Shares of BioXcel Therapeutics, Inc.? (Nasdaq: BTAI) plunged by over 50% in premarket trading following the company's disclosure of a regulatory inquiry into the development of BXCL501, as revealed in a regulatory filing with the SEC.

Despite this setback, BioXcel reported positive topline results for the Phase 3 trial, TRANQUILITY II, evaluating BXCL501 as a treatment for Alzheimer's disease-related agitation. The trial successfully met its primary efficacy endpoint by demonstrating a significant reduction in Positive and Negative Syndrome Scale-Excitatory Component (PEC) total score at 2 hours compared to placebo. However, the trial's secondary endpoints yielded mixed results.

In the regulatory filing, BioXcel disclosed that the FDA conducted an inspection of the TRANQUILITY II trial site in December 2022, which identified issues related to non-compliance with procedures and documentation. Further investigation revealed fabricated email correspondence by the principal investigator, raising concerns about data integrity.

BioXcel is currently conducting an internal investigation and plans to audit the trial site, with the FDA duly informed of these developments. The regulatory inquiry and potential data integrity issues may have an impact on the timing and approval prospects of BXCL501 for dementia-related agitation.

The company also highlighted that data integrity issues could potentially result in the exclusion of specific data or necessitate a new trial. Any actions taken against the principal investigator may further delay the development and approval process, which could have implications for BioXcel's future prospects.

In pre-market, $BTAI was trading at $7.50, experiencing a significant decline of $10.17 (-57.56%).

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