Relmada Therapeutics, Inc. (NASDAQ:RLMD) Q2 2024 Earnings Call Transcript

Relmada Therapeutics, Inc. (NASDAQ:RLMD) Q2 2024 Earnings Call Transcript August 9, 2024

Operator: Good afternoon. Welcome to the Relmada Therapeutics Inc.’s Second Quarter 2024 Earnings Conference Call. At this time, all lines are in a listen-only mode. [Operator Instructions] This call is being recorded on Wednesday, August 7, 2024. I would now like to turn the conference over to Tim McCarthy, LifeSci Advisors. Please go ahead, sir.

Tim McCarthy: Thank you, operator, and thank you all for joining us this afternoon. With me on today’s call are Dr. Sergio Traversa, Chief Executive Officer; and Maged Shenouda, Chief Financial Officer. This afternoon, Relmada issued a press release providing a business update and announcing financial results for the quarter ended June 30, 2024. Please note that certain information discussed on the call today is covered under the Safe Harbors provision of the Private Securities Litigation Reform Act. We caution listeners that during this call, Relmada as management team will be making forward-looking statements. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company’s business.

These forward-looking statements are qualified by the cautionary statements contained in robotics press release issued today and the company’s SEC filings, including the annual report on Form 10-K for the year ended December 31, 2023, and with subsequent filings, including the second quarter 2024 10-Q filed after the close today. This conference call also contains time-sensitive information that is accurate only as of the date of this live broadcast on August 7, 2024. Relmada undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call. Now I’d like to turn the call over to Sergio. Sergio?

Sergio Traversa: Thank you, Tim, and thanks to everyone for taking time to join us this afternoon. Relmada is dedicated to the development of transformative medicine for people living with central nervous system disorder. And I’m pleased to report that Relmada’s clinical program has made meaningful progress over the last five months. We believe that the portfolio led by the Phase 3 program for REL-1017 as a potential adjunctive treatment for major depressive disorder, or MDD, is poised to reach several important milestones. And we are encouraged by the company’s progress. As a quick reminder, REL-1017 is a small molecule that preferentially blocks a hyperactive brain channel called NMNDi receptor that is associated with MDD.

REL-1017 has been designed to rapidly improve symptoms and provide these patients with a new treatment on top of their current regimen. Completing the Phase 3 program of REL-1017 is Relmada’s number one objective, and it will complete the study package required to file the NDA. During today’s call, we will discuss the plan interim analysis, planned by year-end 2024, for the Reliance II study, review the time into complete enrollment in the two Phase 3 studies in the REL-1017 program, outlining timing to initiate a Phase 1 study for a proprietary psilocybin program, REL-P11, in development for metabolic diseases, and comments on our cash balance, which we expect to support our planned operation into 2025, and several key clinical milestones, especially for the REL-1017 program.

I’ll briefly review our program. And in a few minutes, Maged will provide you with a summary of our second quarter financial. After that, I will make a few closing remarks, and then we will open the call for your questions. Starting with REL-1017, we are enrolling two pivotal Phase 3 studies for REL-1017, Reliance II, and Relight. These studies built on positive Phase 2 data with REL-1017 for the objective treatment of depression. Our clinical data set also demonstrated that REL-1017 is well-tolerated with no indication of abuse potential. Our ongoing Phase 3 studies are designed to assess the impact of REL-1017 of the MADRS score as an indicator of depression severity. The studies are evaluating REL-1017 in patients with documented clinical depression undergoing treatment with an approved antidepressant.

Each of the ongoing studies, Reliance II and Relight, is enrolling up to 340 subjects. The studies are randomized one-to-one, and designed and powered to detect 2, 2.5 points delta in the MADRS10 score at day 28. The protocols have been thoughtfully designed to incorporate several elements intended to de-risk each study with a thorough patient adjudication process. As a snapshot, the features that we have emphasized in the Reliance II and Reliance studies are focused on optimizing the protocol, carefully selecting study sites and monitoring the number of patients per site, and most importantly, carefully verifying the diagnosis of depression and each patient’s medical history to ensure enrollment of patients with clinical depression. We have been especially focused on defining the patient enrollment criteria with extra care.

The current protocols include a review of medical and pharmacy records. The studies also require that patients have been treated with an approved antidepressant for at least six weeks and have experienced an improvement of less than 50% since starting treatments. Adoption of these elements has increased our confidence that we are appropriately enrolled in the most suitable patients into Reliance II and Relight. As a result of these efforts, changing in the screen failure rate can be considered one way to assess the stringency of the enhanced enrollment criteria. As of today, we are observing an approximately 80% screen failure rate versus a 50% screen failure in the Reliance I study. We intend to reach two important milestones by end of the year, reporting the output of a preplanned interim analysis and completion of enrollment of reliance students.

We expect completion of enrollment in reliance to follow approximately six months after that. The preplanned interim analysis of Reliance II study is intended to be a de-risking tool to increase the probability of a successful study outcome. The analysis will include a futility analysis and a sample size re-estimation, if necessary, with the potential to adjust the sample size to ensure proper statistical results. There are three potential outcomes from the interim analysis. The studies futile, the study can continue with the addition of certain number of patients, and the study can continue with the preplanned number of patients, that of course is what would be our preferred outcome. We will conduct the interim analysis and expect to report the outcome of this analysis before year end 2024.

Now, I would like to spend a few moments on REL-P11. We identified the metabolic activity of REL-P11 as part of a preclinical evaluation on its potential effect on neurodegenerative disease. As a quick reminder, REL-P11 is a low dose, modified release formulation of psilocybin.Comparing data from a recognized preclinical role and model of metabolic dysfunction associated with metabolic dysfunction-associated steatotic liver disease, or MASLD, published last year in November at the American Association for the Study of Liver Disease is the cornerstone of our program. This data shows that REL-P11 has a benefit on multiple metabolic parameters, including triglycerides levels and glucose metabolism. Besides reducing the steatosis of the liver, REL-P11 reduces blood glucose and body weight without producing any side effect on the CNS.

This data led to our evaluation of P11 as a candidate for the treatment of metabolic disorders, such as obesity. We plan to initiate a Phase 1 single-attended dosing, or SAD, study in this subject for REL-P11 shortly. The Phase 1 study will define the pharmacokinetic safety and tolerability profile for REL-P11 and allow us to select a dose for evaluation in the Phase 2a approval process study. We expect to complete the Phase 1 SAD study and initiate the Phase 2a study in H1 first-half of 2025. Now I would like to turn the call over to our Chief Financial Officer, Maged Shenouda. Maged?

Maged Shenouda: Thank you, Sergio. This afternoon, we issued a press release announcing our business and financial results for the three and six months, ending June 30, 2024. During today’s call, I will provide a brief overview of the three-month financial results. Full details are available in our press release and 10-Q filing on our website located in the News and SEC Filings tabs of the Investor Relations page. Research and development expense for the three months ended June 30, 2024, or approximately $10.7 million, compared to $13.7 million for the same period in 2023, a decrease of $3 million. The decrease was primarily driven by decrease in study costs associated with the completion of two Phase 3 trials in the long-term open label safety Reliance III trial or study 310.

General and administrative expense for the three months ended June 30, 2024, for approximately $8.1 million, compared to $12.3 million for the same period in 2023, a decrease of approximately $4.2 million. The decrease was primarily driven by a decrease in stock-based compensation expense. The net loss for the three months ended June 30, 2024, was $17.8 million, or 59 cents per basic and diluted share, compared with a net loss of $25.3 million, or $0.84 per basic and diluted share for the same period in 2023. I will also note that the company had 30.17 million common shares outstanding as of August 2, 2024. As of June 30, 2024, Relmada had cash, cash equivalents, and short-term investments of approximately $70.4 million compared to $96.3 million as of December 31, 2023.

Cash used in operations for the second quarter was $13.3 million. Based on our current clinical development plans, we believe our current cash position is adequate to support operations into 2025 through key milestones, including the top line from the Reliance II study. Before we go to your questions, I’ll turn back to Sergio to make a few closing comments. Sergio.

Sergio Traversa: Thank you, Maged. As we conclude the prepared remarks on this afternoon’s call, I would like to leave you with a few key messages. Our two Phase 3 studies for our lead program, REL-1017 for MDD has been thoughtfully designed and are being carried out with appropriately adjudicated patients, with potentially the studies. We expect two important milestones from the Reliance II study before the end f the year, with the output of a preplanned interim analysis, which includes both a futility analysis and a simple size re-estimation, if necessary, and the completion of enrollment of the Reliance II study. We expect completion of enrollment of Reliance to follow approximately six months after that. Preparations are on track to begin the clinical program for REL-P11.

Our appropriate data is silo-side formulation for metabolic disorder later this quarter or early next quarter. We believe our financial resources will support our planned operations into 2025 through key milestones including top-lay data from the Reliance II study. At this point, operator, we can open the call for questions.

Q&A Session

Operator: [Operator Instructions] Your first question comes from the line of Mark Goodman with Leerink Partners. Please go ahead.

Rudy Li: Thanks for taking my question. This is Rudy on the line for Mark. Can you remind us the baseline measures for an ongoing Reliance II study and how that compares with the Phase 2 Identity MDD trial and the Phase 3 Reliance I study?

Sergio Traversa: Thank you for the question. And so, the baseline, MADRS average when the patient’s population starts, they are very similar. It’s right in the mid-30s, like, 33, 34 range for all the studies. That’s pretty typical for depression studies.

Rudy Li: Got it. Yes, just a quick follow up. We’ll give you the confidence that Reliance, we finished enrollment six months after Reliance II. And would a potential simple size re-estimation impact the timeline for that trial?

Sergio Traversa: Yes. Well, the confidence that when Reliance II will be over, and if successful, as we hope, then all the resources will be put on Reliance. So, we have like close to a hundred sites that will be available. Of course, if we may not enroll all of them. So, the full resources dedicated to the studies. And so, we do our confidence that based on the involvement rates that we are seeing now, we can finish in about six months. And sorry, the second question was how we’re confident about the timelines for the sample size re-estimation?

Rudy Li: No. I was asking whether the sample size re-estimation will impact the timeline for the second trial.

Sergio Traversa: That’s a good question. Well, we will address it when we know how many patients we’ll have to enroll, but it could, but it’s probably not going to be very material. When we are talking about sample size re-estimation, we are not talking about adding like 200 patients to the study. That would be probably a problem in general. And so, like sample size re-estimation will evaluate how many ifs and how many patients we have to enroll.

Rudy Li: Got it.

Maged Shenouda: So, the answer to your question is that it may, but it’s not going to be a material timeline change.

Rudy Li: Very helpful.

Operator: And your next question comes from the line of Andrew Tsai with Jefferies. Please go ahead.

Andrew Tsai: Yes. Hi. Thanks for taking my question. So, on clinical trials, we noticed there are some changes to the estimated patient enrollment number to 340. I think you mentioned it in the preparatory marks. So, can you talk about why that number changed from 300 to 340?

Sergio Traversa: Yes, sure, good afternoon, Andrew. Well, [indiscernible] is more general indications that is made mostly for the FDA. And it’s an indication, right? If the patient population would be up to 340, that doesn’t mean that we will go to 340. You don’t want to change like the update clinicalfile.gov too frequently. And so, you put some guidelines that you expect to be meeting and also you have to like — depends if you include dropouts and non-dropouts. But the number of patients is up to 340. That doesn’t mean that we have to go to 340, assuming no sample re-estimation. So, I would not take that as the final number. The final number would be determined by the statistical plan that we have not finalized. You usually send to the FDA the statistical plan as close to the end as possible because there is no upside in defining numbers before, it depends on the enrollment rates and values parameter.

So, I hope I answered your question. I don’t take the 340 as the final absolute number. It’s up to 340.

Andrew Tsai: Got it. Yes, very helpful. And it sounds like there’s a futility analysis in the interim now. So, did you have to change the protocol or the stats plan? And are you taking any statistical penalty with the futility option?

Sergio Traversa: Thanks, Andrew, for asking the question, because it’s very important. And we did spend the last, I would say, couple of months to work on the statistical plan. And I’ll tell you why, because when we had in the study 301, we had an interim review and what we get from the data monitoring committee was, they stopped the trial as early as possible, but we had absolutely no indication of what was the reason for that, could have been futility or could have been efficacy. And that one was actually didn’t really help, Relmada, because we stopped it as indicated at the earliest. There was like 220, it was 2027 patients. And the results were not the one we were expecting. If we would have gone to the 300-plus that was the plan, maybe the study based on the numbers could have been statistically significant, especially because the second part of the trial was conducted when the COVID restriction were lifted.

And you may remember that the results of the last 63 patients enrolled in 301 were actually very, very good compared to the previous 165 patients. So, that interim analysis was not only not very helpful, it actually created a little bit of a problem. So, this time we don’t want to end up in the same situation. So, we have been very carefully planning the interim analysis and we want within the boundary of what can be done, of course. We want to get some information that can help to the risk the program. And so, we inserted the futility analysis. So, at least we want to know, we hope not, but we want to know if the study is futile, then we may decide if it is not the case to continue to preserve the cash that we already have. It is significant, the cash that we already have in our hands.

And then, there is a second scenario that is temporary estimation. The DMC will give us an indication how many patients we should add to get to a likely p-value. Then there is the third scenario that is the one that everybody likes the most. They will tell us that we can stop the trial at the planned number of patients. It would be around the 300, 310, or whatever is the final number would be defined in the statistical analysis and statistical plan. And we will know if that would be what the DMC will tell us. We will know that the study is not futile, because if it is futile, we will be informed. And that we don’t have to add any patients to get to a potential p-value. There’s no guarantee then the study will be successful, because we may have some more patients to add that they are not incorporated in the statistical analysis at the interim, but clearly, would give some good sense that we are on the right direction.

And the last of your question was the statistical penalty. No, there is no alpha penalty in the futility analysis because there is no analysis on the efficacy and there is no early stop. So, you don’t pay any alpha penalty. I hope it was a long answer, but I wanted to be very clear and specific on this.

Andrew Tsai: Yes, thank you. And the very last one is what would be the threshold for futility if the placebo adjusted delta is below a certain point on the address, or do you have any color on that?

Sergio Traversa: Yes, that’s a more difficult to answer, not because we don’t want to. But we haven’t finished or finalized the analysis. And then, we get into the heavy, complicated statistics. But in general, we will set the futility close to what can be a non-clinically meaningful threshold, right? If the study would not have a chance to reach it like any clinically meaningful results, then probably would not be worth to continue. But we have to finalize what the numbers will be.

Andrew Tsai: Thank you again.

Sergio Traversa: Thank you, Andrew.

Operator: And your next question comes from the line of Andrea Tan with Goldman Sachs. Please go ahead.

Andrea Tan: Good afternoon. Thanks for taking the question. Sergio, just really quickly, could you remind us the extent of the trial that you expect to be completed ahead of the interim analysis? And following that, how soon after that could we expect to see the top line data?

Sergio Traversa: Hi, Andrea. Good afternoon. Let me be sure I understand your question. Do we do have another trial before the interim analysis? No, the only two trials that are ongoing for REL-1017 is the Reliance II and Relight. Everything else has been completed. Long term safety, they’re all done.

Andrea Tan: No, I’m so sorry. I was just asking in terms of the interim analysis that’s being conducted or planned for Reliance II. I guess maybe what proportion of that study is it? I think you may have mentioned in the past that it’s around 80% to 90% of the trial, at which point the interim analysis will take place?

Sergio Traversa: I got it again, sorry, I misunderstood. Theoretically, the latest you do it, the better. Now there is the incremental benefit that you get it going, like let’s say a 70% or 75%, 80% become smaller and smaller. So, we’ll try to do it as late as possible, but like we also want to know and so it is going to be like before your end, right, over the next, late August. So, the next, I would say three, four months. It takes a couple of months to prepare it. And so, we are pretty close.

Andrea Tan: Okay, and if the DMC advises that you could continue without additional patients being enrolled, maybe what is the expected time frame over which we could then expect the top line data?

Sergio Traversa: Well, it depends on many patients we have to enroll, but it’s not going to be that far away. I don’t have the exact number, but we are planning to finish and roll by your end. So, you can imagine that it can be by your end or sometime early 2025, but not too long after. If they tell us that we don’t need to roll anymore patients, as we hope, it’s going to be pretty short after that.

Andrea Tan: Okay. And then, one quick question on the psilocybin study. Just curious if you could speak to the decision to run that study in Canada, and if that reflects any regulatory hurdles in the U.S. or maybe even a variation how the different agencies view psilocybin?

Sergio Traversa: Yes. Well, we do it in Canada for two main reasons. One is that Canada, for some reason, they have very good structure for Phase 1. Just to give you an example, REL-1017. Phase 1 was done in Toronto and Canada because they have very good facilities. And the second one is that the Canadian agency, it is very used to psychedelic and or is used to more than the FDA. So, the regulatory hurdles are easier in Canada than in the U.S. So, the combination of these two reasons made us do it in Canada, nothing else.

Andrea Tan: Got it. Okay, thank you so much.

Sergio Traversa: Thanks, Andrea.

Operator: And your next question comes from the line of Uy Ear with Mizuho Financial Group. Please go ahead.

Unidentified Analyst: Hi, thanks for taking my question. This is Charles on for Uy. I guess I had a question on the re-estimation analysis. I guess kind of dig into how many more patients you might add potentially in this analysis. Is that kind of a preset number, or will they give you that number? And then, also on the runway guidance; is the runway still expected to readout to for Relight as well? Thank you.

Sergio Traversa: Thank you, Charles. I will make it answer the second question, but the first one is the number will be recommended by the DMC. And so, it can be anywhere, right? Clearly, if the target number is somewhere north of 300 and we don’t expect to double that number of patients or to add like 200 patients. And that would be an indication that the signal may not be that strong. So, it would be a reasonable amount of patients that is also feasible in a reasonable amount of time.

Maged Shenouda: Yes. And Charles, thank you for the question. I’ll take the finances question. I don’t think we want to get that specific with regard to the readout from the Relight study. What we have said is it will take us into 2025, certainly with data from the Reliance II study. And then, a lot depends on enrollment patterns, and that’s developing day by day. So, I can’t be that specific at this point.

Unidentified Analyst: Okay. Thank you for taking my question.

Sergio Traversa: Operator, there is any more questions? It doesn’t seem there are any more questions.

Operator: Apologies. We don’t have any questions at this moment. You can now proceed with your closing remarks.

Sergio Traversa: Okay. Well, thanks a lot. And so, thank you everyone for joining us for the Relmada second quarter 2024 conference call today. We believe we are poised to achieve several important milestones that could represent an inflection point for Relmada. We look forward to updating you on our progress and thank you for joining us for this second quarter business update call. Have a great night.

Operator: Thank you, presenters, and ladies and gentlemen. This concludes today’s conference call. Thank you all for participating. You may now disconnect.