Two weeks after New Haven biotech CT BioXcel Therapeutics secured FDA approval for the psychiatric drug Igalmi, the biotech is taking a major new step: focusing on commercialization and turning much of the rest of its pipeline into a new company.

The biotech announced Tuesday morning that it had entered into strategic financing agreements with funds managed by two companies: Oaktree Capital Management and Qatar’s sovereign wealth fund, Qatar Investment Authority. Together, the two funds will earn BioXcel up to $260 million.

According to BioXcel, the money will help fund the commercial launch of Igalmi, the recently FDA-approved schizophrenia and bipolar drug in the United States, and advance clinical pipeline development. The biotech also said the funds will push the company’s cash trail through 2025.

CEO Vimal Mehta told Endpoints News that BioXcel had $233 million at the end of 2021, which was enough lead to last through 2023.

The long-term strategic funding process was led by Oaktree and includes:

• A credit agreement, allowing up to $135 million in a deferred draw term loan,
• A $120 million revenue-based financing agreement – ​​with up to $120 million in unspecified, capped revenue-based financing on net sales of IGALMI and any other future BXCL501 products, and
• A $5 million equity investment in common stock of BioXcel.

Under the agreement, BioXcel would receive $100 million following FDA approval “for the use of the company’s BXCL501 product for the acute treatment of agitation associated with schizophrenia or the disorder bipolar I or II in adults”. This condition was resolved two weeks ago with the FDA approval of their only now approved drug, Igalmi.

In the meantime, BioXCEl is creating a new subsidiary: OnkosXcel to go after cancer. According to a release and with the funding, OnkosXcel plans to advance the development of BXCL701, an investigational, orally administered innate immune activator designed to initiate inflammation in a microenvironment around tumors.

Mehta said that since BioXcel now has an approved product, the company is looking to a commercial-stage company and said there is a need to create a dedicated resource for BXCL701.

“It brings that laser precision to continue to develop 701, to bring it to provability as well as to grow in other areas,” Mehta added.

The CEO confirmed to Endpoints that for the time being, BioXcel’s management team will lead OnkosXcel until a new management team is in place, which BioXcel will announce in the second half of 2022.

Vince O’Neill, chief marketing officer of BioXcel, told Endpoints that the drug candidate OnkosXcel was considering first was a DPP8/9 inhibitor. It is currently being tested in a phase II trial in combination with Keytruda in metastatic castration-resistant prostate cancer.

And while BioXcel has made no announcements or statements as to what indications the company will pursue, O’Neill noted that the company has “a number of orphan drug designations.” These include pancreatic cancer, melanoma, and soft tissue sarcoma.