BioXcel Therapeutics - Chapter 11 Plan Terms

Plan Terms

Overview

• The combined disclosure statement and Chapter 11 plan, filed Sept. 30, 2026, is a liquidating plan built around a section 363 sale of substantially all assets, with an affiliate of Teva Pharmaceutical Industries Ltd. under contract as stalking horse at $57.5 million cash at closing plus up to $67.5 million in contingent milestone payments.
• Sale proceeds and the milestone rights satisfy the DIP claims first, then the prepetition secured claims held by funds affiliated with Oaktree Capital Management and the Qatar Investment Authority; a liquidation trust takes the residue, prosecutes the retained causes of action, and winds down the estates.
• The only funded recovery earmarked for general unsecured creditors is a reserve capped at $1 million, funded with 30% of whatever the retained causes of action produce.
• The plan does not discharge the debtors, per section 1141(d)(3).
• Posture is pre-auction: the court approved the bidding procedures, the stalking horse agreement and the bid protections on Sept. 28, 2026 [Docket No. 179]; the bid deadline is Oct. 9, 2026, and an auction, if one is needed, runs on or before Oct. 14, 2026. The plan carries a footnote that the sale section will be updated with auction results before the hearing on the solicitation procedures motion.
• The best-interests discussion states that the debtors have already sold substantially all of their assets, though the sale sections put the bid deadline at Oct. 9, 2026 and the auction at Oct. 14, 2026 and make consummation of the sale a condition to the Effective Date.
• Material terms remain blank in the document as filed: the voting record date, the voting deadline, the confirmation hearing date and time, and the confirmation objection deadline await entry of the solicitation procedures order, which the debtors are still requesting; the treatment table carries no estimated allowed claim amounts for Classes 1, 2, 3, 4, 6 and 7 and no projected recovery percentages for Classes 3 and 4, the two voting classes; and the liquidation analysis at Exhibit A has not yet been supplied.
• No official committee of unsecured creditors has been appointed. The U.S. Trustee filed a statement on Sept. 10, 2026 that an insufficient response to its solicitation left the committee unformed.

Sale Transaction

• Under the stalking horse asset purchase agreement dated Aug. 26, 2026 among the debtors and Teva Pharmaceuticals International, GmbH, the buyer committed to an upfront cash payment of $57.5 million at closing, up to $67.5 million in cash contingent milestone payments, and the assumption of certain liabilities including cure costs of up to $2.5 million, in each case subject to higher or otherwise better bids.
• The milestone payments divide into development and commercial components, with the development tier turning entirely on the timing of FDA approval of the pending supplemental new drug application for at-home use of IGALMI. Only one development milestone is payable:
  • $67.5 million if approval is received on or prior to Nov. 21, 2026;
  • $55 million if after Nov. 21, 2026 but on or prior to Feb. 28, 2027;
  • $20 million if after Feb. 28, 2027 but on or prior to May 31, 2027; and
  • $5 million if after May 31, 2027 but on or prior to Nov. 30, 2027.
• If approval is not received on or prior to Feb. 28, 2027, commercial milestones tied to net sales of the milestone product come into play: $10 million on first achievement of annual net sales of $250 million or more on or prior to Dec. 31, 2035, and a further $10 million on first achievement of annual net sales of $500 million or more by that same date. No commercial milestone is payable if either of the two highest development milestones, the $67.5 million or $55 million tiers, is achieved.
• Bid protections approved under the bidding procedures order:
  • Break-up fee: $1.15 million if there is no regulatory approval of the supplemental new drug application for the milestone product before the stalking horse agreement is terminated, or $5 million if such approval precedes that date.
  • Expense reimbursement: the buyer's reasonable and documented out-of-pocket costs, capped at $575,000.
  • Deposit: the stalking horse bidder posted a $5.75 million good-faith deposit with an escrow agent.
• The filing characterizes the bid protections as 3% of the upfront payment and aggregates them at $1.725 million for bid-threshold purposes, a figure that equals the $1.15 million break-up fee plus the $575,000 expense cap and does not account for the $5 million fee payable if regulatory approval precedes termination.
• To qualify, a competing bid must be submitted by Oct. 9, 2026 at 12:00 p.m. (ET) and must include cash at closing exceeding $57.5 million plus the bid protections, aggregating $1.725 million, plus an initial minimum overbid increment of $1,000,000, together with contingent payment rights of equal or greater value to those in the stalking horse agreement.
• If any qualified bid other than the stalking horse bid arrives by the deadline, the auction commences on or before Oct. 14, 2026 at 10:00 a.m. (ET) at the offices of Cooley LLP in New York; if none does, the auction is canceled and the stalking horse bidder is deemed the successful bidder. The stalking horse agreement sets an outside date for closing of Oct. 30, 2026 absent mutual extension, and the debtors' timeline contemplates closing within 60 days of the petition date in line with the DIP sale milestones.
• Any sale order controls over the plan, the plan supplement and the confirmation order in the event of inconsistency, and survives confirmation unimpaired.

DIP Facility and Prepetition Debt

• The DIP facility, established by the Aug. 31, 2026 credit agreement and the final DIP order [Docket No. 149] entered under sections 364(c) and 364(d), is a multi-draw senior secured superpriority priming term loan of up to $77.25 million, consisting of $19 million in new money term loans and a cashless, dollar-for-dollar roll-up of $58.25 million of prepetition secured obligations, funded on a pro rata basis as new money is drawn.
• Rate: 13% per annum on the new money loans, payable in cash; 13% per annum on the roll-up loans, payable in kind.
• Exit fee: 4.0% of the aggregate principal amount of all DIP loans repaid.
• Maturity: the earliest to occur of:
  • five months from closing;
  • consummation of a court-approved sale;
  • the effective date of a confirmed Chapter 11 plan; and
  • certain events of default.
• Oaktree Fund Administration, LLC serves as both prepetition agent under the April 19, 2022 credit agreement and DIP agent. The DIP order grants the DIP secured parties first-priority senior priming liens on substantially all of the debtors' property and superpriority claims; grants the prepetition secured parties adequate protection liens and superpriority claims; and fixes Nov. 14, 2026 as the deadline to commence a challenge to the stipulations, admissions, waivers and releases it contains in favor of the prepetition agent and lenders.
• Case milestones under the facility, each extendable with the consent of the DIP agent at the direction of the DIP agent and prepetition agent or by court order, run from the petition date: entry of the bidding procedures order and the DIP order within 30 days; an auction, if necessary, within 50 days; entry of a sale order and consummation of the sale within 60 days; entry of the solicitation procedures order within 60 days; entry of the confirmation order within 105 days; and occurrence of the plan effective date within 115 days.
• As of the petition date the debtors owed approximately $111.8 million in principal under the prepetition credit agreement, which comprised all of their funded debt, alongside roughly $17 million in unpaid trade and other ordinary course obligations, much of it owed to existing or former professionals. The prepetition loans are secured by a first-priority lien on substantially all of the debtors' assets, including BioXcel's equity in both subsidiaries, which guarantee the debt and pledge substantially all of their own assets. They bear fixed interest of 13.0% payable quarterly in cash, with certain interest capitalized into principal under a payment-in-kind election available through June 30, 2025; carry an exit fee of 0.50% of principal repaid; and mature April 19, 2027.
• The facility was the product of a canvass rather than an auction: the prepetition lenders would not consent to a third-party priming facility but were willing to fund themselves; MTS Health Partners, L.P. approached 11 other lenders for unsecured, junior secured or senior secured financing and approached Teva, which declined; no viable third-party proposal emerged, and no party would engage in a priming contest. Negotiated concessions from the DIP lenders increased available cash, decreased the roll-up, allowed interest on rolled-up obligations to be paid in kind, reduced the original issue discount and the exit fee, increased the permitted budget variance and extended maturity. The lenders separately advanced $1.25 million in prepetition bridge financing on Aug. 24, 2026 and consented to use of their cash collateral.

Treatment of Claims and Interests

• Unclassified claims comprise administrative claims, professional fee claims, priority tax claims, U.S. Trustee fee claims, DIP claims and restructuring expenses, none of which votes.
  • Administrative claims are paid in cash in the unpaid face amount on the later of the Effective Date and 30 days after allowance, absent agreement to less favorable treatment; priority tax claims receive, at the debtors' or trustee's discretion, cash in full on the later of the Effective Date and 30 days after allowance, regular cash installments over no more than five years from the petition date with interest at the applicable non-bankruptcy rate, or other agreed treatment; professional fee claims are paid from the professional fee reserve once allowed by court order; and U.S. Trustee fees accrued before the Effective Date are paid on or before it, with later fees paid by the trustee from trust assets until the cases are closed, dismissed or converted.
  • DIP claims are paid in full in cash on the Effective Date unless their holders consent otherwise; if the distributable value cannot cover the DIP claims plus the administrative, priority tax and priority non-tax claims that confirmation requires be paid, the DIP agent and lenders are deemed to waive administrative expense priority on the DIP claims allocable to the roll-up loans, up to the amount of that shortfall and capped at the outstanding roll-up principal, without impairing the claim itself or the DIP liens and without affecting the superpriority status of the new money loans.
  • If the DIP claims are not paid in full in cash at the sale closing, the debtors assign contingent payment rights to the DIP agent on the Effective Date at a value agreed with the prepetition agent and consented to by the holders or fixed by the court, credited against the claims; aggregate DIP distributions may not exceed the allowed amount.
  • Restructuring expenses, meaning the fees and expenses of the lender professionals, are paid in full in cash in the ordinary course before the Effective Date and on the Effective Date, with any incurred through the Effective Date but left unpaid then paid by the liquidation trustee; after the Effective Date the trustee also pays, as they come due, the reasonable and documented fees and expenses of the DIP agent, DIP lenders, prepetition agent and prepetition lenders relating to the cases, plan implementation, oversight of the wind-down and the trust, and enforcement of their rights, together with their costs of cancelling the DIP and prepetition loan documents without reduction to their recoveries, in each case with no fee application, no itemized time detail and no court review.
• Class 1, priority non-tax claims (unimpaired, deemed to accept): cash equal to the unpaid face amount, or less favorable treatment as agreed; projected recovery 100%.
• Class 2, other secured claims (unimpaired, deemed to accept): at the debtors' or liquidation trustee's discretion, cash equal to the value of the claim, return of the holder's collateral, or less favorable treatment as agreed; projected recovery 100%.
• Class 3, prepetition secured claims (impaired, entitled to vote): after satisfaction of the allowed DIP claims, a pro rata share of the Effective Date distributable cash, of any contingent payment rights not assigned to the DIP agent, at a value agreed by the debtors and the prepetition agent and consented to by holders or fixed by the court, and of remaining distributable liquidation trust assets other than the GUC recovery reserve. No distribution comes from the GUC recovery reserve until Class 4 is paid in full, and aggregate distributions cannot exceed the allowed claims. Any shortfall becomes a prepetition/DIP deficiency claim in Class 4.
• No postpetition interest accrues on claims except as the plan, a court order or the Bankruptcy Code (including section 506(b)) provides; where interest is payable, DIP claims and prepetition secured claims accrue at their contract rates, including any default interest, and all other claims at the federal judgment rate on a noncompounded basis.
• Class 4, general unsecured claims (impaired, entitled to vote): a pro rata share of the GUC recovery reserve and of remaining liquidation trust assets after payment or reserve for all unclassified claims and Classes 1 through 3. The reserve is funded with 30% of the proceeds of the retained causes of action as received and is capped at $1 million. Prepetition/DIP deficiency claims sit in Class 4 but are excluded from the reserve, both for pro rata calculation purposes and for distribution, until all other Class 4 holders are satisfied in full.
• Class 5, intercompany claims (unimpaired or impaired, deemed to accept or reject): adjusted, reinstated or discharged, in each case without distribution, as the debtors or liquidation trustee reasonably determine; recovery 0%.
• Class 6, subordinated claims (impaired, deemed to reject): a pro rata share of remaining liquidation trust assets after payment or reserve for all unclassified claims and Classes 1, 2, 3 and 4; projected recovery 0%.
• Class 7, section 510(b) claims (impaired, deemed to reject): a pro rata share of remaining liquidation trust assets after payment or reserve for all unclassified claims and Classes 1, 2, 3, 4 and 6, pari passu with Class 8 and subject to a calculation methodology to be set out in the plan supplement; projected recovery 0%.
• Class 8, existing equity interests (impaired, deemed to reject): all interests are cancelled, extinguished and discharged, with holders receiving a pro rata share of remaining liquidation trust assets after payment or reserve for all unclassified claims and Classes 1, 2, 3, 4 and 6, pari passu with Class 7 under the same methodology; projected recovery 0%.
• For voting and distribution purposes only, the three estates are deemed merged into BioXcel Therapeutics, Inc.: intercompany guarantees are eliminated, each claim is treated as a single claim against BioXcel, and setoff rights are determined as against one entity. Corporate separateness is otherwise preserved, and U.S. Trustee fees are calculated on a separate-entity basis.
• The debtors acknowledge that cash available to Class 4 may be reduced by liquidation trustee and trust professional fees, other wind-down costs and senior allowed claims, that the recoveries from retained causes of action are inherently uncertain, and that the governmental bar date of Feb. 23, 2027 leaves room for later priority tax and other senior claims to emerge.

Liquidation Trust, Reserves and Distributions

• Implementation runs through four steps: distribution of Effective Date distributable cash by the debtors directly to the DIP agent and prepetition agent; direct assignment of the contingent payment rights to those agents; establishment of the liquidation trust and appointment of the trustee; and transfer of the remaining assets to the trust, from which all other distributions are made. The agent-facing distributions and assignments bypass the trust entirely.
• Effective Date distributable cash means all cash of the debtors and estates as of the Effective Date, including pre-Effective Date sale proceeds and any contingent payment proceeds received before then, less the wind-down reserve, the professional fee reserve and a reserve for allowed administrative, priority tax and priority non-tax claims, each in an amount reasonably acceptable to the DIP agent and prepetition agent.
• The liquidation trustee, whose identity appears in the plan supplement and must be reasonably acceptable to the debtors, the DIP agent and the prepetition agent and approved by the confirmation order, becomes the sole officer, director or manager of each post-effective date debtor and operates under the oversight of the liquidation trust consultation parties, meaning the DIP lenders until the DIP claims are satisfied and the prepetition lenders until the prepetition secured and deficiency claims are satisfied. Existing officers, directors and managers are deemed to resign on the Effective Date, and their indemnification, reimbursement and contribution claims are payable solely from directors and officers insurance proceeds; those policies survive the Effective Date, and the trustee may pursue claims not released under the debtor release that the policies cover and seek to recover the policy proceeds.
• The plan establishes three reserves:
  • the professional fee reserve, funded on or before the Effective Date in an amount acceptable to the DIP agent and prepetition agent, with any amount at or below the cumulative professional fee line in the approved budget less amounts already paid deemed acceptable, and any excess released first to the DIP agent until the DIP claims are paid in full, then to the prepetition agent until the prepetition secured claims are paid in full;
  • the wind-down reserve, funded on or before the Effective Date in an amount acceptable in good faith to the DIP agent and prepetition agent unless those claims are paid in full in cash on the Effective Date, with any surplus available for distribution; and
  • the GUC recovery reserve, funded only as retained-cause-of-action proceeds arrive, at 30% of proceeds and capped at $1 million.
• The trust is structured as a liquidating grantor trust for tax purposes, must dissolve no later than five years after establishment absent a court-approved fixed extension of up to three years, and its beneficial interests are non-certificated and non-transferable except by will, intestate succession or operation of law.
• Distribution mechanics: no distribution below $25 is required and claims under that threshold are barred; checks go void 90 days after issuance; holders who fail to cash checks or return a Form W-8 or W-9 within 90 days forfeit their distributions, which revert to the trust for redistribution. Where a distribution to Classes 7 and 8 is not economically feasible, the trustee may donate the undistributed funds to unaffiliated charities. Distributions on the DIP, prepetition secured and deficiency claims are made to the applicable agent for onward distribution, and DTC and other clearing systems are directed to cooperate without recharacterizing distributions as principal or interest and without indemnity from the trustee or prepetition agent.
• Insured claims receive nothing under the plan until the holder has exhausted its remedies against applicable insurance, and any portion an insurer agrees to satisfy may be expunged without an objection or further court action.

Retained Causes of Action

• The retained causes of action vest in the liquidation trust on the Effective Date, where the trustee holds the exclusive right to institute, prosecute, abandon, settle or compromise them without further court order or notice. A schedule of them will be filed with the plan supplement.
• The definition reaches fiduciary, contractual and statutory duty claims, tort claims and Chapter 5 avoidance claims against third parties, whether or not disclosed in the schedules, but excludes anything released under the plan, the confirmation order, the DIP order or any sale order, and anything sold or conveyed to a purchaser.
• Separately, the background section discloses that BioXcel has several suits pending against the contract research organization and other parties responsible for overseeing the TRANQUILITY Phase 3 trial.
• Claims held by parties named in the retained causes of action are treated as disputed claims, and no distribution is made on them until the cause of action is settled, withdrawn or determined by final order. The plan also notes that if the wind-down reserve cannot fund prosecution, the trustee would need alternative financing or contingency counsel, the cost of which would be paid out of recoveries ahead of distributions to creditors.

Releases, Exculpation and Injunction

• Released parties are the debtors and their estates; the debtors' current and former officers, directors, managers and employees; the post-effective date debtors; the DIP agent; the DIP lenders; the prepetition agent; the prepetition lenders; and the related parties of each. No person is a released party to the extent it is named in a retained cause of action, and the agents, the lenders and every related party qualify only if they are also releasing parties.
• Releasing parties are the DIP agent, the DIP lenders, the prepetition agent, the prepetition lenders, every holder of a claim that votes to accept the plan, and their related parties to the extent agency principles would oblige them. Creditors become releasing parties only by voting to accept, and the U.S. Trustee is expressly not treated as having granted the releases.
• The debtor release and the third-party release both carve out causes of action arising from criminal acts, willful misconduct, actual fraud or gross negligence as determined by final order, and neither touches post-Effective Date obligations under the plan, rights to receive distributions, claims against non-released parties, or the retained causes of action. The debtors also expressly reserve their own setoff, recoupment, counterclaim and claim-objection rights against the releasing parties.
• Most significantly, the debtor releases in Section 15.10(a) are expressly subject to the ongoing investigation by the claims committee, a special board committee formed Aug. 12, 2026 with Susan Atkins as its sole member and authority to investigate and pursue or settle claims against current and former officers and directors and other third parties. Any exceptions, qualifications or modifications to those releases will be identified in the plan supplement.
• Exculpated parties are the debtors and their estates, the debtors' present and former officers, directors, managers and employees, the professionals retained by order of the court, and, solely where they are estate fiduciaries, the related parties of each; exculpation covers acts and omissions from the petition date through the Effective Date in connection with the cases, the negotiation and implementation of the purchase agreement and sale transaction, and the formulation, solicitation, confirmation and consummation of the plan, excepting actual fraud, willful misconduct and gross negligence found by final order. The debtors will identify any exclusions from the exculpated parties in the plan supplement once the claims committee investigation concludes.
• Because the plan does not discharge the debtors, the plan relies on section 1141(c) instead: property dealt with by the plan passes free and clear, holders may look only to assets required to be distributed to them, and all parties are permanently enjoined from commencing or continuing actions, enforcing judgments, creating or enforcing encumbrances, or asserting setoff or subrogation against the debtors, the estates, the post-effective date debtors and their assets, except where a setoff right is asserted in a timely filed proof of claim. A separate permanent injunction bars all persons from pursuing any released claim against the debtors, the estates, the post-effective date debtors or the released parties.

Conditions to the Effective Date, Amendments and Consent Rights

• The Effective Date is the first business day after the confirmation date on which each condition is satisfied or waived, determined in consultation with the DIP agent and prepetition agent. The conditions are:
  • the confirmation order has been entered and has become a final order;
  • all funding, actions, documents and agreements needed to implement the plan have been effected, including funding of the wind-down reserve;
  • the liquidation trust agreement has been executed, the trust established and a trustee appointed;
  • the sale transaction has been consummated under the applicable purchase agreement and sale order;
  • the professional fee reserve has been funded in cash in an amount set by the debtors with the consent of the DIP agent and prepetition agent or fixed by the court;
  • the debtors hold sufficient cash to pay or reserve for projected allowed administrative, professional fee, priority tax, priority non-tax and other secured claims, U.S. Trustee fees and restructuring expenses;
  • all necessary authorizations, consents and regulatory approvals have been received, waived or otherwise resolved;
  • all invoiced restructuring expenses have been indefeasibly paid in full in cash;
  • all DIP claims, less any administrative shortfall amount, have been indefeasibly paid in full in cash unless their holders consent otherwise;
  • no case has been converted to Chapter 7 or dismissed, and no trustee or examiner with expanded powers has been appointed; and
  • all implementing documents have been tendered and executed and their own conditions satisfied or waived.
• The debtors may waive any condition at any time without further order, but only with the consent of the DIP agent and prepetition agent, not to be unreasonably withheld. If the conditions fail, the debtors reserve the right to ask that the confirmation order be vacated, in which case the plan is null and void without waiving any claims.
• The debtors may alter, amend, modify, revoke or withdraw the plan in consultation with the DIP agent and prepetition agent, but material alterations, amendments or modifications of the plan, the plan supplement or any schedule or exhibit require those agents' consent; the introduction to the document extends that consent requirement to the prepetition lenders themselves, while Section 15.4 requires only the agents' consent. The confirmation order, the liquidation trust agreement, the plan supplement and the solicitation procedures order must each be in form and substance reasonably acceptable to the DIP agent and prepetition agent.
• A holder that has accepted the plan is deemed to accept it as amended unless the change adversely affects, or after the confirmation date materially and adversely affects, the treatment of that holder's claim.

Voting and Confirmation

• Only Classes 3 and 4 are solicited, and beneficial holders in both vote directly. Acceptance requires two-thirds in dollar amount and a majority in number of claims actually voting. Because classes are deemed to reject, the debtors will seek confirmation under section 1129(b).
• Stretto, Inc. serves as solicitation and claims agent; the plan supplement, including the liquidation trust agreement, the identity of the liquidation trustee and the section 1129(a)(5) disclosures, is due seven days before the voting deadline.
• Any class with no voting claim as of the start of the confirmation hearing is deemed eliminated for section 1129(a)(8) purposes.
• The debtors acknowledge they may not obtain the requisite acceptances, that classification may draw objection, and that the closing under the purchase agreement may not occur, in which case the Effective Date may not occur and the contemplated distributions may not be made. They also flag that a significant portion of the consideration takes the form of contingent payment rights whose value depends on whether and when the supplemental new drug application is approved, on net sales of the milestone product, and on the buyer's performance.

Executory Contracts

• Every executory contract and unexpired lease not assumed, assumed and assigned, or rejected before the Effective Date, and not subject to a pending motion, is deemed rejected as of the Effective Date, except postpetition contracts entered into in connection with the plan, directors and officers insurance policies, and contracts listed on the assumption schedule in the plan supplement.
• Rejection claims must be filed with Stretto by the rejection bar date, which falls no later than 30 days after the earlier of notice of entry of a rejection order and notice of the Effective Date; untimely rejection claims are forever barred, and the trustee may object to timely ones through the claim objection deadline, 180 days after the Effective Date.

Key Dates

• Petition date: Aug. 27, 2026.
• Hills show-cause deadline: Oct. 7, 2026, by which BioXcel must establish a timeline for seeking Bankruptcy Court approval of the proposed settlement; the debtors' motion to enforce the automatic stay remains pending.
• Bid deadline: Oct. 9, 2026 at 12:00 p.m. (ET); auction, if any, on or before Oct. 14, 2026 at 10:00 a.m. (ET); outside date for closing under the stalking horse agreement, Oct. 30, 2026.
• General bar date: Oct. 23, 2026 at 5:00 p.m. (Eastern Time), set by the bar date order entered Sept. 18, 2026 [Docket No. 121]; governmental bar date, Feb. 23, 2027 at 5:00 p.m. (Eastern Time).
• DIP challenge deadline: Nov. 14, 2026, the same day as the FDA's target action date on the supplemental new drug application.
• Voting deadline, confirmation hearing and confirmation objection deadline: left blank, to be fixed by the solicitation procedures order.
• Post-Effective Date: administrative claims bar date, 30 days after the Effective Date; final professional fee applications, 45 days after, with objections due 21 days after service; claim objection deadline, 180 days after, subject to extension.

Hills Litigation and the Stay Dispute

• Before the petition date BioXcel was a defendant in Hills v. BioXcel Therapeutics, Inc. in the U.S. District Court for the District of Connecticut, where it had reached a proposed settlement providing for a $9.75 million payment funded by the debtors' insurance carriers, subject to final district court approval.
• The debtors filed a suggestion of bankruptcy on Aug. 31, 2026, but the plaintiffs continued to seek affirmative relief, producing an order to show cause requiring BioXcel to establish by Oct. 7, 2026 a timeline for seeking Bankruptcy Court approval of the settlement under Rule 9019. The debtors responded on Sept. 28, 2026 with a motion to confirm and enforce the automatic stay under section 362(a), which remains pending, and say they are still analyzing how to proceed on the settlement itself.

Tax Attributes

• The debtors estimate consolidated net operating losses of approximately $510 million to $540 million for federal income tax purposes as of the petition date, alongside state net operating losses and certain tax credits, all subject to IRS review and adjustment. Each debtor is a member of an affiliated group filing a consolidated return with BioXcel as common parent.
• To avoid a section 382 ownership change, the court entered the NOL order [Docket No. 114] restricting trading in BioXcel stock and the claiming of a worthless stock deduction by any 50-percent shareholder. The debtors believe no ownership change has occurred and intend that none occur before liquidation absent their or the court's approval.
• Consistent with treating the plan as a liquidation for tax purposes, the debtors expect no cancellation of debt income before they distribute all of their assets, and in any event no material attribute-reduction impact. Distributions are allocated first to principal and then to any remaining portion of the claim, are subject to withholding including employment tax withholding, and transfers made under or in connection with the plan are exempt from recording, stamp, transfer, sales, use and similar taxes to the fullest extent permitted by section 1146(a).

The Company and the Path to Chapter 11

• BioXcel, incorporated in Delaware on March 29, 2017 and public on Nasdaq under "BTAI" since its March 12, 2018 IPO, is a biopharmaceutical company built on artificial intelligence that identifies new therapeutic indications for already approved or clinically evaluated drugs. The AI platform itself is not property of the estates; it belongs to a non-debtor affiliate. The debtors are BioXcel Therapeutics, Inc. and its two Delaware subsidiaries, OnkosXcel Therapeutics, LLC, which houses the immuno-oncology programs, and OnkosXcel Employee Holdings, LLC, a management holding company for equity grants to OnkosXcel service providers; foreign non-debtor affiliates, if any, hold no material assets. As of the petition date BioXcel had roughly 31 million shares outstanding, 25 full-time employees, and a single facility, its New Haven, Connecticut headquarters of approximately 18,285 square feet, on a month-to-month lease effective March 1, 2026.
• The lead asset is BXCL501, an orally dissolving film formulation of dexmedetomidine. The FDA approved it as IGALMI in April 2022 for acute treatment of agitation associated with schizophrenia and bipolar I or II disorder in adults, and it remains the debtors' only approved and marketed product and the sole source of product revenue, sold almost entirely through Cardinal Health, which warehouses finished product on consignment and sells to wholesalers that supply hospitals, psychiatric institutions and other healthcare facilities. BioXcel owns no manufacturing and depends on third-party partners, principally ARx, for clinical and commercial supply. Its neuroscience patent estate as of Aug. 3, 2026 comprised 13 U.S. utility applications, 17 issued U.S. utility patents, 41 pending non-U.S. utility applications, 29 allowed or granted non-U.S. patents including five in Japan, one pending U.S. design application and two registered Japanese design patents.
• The value driver behind the milestone structure is the supplemental new drug application for at-home use in acute treatment of agitation associated with bipolar disorders or schizophrenia, filed Jan. 14, 2026 after the SERENITY At-Home Phase 3 trial met its primary objective, accepted by the FDA in April 2026 and carrying a target action date of Nov. 14, 2026; approval would substantially expand patient access and the commercial opportunity by opening the at-home market.
• Commercially, the company never scaled. Concurrent with the April 2022 approval BioXcel entered the prepetition credit agreement and a revenue interest financing agreement with funds affiliated with Oaktree Capital Management and the Qatar Investment Authority, together providing aggregate financing commitments of up to $260 million, drawing $70 million under the initial term loan tranche and $30 million under the revenue interest agreement that month. In December 2023, ahead of the first minimum revenue covenant test, the lenders deferred the test date to Dec. 31, 2024 and reduced the revenue targets, and in connection with that amendment the revenue interest agreement was terminated and the purchasers' interest exchanged for $30 million of term loans. After the July 2022 launch, adoption lagged against extended formulary review timelines, restrictive institutional purchasing protocols and the need for sustained prescriber education, and net IGALMI revenue fell from $2.3 million for 2024 to $0.6 million for 2025 as the commercial organization was cut back. The debtors reported a net loss of $27.4 million for the six months ended June 30, 2026, and the company has historically funded itself through public equity offerings and third-party debt rather than product revenue.
• Compounding that, the TRANQUILITY Phase 3 trial in Alzheimer's dementia agitation was compromised by alleged third-party misconduct: the June 29, 2023 announcement of positive topline results also disclosed an FDA Form 483 following inspection of a trial site, arising from a fabricated email sent to the FDA by the principal investigator overseeing the trial, who was not a BioXcel employee. An independent audit found no further evidence of fraud or data misconduct and the FDA ultimately concluded voluntary action was indicated at the site, but the stock fell roughly 64% in a single day and never recovered, which the debtors say significantly impaired their ability to raise equity to finish the sNDA process or restart TRANQUILITY.
• In August 2023 the board approved the clinical reprioritization, concentrating resources on the SERENITY at-home label expansion and pausing or deprioritizing the TRANQUILITY Phase 3 program, BXCL502 (latrepirdine), the BXCL503 and BXCL504 concepts and further work on BXCL701, the oral innate immune activator in prostate, pancreatic and other tumors held through OnkosXcel. Workforce reductions followed: approximately 15% in May 2024 and a further 15 employees, roughly 28% of then-current headcount, in September 2024, taking full-time staff from about 60 at the time of the first reprioritization announcement to 29 at Dec. 31, 2025, with four more departures before filing.
• As liquidity tightened, BioXcel and its lenders ran a series of amendments: in March 2026 the ninth amendment waived the going-concern covenant for the 2025 audit and cut the minimum liquidity covenant from $15 million to $12.5 million in exchange for a $2.5 million principal prepayment and warrants; in July 2026 the tenth amendment deferred the principal and interest due June 30, 2026, cut minimum liquidity to $7.5 million, and required a definitive strategic transaction by July 31, 2026; further amendments through the petition date preserved liquidity, culminating in the Aug. 24, 2026 bridge.
• Governance shifted alongside. On July 1, 2026, in connection with the tenth amendment, the board replaced a capital raise committee with the strategic process committee and gave it exclusive authority over strategic alternatives including a financing, a capital raise, a sale or a Chapter 11 filing; David Mack, a director since November 2024, was its initial sole member, and Susan Atkins joined as the second member when she was appointed to the board on Aug. 12, 2026, the same day the board formed the claims committee with Atkins as its sole member.
• MTS ran an extensive marketing campaign beginning in the fall of 2025. Teva emerged as the most viable strategic bidder, diligenced the assets and regulatory portfolio including the pending sNDA, and submitted a non-binding letter of intent to acquire substantially all assets through a section 363 process with an affiliate as stalking horse. The board and the strategic process committee concluded that the 363 sale offered a stronger value proposition and greater closing certainty than a standalone financing, given constrained liquidity, the size of the debt, the concessions a financing would require from the prepetition lenders, the uncertainty of further capital raises and the near-term regulatory milestones a well-capitalized acquirer could pursue. The stalking horse agreement was signed Aug. 26, 2026 and the petitions followed on Aug. 27, 2026.
• Alongside the first-day relief, the court approved retention of Cooley LLP as lead counsel and Young Conaway Stargatt & Taylor, LLP as co-counsel, MTS as investment banker, Stretto as claims, noticing, solicitation and administrative agent, and MERU, LLC, with Samir Saleem as chief restructuring officer, each effective as of the petition date, together with interim compensation procedures, ordinary course professional procedures and key employee retention and incentive programs aimed at retaining the employees critical to a value-maximizing sale.

Best Interests, Feasibility and Alternatives

• The liquidation analysis supporting the best-interests test, Exhibit A, has not yet been supplied, so the comparison against a Chapter 7 outcome rests for now on the debtors' assertion that conversion would add Chapter 7 trustee statutory fees and new professional costs payable ahead of creditors, would trigger a new claims bar date diluting recoveries, and would deliver less, and later, than the plan.
• On feasibility, the debtors note that the plan proposes a liquidation and that they expect their cash, the liquidation trust assets including proceeds of the retained causes of action, and the wind-down reserve to cover all required payments.
• The stated alternatives are an alternative plan of liquidation or conversion to Chapter 7, which the debtors say would leave a trustee to complete the liquidation under statutory priorities. They also acknowledge that if administrative claims cannot be paid in full or alternative treatment agreed, one or more cases may be converted.