedback from the FDA regarding the potential of its ongoing or completed clinical trials to support submission of one or more sNDAs and to support a label for use in the home, it is possible that the FDA may not consider our available data adequate to support such submissions. For example, on October 11, 2023, we received feedback from the FDA that TRANQUILITY I and TRANQUILITY II alone are not sufficient to support an sNDA submission for the use of BXCL501 to treat acute agitation (non-daily) in patients with dementia due to probable Alzheimer’s disease in either the at-home setting or care facilities, and the FDA indicated that we should, among other things, conduct a further clinical trial to evaluate safety and collect efficacy data of BXCL501 before we are able to submit an sNDA seeking approval of BXCL501 for use in such populations.

With respect to our SERENITY program, we also held a Type C Meeting with the FDA on March 6, 2024 to obtain further feedback on our proposed changes to the design of SERENITY III Part 2, including with respect to the trial endpoints, and to discuss the content and format of a potential sNDA submission to expand the label of IGALMI® 120 micrograms to the acute treatment of agitation associated with schizophrenia and bipolar disorders in the outpatient setting. IGALMI® is already approved at the 120 mcg dose based on efficacy data that we previously generated in treating a single episode of agitation. Consistent with the data generated to date, the label for IGALMI® currently includes a limitation on use (“LOU”), noting the lack of efficacy or safety data beyond 24 hours following the first dose. During our March 6, 2024 Type C meeting with the FDA, we discussed, among other things, whether evaluating the at-home use of BXCL501 120 mcg, with safety as the primary objective and efficacy measures as exploratory endpoints, if successful, could support the submission of an sNDA seeking expansion of the current label for IGALMI® 120 mcg to allow at-home use and labeling without the current LOU. Based on current FDA feedback, we have amended the Part 2 of the SERENITY III protocol to evaluate the safety and efficacy of the 120 mg dose in the at-home setting, and now refer to this revised trial as the SERENITY At-Home trial. WeOn believeAugust 27, 2025, we announced that ourthe abilitySERENITY At-Home trial evaluating the safety of BXCL501, met its primary endpoint. Additionally, on October 14, 2025, we announced positive results from the correlation study related to seekexploratory labelingefficacy withoutoutcomes from the currentSERENITY LOUAt-Home willtrial. depend,The inresults part, onfrom the numbercorrelation study along with that data from this successful study formed the basis of agitationthe episodessupplemental weNew observeDrug duringApplication our(sNDA) plannedsubmission studyfor period.label Evenexpansion ifof our planned SERENITY At-home trial is successful in demonstrating safetyIGALMI® in the at-home setting, andwhich evenwas ifsubmitted to the IGALMI®FDA 120on mcgJanuary label14, is expanded to allow outpatient use, there is no guarantee that we will observe and/or treat a sufficient number of agitation episodes during the study period to support removal of the current LOU.2026.

Any modifications to our proposed trial designs, whether by us or by the FDA would delay our initiation of such proposed trials, increase the costs of any trial that we do conduct and delay any potential submission of an sNDAs for BXCL501. Requirements to conduct additional clinical trials evaluating BXCL501 in support of our plannedsNDAs submission and any future sNDAs seeking approvals for BXCL501 for our targeted patient populations in at-home settings would increase our costs, and in either case, such modifications or requirements could have a material adverse effect on our prospects and results of operations.

We currently have only one product that has received regulatory approval and may never be able to develop additional marketable product candidates. We are continuing to invest a significant portion of our efforts and financial resources in the commercialization of IGALMI® and development of our four product candidates, BXCL501, BXCL502, BXCL701 and BXCL702, as well as other product candidates. In connection with the Clinical Reprioritization, we have significantly reduced the resources devoted to commercialization of IGALMI® and it is possible that will have adverse consequences on the revenue that we are able to generate from IGALMI® in the near term. As part of the Company’s Clinical Reprioritization, the IGALMI® commercial team shifted focus to a hospital/Integrated Delivery Network (“IDN”) contracting strategy with a Corporate Account Director (CAD) team. The goal of the realigned CAD team is to work with large IDNs and drive sales utilizing a top-down approach. Over time, the revised commercial effort is expected to allow the Company to continue to make inroads into the institutional market in a more cost-efficient manner. However,In January 2026, Mark Pavao joined the Company as Interim Chief Commercial Officer to support the potential launch of IGALMI® in the at-home setting, pending FDA approval of our sNDA submission. While this appointment strengthens our commercial readiness, we continue to have limited experience in drug developmentmarketing and commercialization,selling drug products and ourmay prospectsneed areto substantiallyfurther dependent onexpand our ability,commercial or that of any future collaborator,team to develop,successfully obtainlaunch marketing approvalIGALMI for andthe successfullyat-home commercializeindication productif candidates in one or more additional disease indications.approved.

We have only submitted one NDA to the FDA and have not submitted any similar marketing applications to comparable foreign authorities, for any product candidate,candidate. andOn January 14, 2026 we submitted a sNDA for label expansion of IGALMI® in the at-home setting based on the data from the successful SERENITY At-Home trial, we cannot be certain that our submission will be approved, or that our other product candidates currently in development, or any than may be developed in the future, will be successful in clinical trials or receive regulatory approval. Further, our product candidates currently in development, or any that may be developed in the future, may not receive regulatory approval even if we believe they are successful in clinical trials. If we do not receive regulatory approvals for additional product candidates, we may not be able to continue our operations. For any regulatory approvals to market one or more of our product candidates, our revenues will be dependent, in part, upon the size of the markets in the territories for which we gain regulatory approval and have commercial rights. If the markets for patients that we are targeting for IGALMI® or our other product candidates are not as significant as we estimate, we may not generate significant revenues from sales of IGALMI® or such other product candidates, if approved.

In addition, the FDA’s and other regulatory authorities’ policies with respect to clinical trials may change and additional government regulations may be enacted. For instance, the regulatory landscape related to clinical trials in the EU recently evolved. The EU Clinical Trials Regulation (“CTR”), which was adopted in April 2014 and repeals the EU Clinical Trials Directive, became applicable on January 31, 2022. While the Clinical Trials Directive required a separate clinical trial application (“CTA”), to be submitted in each member state in which the clinical trial takes place, to both the competent national health authority and an independent ethics committee, the CTR introduces a centralized process and only requires the submission of a single application for multi-center trials. The CTR allows sponsors to make a single submission to both the competent authority and an ethics committee in each member state, leading to a single decision per member state. The assessment procedure of the CTA has been harmonized as well, including a joint assessment by all member states concerned, and a separate assessment by each member state with respect to specific requirements related to its own territory, including ethics rules. Each member state’s decision is communicated to the sponsor via the centralized EU portal. Once the CTA is approved, clinical study development may proceed. The CTR foresees a three-year transition period. The extent to which ongoing and new clinical trials will be governed by the CTR varies. For clinical trials whose CTA was made under the Clinical Trials Directive before January 31, 2022, the Clinical Trials Directive will continue to apply on a transitional basis for three years. Additionally, sponsors could choose to submit a CTA under either the Clinical Trials Directive or theThe CTR untiltransition period ended on January 31, 20232025, and,and ifall authorized,clinical thosetrials (and related applications) are governednow by the Clinical Trials Directive until January 31, 2025. By that date, all ongoing trials will becomefully subject to the provisions of the CTR.

Before obtaining marketing approval from the FDA, or other comparable foreign regulatory authorities, for the sale of our product candidates, we must complete preclinical development and extensive clinical trials to demonstrate the safety and efficacy of our product candidates, in accordance with applicable law and regulations. Failure can occur at any time during the clinical trial process. AlthoughWe wehave completed the SERENITY At-Home trial evaluating the safety of BXCL501 and, on January 14, 2026, submitted an sNDA for label expansion of IGALMI® in the at-home setting based on the data from the successful SERENITY At-Home trial and are planning for certain clinical trials relating to BXCL501, BXCL701, BXCL502 and our other product candidates, there can be no assurance that the FDA, or other comparable foreign regulatory authorities, will accept our submission or proposed trial designs as sufficient to establish the safety and/or efficacy of our product candidates.

The discovery and development of product candidates based on EvolverAI, BioXcel LLC’s proprietary pharmaceutical discovery and development engine, and our artificial intelligence (“AI”) platform is novel and unproven, and we do not know whether we will be able to develop any products of commercial value.

WeOur aredrug leveragingdiscovery and development efforts depend on our own AI platform and BioXcel LLC’s EvolverAI, a proprietary pharmaceutical discovery and development engine, to create a pipeline of neuroscience and immuno-oncology product candidates for patients whose diseases have not been adequately addressed to date by other approaches and to design and conduct efficient clinical trials with a higher likelihood of success. While we believe that applying our AI platform and BioXcel LLC’s EvolverAI to create medicines for defined patient populations may potentially enable drug research and clinical development that is more efficient than conventional drug research and development, our approach is novel. Although we obtained FDA approval for IGALMI®, because our approach is novel, the cost and time needed to develop our product candidates is difficult to predict, and our efforts may not result in the discovery and development of commercially viable medicines. We may also be incorrect about the effects of our product and product candidates on the diseases of our defined patient populations, which may limit the utility of our approach or the perception of the utility of our approach. Furthermore, our estimates of our defined patient populations available for study and treatment may be lower than expected, which could adversely affect our ability to conduct clinical trials and may also adversely affect the size of any market for medicines we may successfully commercialize. Our approach may not result in time savings, higher success rates or reduced costs as we expect it to, and if not, we may not attract collaborators or develop new drugs as quickly or cost effectively as expected and therefore we may not be able to commercialize our approach as originally expected.

Any drug discovery that we are conductingconduct using the Company’s AI platform and BioXcel LLC’s EvolverAI may not be successful in identifying compounds that have commercial value or therapeutic utility. The Company’s AI platform and BioXcel LLC’s EvolverAI may initially show promise in identifying potential product candidates, yet fail to yield viable additional product candidates for clinical development or potential commercialization for a number of reasons, including:

Our future success in novel drug discovery and drug development projects depends on our ability to continue to develop and implement our proprietary AI algorithms and models, and to maintain the confidentiality of this technology. ChangesIn addition to the current pause in further developing our AI platform, changes to existing regulations, their interpretation or implementation, or new regulations could impede our use of this technology or require that we disclose our proprietary technology to our competitors, which could impair our competitive position and result in an adverse effect on our business, results of operations and financial condition.

The ability of the FDA and foreign regulatory authorities to review and approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory and policy changes, the FDA’s or foreign regulatory authorities’ ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s or foreign regulatory authorities’ ability to perform routine functions. Average review times at the FDA and foreign regulatory authorities have fluctuated in recent years as a result of some of these aforementioned issues. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. Disruptions at the FDA and other agencies, such as the EMA, following its relocation to Amsterdam and corresponding staff changes, may also slow the time necessary for new drug or modifications to approved drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities.

We plan to continue to commercialize IGALMI® sublingual film for the acute treatment of agitation associated with schizophrenia or bipolar I or II disorder, to be self-administered by patients under the supervision of a healthcare provider, which is our only approved product to date. However, in connection with the Clinical Reprioritization, we significantly reduced the resources devoted to commercialization of IGALMI ® and it is possible that will have adverse consequences on the revenue that we are able to generate from IGALMI®. Revenues for IGALMI® for the year ended December 31, 20242025 were $2.3$0.6 million. If our commercial products do not gain market acceptance, we may not be able to fund future operations, including developing, testing and obtaining regulatory approval for an sNDA for other BXCL501 indications, including in the at-home setting for the acute treatment of agitation (non-daily) associated with dementia due to probable Alzheimer’s disease, or for other product candidates that it may develop. Our results of operations could be materially harmed if we are unable to successfully commercialize IGALMI® for any currently or additionally approved indications or any future product candidates that we may have approved.

We have limited experience in marketing and selling drug products. We have not entered into arrangements for the sale and marketing of IGALMI®, BXCL501, BXCL502, BXCL701, BXCL702 or any other product candidate. Typically, pharmaceutical companies would employ groups of sales representatives and associated sales and marketing staff numbering in the hundreds to thousands of individuals to call on the large number of physicians and hospitals. Following our Clinical Reprioritization, we may need to rebuild a commercial sales and marketing team if we seek to modify our commercial strategy for IGALMI® or initiate commercial sales for any product candidate in the future, which will likely require significant cost. We may seek to collaborate with a third-party to market our drugs or may seek to market and sell our drugs by ourselves. If we seek to collaborate with a third-party, we cannot be sure that a collaborative agreement can be reached on terms acceptable to us. We may also need to hire additional personnel skilled in marketing and sales for our direct marketing and selling efforts. We cannot be sure that we will be able to acquire, or establish third-party relationships to provide, any or all of these marketing and sales capabilities. The maintenance and expansion of our direct sales force or establishment of a contract sales force, or a combination thereof, as applicable, to market our products is expensive and time-consuming and could delay any product launch. In addition, reputational harm from the Clinical Reprioritization may adversely impact our efforts to hire personnel skilled in marketing and sales. Further, we can give no assurances that we will be able to maintain a direct and/or contract sales force for any period of time or that our sales efforts will be sufficient to grow our revenues or that our sales efforts will ever lead to profits. A direct sales force has in the past subjected and may in the future subject us to higher fixed costs than those of companies that market competing products through independent third parties, due to the costs that we bear associated with employee benefits, training, and managing sales personnel. As a result, we could be at a competitive disadvantage. Additionally, these fixed costs may slow our ability to reduce costs if needed, which could have a material adverse effect on our business, financial condition, and results of operations.

Third-party payors are increasingly challenging the prices charged for medical products and services. It will be time consuming and expensive for us to go through the process of seeking coverage and reimbursement from Medicare and private payors. IGALMI® and any other products for which we receive regulatory approval may not be considered cost-effective, and coverage and reimbursement may not be available or sufficient to allow us to sell our proposed products on a profitable basis. Further federal, state and foreign government proposals and health care reforms are likely which could limit the prices that can be charged for IGALMI® and the product candidates that we develop and may further limit our commercial opportunities. Our results of operations could be materially adversely affected by proposed health care reforms, by the Inflation Reduction Act and other drug pricing legislation in the U.S., by the possible effect of such current or future legislation on amounts that private insurers will pay and by other health care reforms that may be enacted or adopted in the future.

In addition, other legislative changes have been proposed and adopted in the U.S. since the ACA was enacted. These changes include the Budget Control Act of 2011, which resulted in aggregate reductions of Medicare payments to providers, which went into effect on April 1, 2013, and, due to subsequent legislative amendments to the statute, will remain in effect through 2032, unless additional Congressional action is taken. Furthermore, the American Taxpayer Relief Act of 2012, further reduced Medicare payments to several types of providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. More recently, on March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory Medicaid drug rebate cap, beginning January 1, 2024. The rebate was previously capped at 100% of a drug's average manufacturer price.

Most significantly, on August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law. This statute marks the most significant action by Congress with respect to the pharmaceutical industry since adoption of the ACA in 2010. Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025). The IRA permits the Secretary of the Department of Health and Human Services (“HHS”) to implement many of these provisions through guidance, as opposed to regulation, for the initial years. On August 29, 2023, HHS announced the list of the first ten drugs that will be subject to price negotiations. As of January 17, 2025, HHS announced it will begin price negotiations for a list of fifteen additional drugs. HHS has issued and will continue to issue guidance implementing the IRA, although the Medicare drug price negotiation program is currently subject to legal challenges. While the impact of the IRA on the pharmaceutical industry and our business cannot yet be fully determined, it is likely to be significant.

BioXcel Therapeutics, Inc. (Nasdaq: BTAI, “BTI” or the “Company”) is a biopharmaceutical company utilizingbuilt on artificial intelligence (“AI”) to develop transformative medicines in neuroscienceneuroscience. and, through the Company’sOur wholly owned subsidiary, OnkosXcel TherapeuticsTherapeutics, LLCis (“OnkosXcel”),focused on the development of medicines in immuno-oncology. We arehave focused on utilizingutilized cutting-edge technology and innovative research to develop high-value therapeutics aimed at transforming patients’ lives. We employdeveloped variousa proprietary AI platformsplatform to reduce therapeutic development costs and potentially accelerate development timelines. Our approach leverages existing approved drugs and/or clinically evaluated product candidates together with big data and proprietary machine learning algorithms to identify new therapeutic indications. We believe this differentiated approach has theproven its potential to reduce the expense and time associated with drug development in diseases with substantial unmet medical needs.

Our most advanced neuroscience candidate is BXCL501. In indications other than those approved by the United States (“U.S.”) Food and Drug Administration (“FDA”) as IGALMI®, BXCL501 is an investigational, proprietary, orally dissolving sublingual film formulation of dexmedetomidine (or “Dex”) in development for the treatment of agitation associated with psychiatric and neurological disorders. Our most advanced immuno-oncology asset, BXCL701, is an investigational oral innate immune activator being developed byfrom OnkosXcel Therapeutics as a potential therapy for the treatment of aggressive forms of prostate cancer, pancreatic cancer, and other solid and liquid tumors.

On April 6, 2022, we announced that the FDA approved IGALMI® (dexmedetomidine) sublingual film for the acute treatment of agitation associated with schizophrenia or bipolar I or II disorder in adults. IGALMI® is approved to be self-administrated by patients under the supervision of a health care provider. On July 6, 2022, we announced that IGALMI® was commercially available in doses of 120 and 180 micrograms.micrograms (“mcg”).

We continue to support IGALMI® in the hospital setting with minimal commercial support. On August 14, 2023, the Company announced it had implemented a shift in commercial strategy for IGALMI® in the institutional setting, a reduction of in-hospital commercialization expenses, a suspension of programs no longer deemed core to the Company’s business, and a shift to focus on the development of BXCL501 for use in the at-home and care facilities in the treatment of acute agitation in schizophrenia and bipolar disorders, and in the treatment of acute agitation (non-daily) associated with dementia due to probable Alzheimer’s disease (collectively, the “ Clinical Reprioritization”).

Following the Clinical Reprioritization, a small Corporate Account Director (“CAD”) team supported current customers and targeted Integrated Delivery Networks (“IDNs”) with educational support and contracting opportunities, while our trade operation supported customers with drug supply. The goal of this approach was to help maintain current business and potentially broaden IGALMI® utilization through volume contracting.

As part of the Clinical PrioritizationReprioritization in September 2024, further workforce reductions were made, including 9 additional marketing and sales employees. The Clinical PrioritizationReprioritization staff reductions may have futurehad impacts on net revenue. Despite our reduction in commercial resources, net revenues from IGALMI® product sales ofdecreased to $642 for the year ended December 31, 2025 from $2,266 for the year ended December 31, 2024 were up 64% over net revenues from IGALMI® product sales of $1,380 for the year ended December 31, 2023. We believe this positive growth reflects increasing market acceptance and interest in our product.2024.

CreditMarch Agreement2026 AmendmentsOffering and Warrant Amendment

Revenue relates to sales of IGALMI® and reflectreflects limited market access since commercial launch in July 2022. The revenues are net of rebates, chargebacks, discounts, and other adjustments. During the fourth quarter of 2022, we began contracting directly with intermediaries such as GPOs.

20242023 Clinical PrioritizationReprioritization

As discussed in Note 4, Restructuring, onOn May 8, 20242024, the Company took additional actions as part of its continued efforts to preserve cash and prioritize investment in its core clinical programs. As part of these actions, theThe Company initiatedreduced aits furtherworkforce reduction ofby approximately 15% of the Company’s then current workforce. The Companyand notified impacted employees on May 8, 20242024. andAll recorded totalrelated restructuring costs of $856 for the three months ended June 30, 2024. These costs consisted of severance and benefit costs, all of which were paid duringin the threesecond monthquarter period ended June 30,of 2024.

As of MarchJune 31,30, 2026, we had $17.2$13.8 million in cash, cash equivalents and restricted cash. Based on our existing cash, cash equivalents and lack of current availability under our funding facilities, we do not believe we have sufficient cash on hand to support current operations and service our debt obligations for at least one year from the date of issuance of the audited consolidated financial statements appearing in this in this Quarterly Report. This condition raises substantial doubt about our ability to continue as a going concern for at least one year from the date that our financial statements for the three and six months ended MarchJune 31,30, 2026 are issued. In order to mitigate liquidity issues, we have undertaken the Clinical Reprioritization and other restructuring actions, and may, among other things, seek to raise capital through the issuance of common stock, or by restructuring, refinancing, and/or amending the terms of the Credit Agreement (including with respect to regulatory related events of default that do not contain a cure period) or pursue other strategic alternatives. However, such transactions may not be successful and we may not be able to raise additional equity and/or financing necessary to meet our obligations.

Since our inception, we have incurred significant operating losses. Our net loss was $12.7$27.4 million and $7.3$26.4 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. As of MarchJune 31,30, 2026, we had a stockholders’ deficit of approximately $105.5$115.5 million. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. We have only one product candidate approved for marketing in the U.S., none in any other jurisdiction, and may never receive approval beyond the one product approved to date. It could be several years, if ever, before we have a commercialized product that generates significant revenues through sales of IGALMI® or our product candidates, if approved. As a result, we are uncertain when or if we will achieve profitability and, if so, whether we will be able to sustain it. The net losses we incur may fluctuate significantly from quarter to quarter and year to year. We anticipate that our expenses may increase in the long term as we:

Management believes that the Company’s cash, cash equivalents and restricted cash of $17.2$13.8 million as of MarchJune 31, 2026, plus the $2.7 million of gross proceeds from sales pursuant to the Company ATM Program after March 31,30, 2026, will allow the Company to fund its operations and meet its liquidity requirements intothrough the second quarterend of August 2026. There can be no assurance that we will be able to extend our cash runway.

As we continue our research and development activities, we will require additional resources to continue as a going concern. We can provide no assurance that we will successfully obtain additional resources to improve our financial condition. If we are unable to obtain necessary additional capital, we could be compelled to pursue alternative options, including, without limitation, implementing further workforce reductions, reducing or ceasing product development programs and advancement of our clinical trials and product candidates, selling our assets or seeking other strategic alternatives. Our board of directors is evaluating a range of strategic options to maximize shareholder value and advance the commercial and development plans for IGALMI, which may include, but are not limited to, a sale of the Company, a merger or other business combination, a collaboration, joint venture, royalty or license agreement of all or a portion of our assets, a recapitalization or other financing transaction, or continued execution of our standalone operating plan. We have not made a decision to pursue any specific transaction or strategic option, no set timetable has been established for the completion of this process, and there can be no assurance that the process will result in any transaction or other particular outcome. The process itself may be costly and time-consuming, may divert the attention of our management and the board of directors, may create uncertainty for our employees, collaborators and counterparties, and may cause volatility in the trading price of our common stock. Further, if we seek relief under the U.S. Bankruptcy Code, there can be no guarantees that we will emerge from bankruptcy as a going concern or that holders of our common stock will receive any recovery from any bankruptcy proceedings.

As of MarchJune 31,30, 2026, we had aggregate principal indebtedness of $104.0$107.2 million outstanding under our Credit Agreement and Guaranty (as amended, the “Credit Agreement”) by and among the Company, as the borrower, certain subsidiaries of the Company from time to time party thereto as subsidiary guarantors, the lenders party thereto (the “Lenders”), and Oaktree Fund Administration LLC (“OFA”) as administrative agent.

Restrictive covenants in the Credit Agreement place limits on our ability to conduct our business. The Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness, and dividends and other distributions, subject to certain exceptions, including specific exceptions with respect to product commercialization and development activities. In addition, certain events, including receipt of a warning letter from the FDA, may constitute an event of default. We must also comply with certain covenants under the Credit Agreement, including a financial covenant that requires we maintain certain minimum cash liquidity amounts. In addition, certain events, including certain regulatory events and any “going concern” or similar qualification in a report of the Company’s independent registered public accountants relating to the Company’s annual financial statements (except for the years ended December 31, 2023, 2024 and 2025, which have been waived pursuant toby the Ninth AmendmentLenders), constitute an event of default under the Credit Agreement.

We have only submitted one NDA to the FDA and have not submitted any similar marketing applications to comparable foreign authorities, for any product candidate. On January 14, 2026 we submitted a sNDA for label expansion of IGALMI® in the at-home setting based on the data from the successful SERENITY At-Home trial, we cannot be certain that our submission will be approved, or that our other product candidates currently in development, or any than may be developed in the future, will be successful in clinical trials or receive regulatory approval. Further, our product candidates currently in development, or any that may be developed inDuring the future,sNDA mayreview notcycle, receivethe regulatoryFDA approval even ifrequested we believe they are successful in clinical trials. If we do not receive regulatory approvals for additional product candidates, we may not be able to continue our operations. For any regulatory approvals to market one or more of our product candidates, our revenues will be dependent, in part, uponmodify the sizechild-resistant feature of the marketsprimary in the territories for which we gain regulatory approval and have commercial rights. If the markets for patients that we are targeting for IGALMI® or our other product candidates are not as significant as we estimate, we may not generate significant revenues from salespackage of IGALMI® for use in the at-home setting. We plan to submit a new proposed package design to the FDA in response to their feedback. We have no assurance that the FDA will accept our proposed package design in a timely manner or suchat otherall. productAny candidates,delays ifin approved.the FDA’s review, feedback or approval of our proposed package design could have a negative impact on the likelihood of receiving approval for our sNDA on the PDUFA target action date of November 14, 2026.

We plan to continue to commercialize IGALMI® sublingual film for the acute treatment of agitation associated with schizophrenia or bipolar I or II disorder, to be self-administered by patients under the supervision of a healthcare provider, which is our only approved product to date. However, in connection with the Clinical Reprioritization, we significantly reduced the resources devoted to commercialization of IGALMI ® and it is possible that will have adverse consequences on the revenue that we are able to generate from IGALMI®. Revenues for IGALMI® for the three and six months ended MarchJune 31,30, 2026 were $0.2 million.million and $0.4 million, respectively. If our commercial products do not gain market acceptance, we may not be able to fund future operations, including developing, testing and obtaining regulatory approval for an sNDA for other BXCL501 indications, including in the at-home setting for the acute treatment of agitation (non-daily) associated with dementia due to probable Alzheimer’s disease, or for other product candidates that it may develop. Our results of operations could be materially harmed if we are unable to successfully commercialize IGALMI® for any currently or additionally approved indications or any future product candidates that we may have approved.

Our Chief Executive Officer and member of our board of directors, Vimal Mehta, Ph.D., is the Chief Executive Officer, President, Treasurer and Secretary and a member of the board of managers of BioXcel LLC and Chief Executive Officer, President, Treasurer and Secretary and the sole member of the board of directors of BioXcel Holdings, Inc. Additionally, as of MarchJune 31,30, 2026, Dr. Mehta, through his beneficial ownership of BioXcel LLC, beneficially owned approximately 1.8%1.5% of the Company. The management and ownership of BioXcel LLC by Dr. Mehta may create the appearance of conflicts of interest when Dr. Mehta is faced with decisions that could have different implications for BioXcel LLC than the decisions have for us, including decisions that relate to our Services Agreement and Contribution Agreement, as well as potential agreements relating to future product candidates and AI-related services or collaborations. Any perceived conflicts of interest resulting from investors questioning the independence of our management or the integrity of corporate governance procedures may materially affect our stock price and expose us to litigation risk.

As such, these third-party manufacturers will be required to comply with cGMPs, and other applicable laws and regulations. We have no control over the ability of these third parties to comply with these requirements, or to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or any other applicable regulatory authorities do not approve the facilities of these third parties for the manufacture of our other product candidates or any products that we may successfully develop, or if it withdraws any such approval, or if our suppliers or contract manufacturers decide they no longer want to supply or manufacture for us, we may need to find alternative manufacturing facilities, in which case we might not be able to identify manufacturers for clinical or commercial supply on acceptable terms, or at all. Any of these factors would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates and adversely affect our business. Currently, a manufacturing facility of our sole supplier of an active pharmaceutical ingredient used in the production of Dex is subject to an “official action indicated” (OAI) by the FDA related to cGMP requirements. The OAI is not specifically related to the active pharmaceutical ingredient used in the production of Dex, but nonetheless the OAI could result in a delay or rejection by the FDA in connection with our Prescription Drug User Fee Act (“PDUFA”) target action date of November 14, 2026.

In addition, in April 2025, we entered into an Equity Distribution Agreement with Canaccord Genuity LLC establishing an “at-the-market” equity offering program under which Canaccord acts as sales agent (the “Company ATM Program”). On August 18, 2025, following an increase in the Company's public float above $75 million, we amended the program to permit sales of shares having an aggregate offering price of up to $80,000,000. Any sales under the Company ATM Program will be dilutive to existing stockholders and could adversely affect our stock price. From the inception of the Company ATM Program in April 2025 through March 31, 2026, we sold 12,331,743 shares of our common stock under the Equity Distribution Agreement for aggregate gross proceeds of approximately $35.0 million.

The number of shares of common stock underlying our outstanding warrants is significant in relation to our outstanding common stock (26%25% as of MayAugust 14,11, 2026), which could have a negative effect on the market price of our common stock and make it more difficult for us to raise funds through future equity offerings. In the event these warrants are exercised, our stockholders will experience additional dilution. To the extent outstanding stock options or warrants are exercised, there would be further dilution to our existing stockholders, which could impact the price of our common stock. Any future issuances of equity securities, including under our existing “at-the-market” program or in connection with potential strategic transactions, would further dilute existing stockholders and could materially and adversely affect the market price of our common stock and our ability to raise additional capital on favorable terms.

On August 27, 2025, we announced that the SERENITY At-Home Pivotal Phase 3 trial evaluating the safety of BXCL501, as an acute treatment for agitation associated with bipolar disorders or schizophrenia in the at-home setting, met its primary objective. This study was designed and implemented to remove the healthcare supervision requirement and to allow multiple doses after an initial single dose. The data from this study formed the basis of the sNDA submission for a label expansion of IGALMI® into the at-home setting. The sNDA was filed with the FDA on January 14, 2026. On April 1, 2026, we announced that the FDA has accepted our sNDA for approval of IGALMI® for at-home use in the acute treatment of agitation associated with bipolar disorders or schizophrenia. The FDA has assigned a Prescription Drug User Fee Act (“PDUFA”) target action date of November 14, 2026.

An sNDA was submitted on January 14, 2026 for the acute treatment of agitation in schizophrenia and bipolar disorders in the unsupervised (at-home) setting. On April 1, 2026 we announced that the U.S. FDA has accepted the supplemental New Drug Application (sNDA) for approval of IGALMI® for at-home use in the acute treatment of agitation in the home setting. The FDA has assigned a Prescription Drug User Fee Act (“PDUFA”) target action date of November 14, 2026.

In October 2024, we submitted a request to the FDA for an extension and plan to submitcomplete anthe study; a three year extension was granted in December 2024. An updated trial protocol was submitted in March 2026 to complete enrollment requirements for pediatric patients with schizophrenia or schizoaffective disorder. The FDA granted a 3-year extension to complete the pediatric study.

Our research partners have been awarded grants for the development of BXCL501 in alcohol use disorder (“AUD”) with comorbid post-traumatic stress disorder (“PTSD”), opioid use disorder (“OUD”), and acute stress disorder (“ASD”). The Company is providing, or has provided, regulatory and operational support and investigational product for these development opportunities, which are being funded through Cooperative Agreements with the U.S. Department of Defense Congressionally Directed Medical Research Program and National Institute on Drug Abuse (“NIDA”). Clinical and regulatory responsibilities are led by clinical researchers and regulatory staff at the Veterans Affairs Connecticut Healthcare System, Yale University Medical School, RTI International, Columbia University New York State Psychiatric Institute, and University of North Carolina at Chapel Hill.

On April 8, 2026, we announced the enrollment of the first patients in this DoW-funded Phase 2a clinical trial. The trial is being led by the University of North Carolina at Chapel Hill (UNC) Institute of Trauma Recovery and marks a significant milestone in the collaboration between BioXcel Therapeutics and UNC. As of July 28, 2026, the study enrolled 20 participants.

ASR symptoms occur in the days and weeks after trauma, and include anxiety, sleep disturbance, concentration difficulty, pain, and somatic symptoms such as dizziness and lightheadedness. Chronic adverse posttraumatic neuropsychiatric symptoms occur when acute stress reactions do not resolve, and include persistent pain, posttraumatic stress, and depressive symptoms. ASRs are common among service men and women, police and other first responders, and survivors of shootings and natural disasters. ASRs affect more than 40 million Americans who seek emergency department care annually after traumatic stress exposure (e.g., motor vehicle collision) 1,2 1 Adler, Amy B., et al. “Post-traumatic stress disorder risk and witnessing team members in acute psychological stress during combat.” BJPsych Open, vol. 6, no. 5, Sept. 2020, https://doi.org/10.1192/bjo.2020.81.

We have multiple patent families filed to protect our Neuroscience program, including BXCL501. As of MayAugust 1,3, 2026, our neuroscience patent portfolio included one Patent Cooperation Treaty (“PCT”) application not yet in the national phase, 1113 U.S. utility applications, 17 issued U.S. utility patents, 4741 pending non-U.S. utility applications, 2729 allowed or granted non-U.S. patents (including five in Japan), one pending U.S. design patent application, and 2 registered design patents in Japan. Fourteen U.S. utility patents, directed to our proprietary sublingual film formulation of dexmedetomidine and methods of treating agitation, are listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (commonly known as the “Orange Book”) for IGALMI® with expiration dates between 2037 and 2043. In the formulation family, we have granted or allowed patents in China, Europe, Eurasia, Japan, Mexico, and the U.S., and pending applications in the U.S., China, and other major markets. We expect that patents issued in this family will expire no earlier than 2039. We have also filed applications in additional patent families that are relevant to BXCL501. We have one granted European patent and applications pending in the U.S. and Japan directed to methods of treating insomnia using sublingual dexmedetomidine. We expect that patents issued from these applications, will expire no earlier than 2035. We also have granted patents and pending applications filed in major markets, including the U.S., Europe, Japan, and China, directed to methods of treating agitation. We expect that patents issued from these applications, will expire between 2039 and 2043.

As of MayAugust 1,3, 2026, we have multiple patent families filed to protect our immuno-oncology program, including our core patent family directed to methods of using BXCL701 with immune checkpoint inhibitors, which is granted in the U.S., Japan, Australia, Canada, Russia, China, India, Taiwan, South Africa, Mexico, New Zealand, Europe and United Arab Emirates.Mexico. Additional applications in this family are pending in major markets. Patents issued from this family are expected to expire no earlier than 2036. We have an additional patent issued in the U.S. directed to a method of selecting patients based on a biomarker and methods of treating certain cancers, with an expected expiration date no earlier than 2039. A corresponding European Patent case directed to selecting patients is issued and is expected to expire no earlier than 2039.2038.

Additional applications are directed to administering BXCL701 in combination with various other molecules, biomarkers, andcertain dosing regimens. We expect that any patents issuing from these applications will expire no earlier than 2043 to 2044.

Our research and development costs by program for the three and six months ended MarchJune 31,30, 2026 and 2025 were as follows:

Comparison of the Three Months Ended MarchJune 31,30, 2026 and 2025

Commercial sales of IGALMI® launched in July 2022. As part of the Company’s Clinical Reprioritization, the IGALMI® commercial team shifted focus to a hospital/contracting strategy with a Corporate Account Director (“CAD”) team. The goal of the realigned CAD team is to work with large hospital/Integrated Delivery Network (“IDN”) and drive sales utilizing a top-down approach, allowing the Company to continue to make inroads into the institutional market in a more cost-efficient manner. IGALMI® product revenue, net was $206$182 and $168$120 in the three months ended MarchJune 31,30, 2026 and 2025, respectively. The increase in sales was primarily the result of increased gross volume due to deeper GPO discounts that went into effect atin the end of the firstsecond quarter of 2025.2025, as well as revenue generated from new contracts that commenced during the same period.

Cost of goods sold for the three months ended MarchJune 31,30, 2026 and 2025, were $283$22 and $14,$107, respectively. The increasedecrease in Cost of goods sold for the three months ended MarchJune 31,30, 2026 is the result of higherlower charges for reserves for excess or obsolete inventory compared to the same period in 2025. Charges for reserves for excess or obsolete inventory were $265$0 and $0$95 in the three months ended MarchJune 31,30, 2026 and 2025, respectively.

Research and development expenses for the three months ended MarchJune 31,30, 2026 and 2025 were as follows:

The overall decrease of $1,599$7,092 for the three months ended MarchJune 31,30, 2026 relative to the same period in 2025 was primarily attributable to:

Selling, general and administrative expenses for the three months ended MarchJune 31,30, 2026 and 2025 were as follows:

The overall increase of $1,492$1,580 for the three months ended MarchJune 31,30, 2026, relative to the same period in 2025 was primarily attributable to:

Interest expense increased to $4,198$4,257 for the three months ended MarchJune 31,30, 2026 from $3,993$4,222 in the same period in 2025 primarily due to higher debt balances under the Credit Agreement. The expense was partially offset by lower interest income earned on lower levels of cash and cash equivalents that were held primarily in short-term money market funds. Interest income decreased to $211$131 for the three months ended MarchJune 31,30, 2026 compared to $279$230 for three months ended MarchJune 31,30, 2025, due to lower average cash balances during the year. Other (income) expense, net is primarily associated with changes in fair value of derivative financial instruments for the period, which relate to instruments associated with the Credit Agreement and the Company’s registered direct equity offerings.

As of MarchJune 31,30, 2026, we had cash, cash equivalents and restricted cash of $17,180,$13,801, negative working capital of $21,086$108,449 and stockholders’ deficit of $105,543.$115,460. Net cash used in operating activities was $11,809$17,907 and $12,043$24,618 for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. We incurred losses of approximately $12,691$27,404 and $7,254$26,441 for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. We will need to generate significant product revenues to achieve profitability. Our history of significant losses, negative cash flows from operations, potential near-term increased covenant-driven amortization payments or full repayment obligations under our Credit Agreement, the regulatory event of default triggers under the Credit Agreement, other funding requirement covenants under the Credit Agreement, limited liquidity resources currently on hand, and dependence on our ability to obtain additional financing to fund our operations after the current resources are exhausted, about which there can be no certainty, have resulted in management’s assessment that there is substantial doubt about our ability to continue as a going concern for a period of at least 12 months from the issuance date of the financial statements included in this Quarterly Report.