Better Therapeutics, Inc. (BTTX) Q1 2023 Earnings Call Transcript


Good morning and thank you for standing by, and welcome to the Better Therapeutics’ First Quarter 2023 Conference Call. At this time all participants are in a listen-only mode. After the speakers’ presentation, there’ll be a question-and-answer session. [Operator Instructions]. Please be advised today’s conference is being recorded.

I would now like to hand the conference over to your speaker today, Mark Heinen, Chief Financial Officer. Please go ahead.

Mark Heinen

Thank you, operator. Good morning, everyone, and welcome to the Better Therapeutics conference call. Our press release was issued this morning and can be found in the Investors section of our corporate website, Joining me on the call today is Frank Karbe, our President and Chief Executive Officer; Dr. Mark Berman, our Chief Medical Officer; and Diane Gomez-Thinnes, our Chief Commercial Officer. During today’s call, we will provide a business update and a financial overview of the first quarter of 2023. A Q&A session will follow our prepared remarks.

Before we begin, I’d like to remind everyone that any statements we make or information presented on this call that are not historical facts are forward-looking statements that are based on our current beliefs, plans, and expectations that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual events and results may differ materially from those expressed or implied by any forward-looking statement.

With that, I’ll pass the call over Frank Karbe. Frank?

Frank Karbe

Thank you, Mark, and good morning, everyone. Thanks for joining us on the call today. We successfully navigated several challenges in Q1. And with that, we believe laid the foundation for our long-term success. We also advanced our interactions with the FDA and are now within the final 90 days of our review. And with that in mind, we have continued to advance our preparations for the anticipated commercial launch of BT-001 in type 2 diabetes, including discussions with potential launch partners.

Before I recap our accomplishments in the first quarter, I want to acknowledge the news of Pear Therapeutics’ filing for bankruptcy. This is obviously a devastating outcome for Pear and setback for prescription digital therapeutics or PDTs. As one of the true pioneers in the industry, Pear paved the way for the investment and innovation, their contributions to creating PDTs as a new category. However, the difficulties likely raised doubts around the commercial viability of PDTs. And it is therefore more important than ever to perhaps highlight that the dynamics across the different PDT players are, in many cases, quite different.

And I’ll take this opportunity to underscore key points of differentiation for Better Therapeutics, which we believe will drive our ability to gain traction with payers, providers, and patients over the long term.

The first and perhaps the most important point of differentiation is our therapeutic area of focus. Our current development candidates are intended to treat cardio-metabolic diseases, including type 2 diabetes, hypertension, hyperlipidemia, nonalcoholic fatty liver disease or NAFLD, nonalcoholic steatohepatitis or NASH, and chronic kidney disease.

We deliberately chose cardiometabolic diseases as our initial target because they, A, share the same lifestyle behaviors as a common root cause, B, ranked among the most prevalent and costly chronic diseases that are largely reversible and preventable, presenting opportunities for transformative impact, and C, represent areas of significant unmet clinical need because currently available drugs are often expensive and predominantly treats symptoms, typically resulting in disease progression and more costly healthcare interventions over time.

Second is the treatment landscape. Our focus on cardiometabolic diseases, and in particular, diabetes, offers access to very large patient populations with high cost-of-care burdens, driving an urgency to act on the side of health systems and payers. In talking with payers for more than a year now and also validated by numerous third-party research studies, diabetes is a top priority as disease prevalence continues to grow and costs are escalating. Meanwhile, we’re not seeing significant improvements in patient outcomes.

Furthermore, current diabetes treatment guidelines already calls for behavior change as the foundation of treatment. We’ve been stating in recent updates that digital health interventions may be useful as an adjunct to standard of care to improve diabetes management. We believe this will help with provider adoption as we don’t need to change ideas about treatments or the way that it is delivered.

Moreover, most drugs are indicated to be used in conjunction with behavior change, and we believe this allows for a more natural and seamless introduction and further adoption of PDT in the diabetes indication.

Third is the significance of the clinical endpoint used in our pivotal trial. Not only is the reduction of hemoglobin A1C a universally accepted clinical endpoint for type 2 diabetes by providers and payers alike, it is also widely accepted as a proxy for future events in diabetic patients. As you know, the same endpoint is also used in drug trials.

At our exploratory endpoints’ collected data across a broad range of additional health outcome measures, providing further clinical evidence for the health impact of our PDT. The initial health economic data shows promising potential cost offsets derived from the utilization of our therapy.

And finally, our PDT platform, as currently developed, is designed to have broad utility and enable rapid expansion across multiple-related disease states. This potential for rapid expansion stems from the fact that the underlying root cost behaviors are largely the same for most cardiometabolic conditions. And hence, the behavioral health interventions delivered by our platform to treat these conditions are also largely the same. This is fundamentally different from a traditional pharmaceutical drug approach where the products to treat different diseases are usually distinct with unique mechanisms of action.

I will now recap our accomplishments in the first quarter of this year. We took a number of actions in Q1 to enhance our financial position and ensure the long-term success of the company. This included, among others, a reduction in force, coupled with other cost-saving measures as well as a $6.5 million private placement in April.

Combined, these measures were targeted to extend our cash runway towards the end of September, allowing us to potentially reach several important milestones that we expect will further substantially enhance our financial position. These include potential FDA authorization for BT-001, as well as the potential BD partnership and/or a royalty monetization transaction.

Throughout the first quarter of this year, we had multiple rounds of interactions with the FDA regarding our de novo submission. We highlighted on our last earnings call the request for additional information received as a typical part of the de novo process and guided that we expected to respond to the FDA by mid-April. We’re happy to report that we submitted our response on April 17 and the agency confirmed the review is progressing. We believe we are on track to receive the FDA’s decision by the middle of this year.

We also made substantial progress in our preparations for the potential commercialization of BT-001. Specifically, in the last quarter, we filled key leadership positions, including the hiring of a Head of Marketing and Head of Medical Affairs, both bringing considerable cardiometabolic expertise to the team.

Signed a contract for hub and distribution services and building on the growing body of evidence, we had our abstract from the Cardiometabolic Health Congress published in postgraduate medicine, highlighting our primary endpoint results. And during the Academy of Managed Care Pharmacy or AMCP meeting at the end of March, we had good interactions with payers and have commenced formal pre-authorization information exchange meetings.

Despite the reduction in force and resulting slowdown of enrollment in our real-world evidence study, we’re pleased to report we have enrolled almost 75% of the target participants and expect to complete enrollment by the end of Q3 this year. We then expect to share the first data set in Q4 of this year.

And lastly, we expect the submission to the FDA for a breakthrough device designation for the treatment of liver disease to be completed in Q3 of this year. Related, we recently submitted an abstract describing our LivVita study results for presentation at the European Association for the Study of the Liver or EASL’s Annual Congress. EASL is a leading professional society and their clinical practice guidelines informed the standard of care for NAFLD and NASH around the world. Our abstract was accepted for poster presentation at the event in June in Vienna and Dr. Alkhouri, the PI for the study, will be presenting the poster.

Over the past few months, we made in part difficult but necessary changes to our business. As a result, I believe we are extremely capital efficient while maintaining the ability to advance with laser focus the potential commercialization of BT-001, which we anticipate commencing within a few months of receiving a decision from the FDA.

Diane will now share more detail on our progress. Diane?

Diane Gomez

Thanks, Frank. I am thrilled to add to our growing commercial organization with two key leaders in marketing and medical affairs who together bring a combined 40-plus years of cardiometabolic disease and interest and experience. Our market access work continues and we’re pleased to have consolidated our payer messaging, payer research, and health economic modeling, and value-based agreement work streams to complete our pre-authorization information exchange or PIE value story that we have now begun to use in our first payer meeting as Frank mentioned.

From panel discussions and conversations with payers at the recent AMCP meeting, I would like to share the following key takeaways. One, payers are beginning to differentiate PDTs from other digital therapeutics. In other words, those that are FDA authorized versus those that are not. Two, payers see the potential for Medicare coverage through the Access to Prescription Digital Therapeutics Act of 2023 bill as a signal to get ready to cover PDT. And finally, payers are beginning to define pathways and processes for reviewing prescription digital therapeutics.

And since the AMCP, we have had several meetings confirmed with payers on our targeted list and are encouraged by the early discussions as we progress towards potential FDA authorization.

Veterans Affairs or the VA are an important part of our targeted launch strategy. As a matter of fact, one VA site is currently enrolling patients into our real-world evidence program. We’ve recently completed a research study to understand more about the patient population and the engagement model. The VA is organized into 18 veterans integrated services networks or VISNs. And insights from interviews suggest we take a dual-strategy approach, navigating with champions at the national level while also driving local VISN-level advocacy.

Key summary points from the study are as follows: the concept of a cognitive behavioral therapy or CBT-based treatment path for diabetes was well received. Pharmacy decision makers responded positively to BT-001’s strong safety profile when considering adverse events of a behavioral digital therapy in comparison to those associated with pharmacotherapy. They also perceived no negative impact on the pharmacy budget.

Pharmacy leaders agreed BT-001 could be used at any stage of diabetes progression throughout a patient’s journey, but felt it would be used as early as possible. They agreed that BT-001 would fit in the current VA clinical practice guideline as an individualized diabetes self-management education treatment tailored to a patient’s preferences, learning needs, and abilities.

And finally, a decrease in HbA1C and outpatient visits were cited most in terms of measures for a successful diabetes treatment. We look forward to taking these valuable insights as we move into meetings with key supporters at the national level while developing our VISN-level coverage approach.

As we refine our plans for market entry, the first phase in our launch will be focused on continuing efforts to expand coverage amongst payers. Covered lives will be a key metric and determinant of success for us. We anticipate follow-up meetings with payers upon FDA authorization, and we will prioritize the hiring of our field payer team in this effort.

We know it is critical to also have provider demand and clinical champions in the marketplace. Health system characterization continues as we further refine our list of 50 health systems matched from patient claims analyses we conducted in the fourth quarter of last year. Our goal is to identify those health systems that are innovative and more likely to adopt BT-001. Indicators include the ability to influence provider network, engaging in value-based contracts, and focusing on population health studies or initiatives in diabetes or other large population diseases.

As we create awareness and to accelerate our target payers’ willingness to review for coverage via PIE meetings, we will prioritize health systems mapped to these payers. Our plan is to initiate the build-out of field teams in specific geographies where we see positive momentum with payers and providers for a focused regional market entry. And this represents a thoughtful approach to our ramp-up responsibly and efficiently managing our resources.

With regards to provider engagement, in the first quarter, we also on-boarded key opinion leader advisers who are serving to guide our marketing efforts. Early insights gathered will inform our broader research. I’m delighted to hear from practicing clinical experts who have not had prior exposure to or experienced with BT-001 about their enthusiasm for this novel therapeutic and the clinical data that supports it.

Advisers value a clinical endpoint that matches what they expect in drug trials, the reduction in HbA1C. They’re encouraged by the health economic data where BT-001 may offset costs of expensive pharmacotherapy. They recognized the exciting innovation here as a shift to behavioral therapy, which may increase the chance for patient change beyond what monitoring alone can do to increase awareness of blood glucose impact from food choice. And like medication, it’s critical to have BT-001 prescribable in their e-prescribing workflows.

Finally, we’re pleased to report that we have engaged our distribution partner, Phil, leveraging its PhilRx Patient Access platform to improve access to prescriptions, simplify the patient experience with their prescription, and manage both pharmacy and medical benefits processes. Phil’s technology solution offers the capabilities companies like ours in the PDT space need, and it has already been implemented with a number of prescription digital therapeutics commercially available today.

Mark Heinen, our Chief Financial Officer, will now review our first quarter 2023 financial results. Mark?

Mark Heinen

Thank you, Diane. I’ll begin by discussing our operating expenses for the first quarter of 2023. Our research and development expenses were $3.4 million for the quarter ended March 31, 2023, compared to $3.7 million for the same period in 2022. The decrease was primarily due to an increase in capitalized software development costs, offset by a decrease in clinical study costs.

Sales and marketing expenses for the quarter ended March 31, 2023, were $2.1 million compared to $2 million for the same period last year. The increase was primarily related to higher personnel-related costs associated with our commercial readiness activities, partially offset by lower real-world evidence-related expenses.

General and administrative expenses for the quarter ended March 31, 2023, were $3.4 million compared to $3.6 million for the same period in 2022. The decrease was primarily related to lower business insurance costs, offset somewhat by an increase in personnel-related costs.

Interest expense for the quarter ended March 31, 2023, was $400,000 compared to $300,000 for the same period last year. The increase was primarily the result of an additional $5 million borrowed under the company’s secured term loan agreement with Hercules Capital in the second quarter of 2022.

Net loss for the quarter ended March 31, 2023, was $9.4 million compared to $9.7 million for the same period last year. On a per-share basis, net loss was $0.39 compared to $0.41 last year. The decline in loss per share is related to an increase in weighted average shares outstanding and a decline in net loss.

Moving to our balance sheet, cash and cash equivalents were $6.1 million on March 31, 2023, compared to $15.7 million on December 31, 2022. In April 2023, we completed a private placement for gross proceeds of $6.5 million.

On a pro forma basis, taking into account the private placement, cash and cash equivalents was $12.6 million at the end of the first quarter. Our cash burn in the first quarter included a number of one-time expenses totaling approximately $1.6 million, including fees related to our recent financing, a principal payment under our Hercules debt facility and others. However, as a result of the restructuring and other cost savings initiatives, our cash burn has now been meaningfully reduced. These initiatives include amending the term loan agreement with Hercules, which among other things, provides for July and principal payments for up to six months.

The cost savings initiatives and delay in principal payments and proceeds from the private placement are expected to extend our cash runway towards the end of Q3, allowing us to potentially meet several key milestones, including FDA authorization, a business development transaction, and/or a royalty monetization transaction.

With that, I’ll turn the call back over to Frank for some closing comments. Frank?

Frank Karbe

Thank you, Mark. Before we wrap up, I would like to come back to our financing strategy. As I shared previously, we are pursuing a three-tiered strategy, which consists of capital markets-based financings, business development, and structured non-share dilutive financings, such as a royalty monetization transaction.

While we have executed on one element of the strategy with our private placement, we recognize our cash resources need to be further enhanced. As Mark mentioned, with the actions taken to extend our cash runway, we believe we have sufficient time to meet one or several of the milestones critical to our success. Each of these milestones are either catalysts for further financing opportunities or directly result in meaningful cash injections or both.

And it is worth noting that when we completed our recent private placement, we could have done a larger deal, but deliberately decided to do a smaller deal on better terms because we felt it was the right thing to do for the company and for shareholders. We also believe it better sets us up for long-term success, and it reflects our confidence in other elements of our financing strategy coming to fruition.

Since the private placement, we have made significant progress in our various business development discussions and are optimistic about our ability to continue to deliver on several elements of our financing strategy. Until we know where we come out on these elements, we’re operating on a highly cost efficient basis.

In closing, the industry is at an inflection point. Whether it is the advancement of the Access to Prescription Digital Therapeutics or the continuously increasing interest of payers in PDTs, the industry is evolving in ways that are beneficial to us. We believe we are in a very good position to succeed.

Largely, because of our focus on cardiometabolic diseases with type 2 diabetes as our lead indication, we expect the dynamic of our launch to be different from what has been observed in prior PDT launches. And we look forward to bringing our groundbreaking therapeutic to the providers and patients who urgently need them.

And finally, I want to again thank the entire Better Therapeutics team for the unwavering passion and commitment to patients that they demonstrate every day. And with that, we’re now ready to take your question. Thank you.

Question-and-Answer Session


[Operator Instructions]. Our first question comes from the line of Thomas Flaten at Lake Street Capital Markets. Thomas, your line is open.

Thomas Flaten

Good morning, everyone. Thanks for taking the questions. Frank, I was wondering if you could comment on the dialogue with FDA. Did they provide any hint as to the sufficiency of the responses that you’ve put in?

Frank Karbe

Hey, Thomas, good morning. Thanks for your questions. We cannot comment on what exactly the FDA responded back to us. But what they did tell us is that they accepted our submission and that the review continues to progress. They further gave us an indication that led us to believe that we are now on the final 90 days of the review. That is going back to the submission date, which was April 17.

Thomas Flaten

Got it. And congrats on the enrollment in the real-world studies. I was curious if maybe you could preview for us a little bit how many patients will see, what follow-up time period, what types of endpoints we might see when we roll into the fourth quarter and you’re ready to announce some of that data?

Frank Karbe

Yes. We can add a little bit of color of what to expect here. And I would like to invite Mark Berman into the conversation. Mark, do you want to comment on this?

Mark Berman

Happy to. Thanks, Frank, and good morning, Thomas. So the real-world evidence program, as you know, it’s going to enroll approximately 1,000 patients across the multisite study. And as we mentioned, we’re about three quarters of the way enrolled that study and expect to be fully enrolled by the end of Q3.

In Q4, we will release interim results. These will be our results of six-months duration front, so change from baseline. We’ll focus on A1C change at that time, and we’re going to release contingent on having sufficient power. So obviously, this won’t be the full set of patients as of the interim results. And we’ll make sure that we release results when we have a sample size that that gives us sufficient power. And therefore, sufficient confidence in the results that we’ll share.

Thomas Flaten

And just a follow-up on that. And will those data then be rolled into your dossier that you used in discussions with payers, or will you wait for the study to be complete?

Mark Berman

Yes. It’s a great question. I’ll start and then we can turn it over to Frank or Diane to comment on that. So our belief is that this data, while it’s going to be super helpful in the long run for providers and in the long run, potentially for payers, it’s not necessary for initial commercial launch or initial discussions with payers. So we are not planning to wait on this data.

Diane Gomez

Correct, Mark. And, good morning, Thomas. I’ll just add to say that of course, a real-world evidence studies are always important to payers. But even from some of the early conversations we had on value-based agreements, there’s a real understanding that behavior change is very likely to change clinical outcomes for patients. And so a lot of our conversations with payers have focused a lot on engagement metrics. But of course, any data that becomes available, we’ll look to utilize.

Thomas Flaten

Thanks. I appreciate you taking the question. Thank you.

Frank Karbe

Thank you.

Mark Berman

You’re welcome.


Our next question comes from Charles Rhyee of TD Cowen. Charles, your line is open.

Lucas Romanski

Hi, this is Lucas on for Charles. Thanks for taking the questions. Curious to see or to hear payer conversations with health systems and providers have gone at this point, given that physicians may be harder to sell than payers when it comes to using PDTs. I’d like to hear how your interactions with physicians and health systems, particularly in the regions that you’re targeting have gone up to this point. And just maybe some detail around what you guys specifically do to maybe overcome or maybe a stigma among patients around prescription digital therapeutics?

Frank Karbe

Yes, good morning. Thanks for your question. I will hand it on to Diane here in a moment, but maybe just to start. You mentioned at the end a stigma that maybe — around patients here. This is actually, I think, one of the things we were different from perhaps other PDT launches that you saw in the past. We don’t think we actually have this issue that we’re dealing with highly stigmatized patients.

We are dealing with type 2 diabetes with a patient population that is, a, highly prevalent, that has high cost-of-care burden associated with it, and that has high degrees of unmet medical needs. You may recall we shared earlier that only about 50% of patients that are on the standard-of-care medications do, in fact, have their blood sugar under control.

And these patients have been treated in the mainstream of our healthcare system by endocrinologists and primary care physicians. So we actually don’t think that there’s stigma around digital health interventions. As I said in my prepared remarks, the treatment guidelines for type 2 diabetes, not only do they call already for behavior change as the foundation of treatment in the most recent update, it actually also now references that digital health interventions. So we think we’re very well positioned here.

But, Diane, maybe you can share a little bit more color of what we’re hearing from providers and payers alike in the various interactions that we’ve had over the last few weeks.

Diane Gomez

Yes, absolutely. Thanks, Frank, and good morning, Charles. I do think it’s important to separate out on the payers and the providers. In the payers, clearly, there’s more understanding for prescription digital therapeutic as a category. And I think, you know, an additional add to what Frank has already stated that we’ve already been speaking with payers for the last 12 to 18 months. And since the beginning, the team has been asking what they would need to consider for reviewing BT-001 and considering coverage.

And we looked down the list of everything we’ve heard over this time period and we are ready to deliver on those expectations that payers have. And that includes: FDA authorization; having an adequately sized and controlled trial design, diverse populations, which I know have been very much appreciated by payers, the clinical endpoint, A1C, which are accustomed to be understood in that clinical setting in drug trials different than symptom alleviation types of endpoints from safety and efficacy data, and also engagement during treatment.

One of the important things to note as well is that there is more recognition among payers around the differences in prescription digital therapeutics. So while it’s important to look at this as a category, it’s also important to look a little bit deeply. So Frank noted some of those differences maybe with our product and the space in which we play versus other prescription digital therapeutics. But it’s also important to understand that we are also seeking a treatment claim.

And so the level of evidence that we are presenting is much more robust than a payer may typically understand, let’s say, from a 510(k) type of device. So it’s important for us to point out some of those differences and payers are beginning to recognize that the level of evidence from one PDT to another is important as part of their review.

On the provider side, I’m actually quite pleased. It was really important to start engaging provider to — I think it’s important to note are less aware about PDTs as a category. And so when we speak to providers, we’re speaking specifically to our therapy in type 2 diabetes and they don’t have necessarily the knowledge of PDTs in other disease areas.

And as we’ve onboarded some key opinion leader advisors who also serve as advisors for big pharma companies and other device companies, I’m super pleased about their reaction. And as they’re exposed to BT-001 and all of the clinical data that supports it, they continue to engage to inform our broader research.

And again, here, I would say what’s really pointed out by our early research is this value around the clinical endpoint that matches what they expect in drug trials, and in our case, this reduction of A1C. Even without being experts into health economic data, they understand the costly impacts on their patients with expensive pharmacotherapy and the management of systems and this feeling of advancing from one medication to the other. So they’re encouraged by the health economic data and our own and really encourages, makes sure we’re publishing, which, of course, we’ve advanced to that work.

And they do see this as exciting. Right now, it’s been thought of, monitoring. Really it’s been important especially as innovation in monitoring has continued to improve and increasing awareness of patient’s blood glucose. The choices they make every day is really important. They really see this as adding to that chance for patients to make real change and really improve what normally has been just a progressive disease from one medication to another. So at this point, we’re really encouraged by the conversations that we’re having with advisors who have not had experiences to our therapy.

Lucas Romanski

Okay. Yes, it’s encouraging. And then can you guys update us on progress made around using the data collected on outcomes and engagement and building out personalization features into your platform? I understand that you guys are intending to see these capabilities embedded into the platform at the time of BT-001’s launch.

Now that we’re getting closer to commercial launch, could you guys give us an update on what these capabilities around personalization of treatment and experience might look like?

Frank Karbe

Let me start and I’ll ask Mark Berman to chime in as well. The first thing to recognize is that the product, as it was used in our randomized controlled trial, does already include a high degree of personalization. The treatment algorithms that are AI powered dynamically adjust the treatment patient intensity to each individual patients.

One of the features of digital therapeutics in general is that they are subject to continuous improvement based on the very data that the use of these therapies generate. And so we have, of course, made additional improvements. And that is a development that will continue over time as more and more data is being collected.

I think the engagement data is the data we’ve shared previously from our randomized controlled trial. And there, I think the numbers were exceptionally strong. We saw 81% of patients still engaged with our PDT after six months. On average, spending six minutes in app per day. So those were really exceptionally high engagement metrics. And the NPS scores as a measure for patient satisfaction was also exceptionally high, with an NPS score of 61.

And I think, of course, we continue to collect data around this currently in our real-world evidence program. And once we release the next batch of data, we will of course also include engagement data again.

And as a last point, I would say you may recall the engagement data that we released on our pilot study in liver disease, the LivVita study where we evaluate the utility of our platform in NASH and NAFLD had even better engagement metrics than what we saw in the randomized trial. Though, I will say it was also a smaller sample size.

Mark, do you want to comment a bit more on sort of the level of personalization that’s embedded in our product?

Mark Berman

Happy to, Frank. I mean, I think you did a wonderful job of summarizing that. Again, Lucas, the product that was tested within the BT-001 pivot has a high degree of personalization. And of course, with every opportunity to study the product, with every opportunity to expose it to another cohort of patients, we gain valuable usability data, valuable engagement data, valuable satisfaction data, and we’ve made a number of refinements to the product that will go into the commercially launched product.

But the core tenants of personalization are going to remain as they are because they’re working well. As Frank mentioned, those personalization elements include really the ability for any patient to engage with the platform independent of their current state of behavioral achievement or activation, if you will. The algorithm that guides the patient’s behavioral change really does respond to the current state of the patient. And as they advance at their unique pace, tries to advance that patient forward at a pace that’s going to be right for them to make behavioral changes that not only will be effective, but also will be sustainable, and we see that very much reflected in our data.

When we look deeper at the data, we see a gradual shift in behaviors starting from wherever patients are. We see those progressing over the six months and we don’t see yet a peak, degree of change suggesting that we’ve created a pattern that is more consistent with the sustained behavioral changes. The other elements of the cognitive behavioral therapy, including the lessons, include personalization elements.

There’s a large bank of skills recognizing that the behaviors that we are trying to change really do represent a very broad set of eating and other living lifestyle and self-care behaviors. And patients will need to acquire a diverse set of skills in order to be effective. And the platform allows that patient to personalize their experience to the different skills that are going to be beneficial to them.

In addition, the computer-generated feedback, if you will, is omnipresent throughout the solution. So that from the beginning of treatment, the patient is getting a sense of whether their combination of engagement, their behavioral change, their biometrics is suggesting that they are going to be on track to receive benefit from the solution and guides the patient if they are not to additional content, additional activities that are intended to help overcome barriers to change.

So there is a rich — I’ll summarize it saying there’s a rich set of personalization features. We’ve essentially tested all of those. And what we’re going to be releasing in the commercial product are our refinements based on the usability data that we have. And I think I’ll echo what Frank said. I mean, we’re incredibly excited about the opportunity to launch this product, hopefully in the commercial world. Because it’s very clear that as we gain larger cohorts of patients, that data is really invaluable at allowing us to further refine both the feature set and the algorithms that drive the patient experience.

Lucas Romanski

Great. Thanks for taking for the questions.


Our next question comes from the line of Keay Nakae at Chardan. Keay, your line is open.

Keay Nakae

Yes, thanks. My question is on the BD side, the potential commercial partner. I guess from your perspective, again, given the kind of the early history of PDTs partnering for commercialization, what are you really looking for in an ideal partner? And I guess maybe specific to diabetes, as we’ve seen at least on the device side, there’s a lot of post-sale handholding required for patients with this disease. So how important is that? Thanks.

Frank Karbe

Thanks, Keay, for your great question. Good morning. So on the partnering side, as I mentioned on a slide our earnings call, that we have multiple discussions that we’re currently entertaining with different types of companies that span the gamut, from pharma to medical device through tech. And the nature of these discussions is in each of these cases, it’s slightly different. And we could benefit from a potential partnership in multiple ways.

You could imagine a partnership that might support the commercial launch in the U.S. and help us successfully commercialize our PDT in the US market. You could separately see a partnership that maybe supports expanding our geographic footprint and help us commercializing our PDT in markets outside of the United States where we’re currently really not set up to do this ourselves.

Thirdly, you can imagine a partnership to support the expansion of our pipeline, meaning expansion beyond type 2 diabetes into other cardiometabolic conditions, particularly those where we already have proof of concept. And then with a partner, we would be able to progress faster. You could also see, as a fourth example, opportunities to combine our PDT with certain other medical devices. So it’s a very broad gamut and the value proposition to us, I think, it’s different depending on who we’re talking to.

Keay Nakae

Anything that is diabetes disease related, that’s important from your perspective.

Frank Karbe

Say it again, sorry. I could not hear you.

Keay Nakae

Anything that is diabetes disease related, it’s important that partner understands that you’re looking for from your end?

Frank Karbe

Yes. I mean, we don’t — I think the fundamental point here is that we don’t view our PDT as an adjunct to a drug, to a pharmaceutical drug. We view our PDT as a self-standing product that delivers value on its own and it generates revenue on its own. So that’s maybe one key point here.

And of course, experience in type 2 diabetes or other cardiometabolic conditions, depending on whether the partnership is focused on supporting our launch in type 2 diabetes or whether it’s focused on expanding our pipeline, therapeutic area expertise, and capabilities that can help with market access, medical affairs, and ultimately sort of sales and marketing, of course, that would be beneficial.

And I don’t know, Diane, anything that you would want to add from your standpoint?

Diane Gomez

Yes. Thanks, Frank. So we do see this as a revenue generating treatment and not necessarily specific to any one drug. And we feel that capturing the features of adherence of drugs is important in our technology. I think what’s really important to understand is that this isn’t a companion app of any source. You know there’s a lot of digital therapeutics or digital solutions that are certainly advancing amongst many players in the pharmacotherapy, the devices space, or even in the consumer space. So I think that’s an important differentiator, that we see this as a drug therapeutic that can be revenue generating.

And I think what’s important to understand as well, I heard the comment, Keay, with regards to handholding with patients is we’re extremely excited about the data we’ve already seen in our pivotal trials, with level of engagement where patients were not necessarily incentivized to use the app. They were not incentivized to use the app and nor was there any additional kind of human interaction through that process.

But we do know from conversations now, for example, with payers and with providers, the importance of ensuring the education of diabetes. And there’s educators who are already part of the treatment support for patients with diabetes and also diabetes disease management that exists. So what’s encouraging is that the payers and providers together are signaling this therapy being part already of this treatment pathway. And so we are encouraged about those specifics related to type 2 diabetes.

Frank Karbe

And I would just clarify maybe one last point. As Diane said, we don’t view our PDT as a companion app, but as a self-standing product. But that is not to say that using our PDT alongside a pharmacotherapy that a partner may have on the market, it could generate additional benefits clearly. I mean, we’ve shown that in our randomized controlled trials where the combination — we demonstrated that the combination of our PDT with a standard of care yields better outcomes, both in terms of safety and efficacy than standard of care alone.

You could further think about avenues where the pairing of a PDT with a pharmaco drug might result in better medication adherence because you have a platform that allows you to engage with the patient on a daily basis. So I just would say that while we view our PDT as having independent value, there is an incremental value proposition that could be realized in cases where a partner might have existing pharmacotherapies on the market.

Keay Nakae

Okay. Well, thank you for answering my questions.


Our next question comes from the line of Rahul Rakhit, LifeSci Capital. Rahul, your line is now open.

Rahul Rakhit

Hey, good morning, guys. Look, I know I’ve asked this before, but given that you guys are further honing in on commercial strategy ahead of the launch, I was just thinking how you think about positioning BT-001 to physicians? And obviously current treatment guidelines call for behavioral therapy as a first-line therapy. But we saw it in pivotal study that you guys treated patients with pretty advanced disease and saw compelling changes being made to their medication usage. So just as you guys start to build out the sales force and prepare them for those introductory conversations with endos and PCPs, I guess which side — if you are to pick one, the spectrum do you intend to focus on?

Frank Karbe

Thank you for your question, Rahul. Good morning. I will say it may be a little bit too early to comment in great detail on this and we may reserve some of it maybe for the next call when we are closer to the actual launch. But, Diane, maybe you want to provide already some high-level thinking around the question that Rahul just asked.

Diane Gomez

Sure. Rahul, good morning. I love this topic. And it’s important to recognize that as we’ve on-boarded advisers, this is really a lot of, first and foremost, the set of work that they are helping to guide us with. So their early insight, how they see potential for positioning, having us make sure we carve out right at different place in the market because this therapy is so differentiated. Then again, the many companion apps that are out there, solutions in the wellness space, other types of therapies.

And so it is a little bit early to say. But I’m encouraged just as recent as this week being able to engage with providers on some potential positioning work. And so a little more to advance there before we talk more in depth, but certainly ongoing work that we’re doing at the moment.

Rahul Rakhit

Got it. No, I appreciate that. Look, I know you guys are heads down focused on a future launch. But given that you have some of these other plans within the pipeline to develop out these assets down the road, I guess, given the size of pivotal studies in NASH, hypertension, or hyperlipidemia, I mean, I guess what are the estimates around what a pivotal trial in one of these indications might cost? What resources are needed to execute a trial like that?

Frank Karbe

I’ll say two things, Rahul. The first one is while we have, as you know, pilot data for NASH, NAFLD, hypotension, hyperlipidemia, and we believe we have the data in hand to then go and design the next set of pivotal trials, we are currently not pursuing this, as much on hold, just because we need to focus our precious financial resources on getting through FDA authorization, advancing our preparation for commercial launch, and really making sure that we had the eyes on the prize first to get type 2 diabetes over the line and are ready to launch.

The moment that we have additional financial resources, and this could come through a number of different avenues, as I alluded to, we’re pursuing this [Technical difficulty]. The moment we have financial resources. Then we are going to continue those additional explanations to expand into other indications and initiate others. I just want to be clear that we’re very focused right now on where we’re spending our money and we’re spending our time.

One of the I think attractive features of developing PDTs is that the time and cost required to get through these pivotal studies is a fraction of what it is for a typical pharmacological agent. And, Mark Berman, maybe you want to just give a high-level estimate of how we think about cost and time around the pivotal trial, let’s say, for NASH/NAFLD, but it equally applies actually to other indications as well.

Mark Berman

Yeas, I think that’s right. Good morning, Rahul. So to build on Frank’s comments, you recall that our initial pivotal study in about 668 patients is considered one of the most robust pivotal trials for a medical device or a prescription digital therapeutic. And it really was submitted to the FDA as a pivotal trial as a part of the de novo pathway.

Our anticipation and our strategy is that assuming we will get authorization for BT-001, subsequent indications are going to be filed under the 510(k) pathway because the underlying platform is substantially similar. We already have had a robust safety data set that has been gathered; that safety data set was very strong. And so there will be a need to establish a new data set to advance specific claims, for example, as a treatment for NASH and NAFLD.

But because of that earlier, predicate work, the future studies are expected to be smaller than the pivotal study. Obviously, they’ll be — all be individually powered, so they’ll have individual sample sizes, depending on the effect sizes that we’re looking to see in each indication.

But similarly, we also — we think that most of these trials on average are going to be about a six-month treatment period enough to demonstrate safety when the patient is using the device as it’s intended and enough to generate an effectiveness or efficacy signal to establish the claim. So as Frank mentioned, these are — while they would be randomized controlled trials and still robust trials there and have a fraction of the duration and a fraction of the cost than the traditional drug trial. And so as Frank mentioned also, we are really excited to commence work on those once we have resources. And at the moment, we’re staying focused on BT-001.

Frank Karbe

As you asked, Rahul, specifically, what does this cost? I mean, the type 2 diabetes pivotal trial costs between $10 million and $15 million. And exponentially, that might be slightly higher, but not much. I would say it’s roughly in the same ballpark, more in the upper end of that range.

So if you think about, these are, at the end of the day, sort of phase these studies, that data of which it’s going to be used to seek additional authorizations from the FDA. Again, it’s a fraction of what it would be for a new pharmacological agent.

Rahul Rakhit

Got it. That’s helpful. I appreciate that. And then just one more clarification question for me. I apologize if I missed it earlier. But just obviously assuming clearance and a subsequent launch earlier this year, I guess, how should we think about your incremental changes to OpEx over the next couple of quarters? Thanks.

Frank Karbe

Yes. So generally, you can expect our OpEx to continue to actually decline right now. And that’s really because the impact from the restructuring is still working its way or it hasn’t worked its way through our P&L in the early parts of the second quarter because that’s where we sort of implemented it. And then going forward, you will see that operating expense continues to go down and we’re going to continue to operate on a highly cost-efficient basis until additional funding is secured.

And as we’ve said multiple times here, we feel pretty optimistic that with the actions we’ve taken both in terms of the private placement that we completed a few weeks ago and with the cost containment measures that we have extended our runway sufficiently to get to the multiple milestones such as potential FDA authorization, potential PDT transaction, possibly a royalty monetization transaction. So we have the time, we believe, to now get one or several of these to the finish line and each of them either result directly or could unlock opportunities to potentially substantial additional funding.

But until then, we’re going to operate very, very efficiently, and that means that you will see our operating expense continue to decline over the next couple of quarters.


Thank you very much. At this time, I would like to turn the call back to Frank Karbe for closing remarks.

Frank Karbe

Well, thank you very much for your interest this morning and joining us for this call. We feel very, very good with where we are. I hope we were able to convey that, and we look forward to keeping you updated on the progress. And in the meantime, if you have questions, please feel free to contact us. Thank you. Bye-bye.


Thank you for your participation in today’s conference. This does conclude the program, and you may now disconnect. Thank you.