Relmada Therapeutics, Inc. (NASDAQ:RLMD) Q4 2023 Earnings Call Transcript

Relmada Therapeutics, Inc. (NASDAQ:RLMD) Q4 2023 Earnings Call Transcript March 19, 2024

Relmada Therapeutics, Inc. beats earnings expectations. Reported EPS is $-0.84, expectations were $-0.88. RLMD isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good afternoon, ladies and gentlemen, and welcome to the Relmada Therapeutics Inc. Fourth Quarter and Full Year 2023 Results Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] This call is being recorded on Tuesday, March 19, 2024. I would now like to turn the conference over to Mr. Tim McCarthy. Thank you. Please go ahead.

Tim McCarthy: Thank you, operator, and thank you all for joining us this afternoon. With me on today’s call are Chief Executive Officer, Sergio Traversa and Chief Financial Officer, Maged Shenouda. This afternoon, Relmada issued a press release, providing a business update, announcing financial results, for the three and 12 months ended December 31, 2023. Please note that certain information discussed on the call today, is covered under the Safe Harbor provisions, of the Private Securities Litigation Reform Act. We caution listeners that during this call, Relmada’s 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 Relmada’s press release, issued today and the company’s SEC filings, including in the annual report on Form 10-K, for the year ended December 31, 2023, and subsequent filings. This conference call also contains time-sensitive information that is accurate only as of the date, of this live broadcast, March 19, 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, as always. Good afternoon to everyone, and welcome to the Relmada fourth quarter, and full year 2023 conference call. We are continuing, to make solid progress in advancing the ongoing Phase 3 program, for REL-1017 in major depressive disorder, MDD, as well as in the promising preclinical novel psilocybin program, all of which I will briefly cover today. Following this, Maged will review, our fourth quarter and full year 2023, financial results, and then we will take your questions. Let’s begin with an update on the Phase 3 program for REL-1017. As you know, Relmada is focused on developing REL-1017, as an adjunctive treatment for MDD. As previously communicated, we have made critical changes to RELIANCE II, the ongoing study 302, a Phase 3 two-arm placebo-controlled pivotal study, evaluating REL-1017 25 milligrams, for adjunctive MDD, aimed at controlling placebo response, and improving the enrollment quality.

The amendment Study 302 protocol, has been implemented, across all our clinical sites. Enrollment continues to steadily progress, and our ability, to leverage our close relationship, with the study site, is paying dividends. Moreover, the ongoing initiative we put in place, to drive trial awareness with prospective patients, are also bearing fruit. Importantly, we are evaluating the productivity of sites on a real-time basis and making changes where needed. As a reminder, we plan to enroll approximately 300 patients into RELIANCE II. Based on our current projection, we expect the enrollment into RELIANCE II, to be completed in mid-2024. In our second Phase 3 trial for REL-1017, named RELIGHT, or Study 304, we began those in patients during the third quarter of last year.

RELIGHT also has a planned enrollment, of approximately 300 patients that is planned, to be completed by year-end 2024. To reiterate what we have said previously, like RELIANCE II, RELIGHT is a randomized, double-blind, placebo-controlled four-week trial, evaluating the efficacy and safety of REL-1017, as an adjunctive treatment for MDD, in patients experiencing, inadequate response, to ongoing background antidepressant treatment. The primary endpoint of both studies is the same, is the change in the MADRS total score from baseline, to day 28, as compared to placebo. I should highlight that, we made significant changes to our screening and enrollment processes, in order to ensure that we have patients that, meet all the quality criteria. More specifically, we have instituted a comprehensive adjudication process through, which we now require medical records, for all patients enrolled in RELIANCE II and RELIGHT.

Given this, our screen failure rate in these studies, is now approximately 80% versus 50% previously in RELIANCE I and RELIANCE III, our previously completed Phase 3 trials for REL-1017. We strongly believe that these changes, will significantly enhance the probability, of success of our current studies. Of note, we have completed all the necessary preclinical, manufacturing, and Phase 1 studies, required for a potential REL-1017 NDA filing, and are now focused on execution of various pre-commercial readiness activities. Moving now, to our promising preclinical novel modified release psilocybin program. You may recall that, at last November AASLD meeting, the Liver Conference, compelling preclinical data, were presented in a poster presentation.

These data, demonstrated the beneficial effect, of low – chronic dose psilocybin on multiple metabolic parameters in a rodent model, of metabolic dysfunction, associated steatotic liver disease, or MASLD. These initial promising preclinical results, support the therapeutic potential, of low chronic dose of psilocybin. As we said previously, based on – these data, low dose psilocybin could improve lipids and glucose, with potential fewer side effects, over other investigative treatment approaches such as GLP-1, glucagon, and GIP. We intend to initiate a single ascending dose, Phase 1 trial in obese patients in the first half of 2024, to define the pharmacokinetic, safety and tolerability profile, for our modified release psilocybin formulation in this population.

This will be followed, by a Phase 2a trial, to establish clinical proof-of-concept. Data from the Plan 2a study, is anticipated in the first half of next year. Just to summarize a multiple upcoming key milestones over the next 12 to 18 months, we anticipate completing enrollment in the ongoing RELIANCE II study mid-2024, with top line in the second half. In addition, we plan to complete enrollment in the RELIGHT study, by the end of this year. Finally, we intend to initiate a Phase 1 clinical trial for the modified release formulation of psilocybin in the first half of this year. Moving on, while Maged, will provide a detailed review of our financial, I would like to emphasize that with current cash on hand, to take us into 2025, Relmada remains sufficiently funded, to fully execute our plans, to reach data readouts from both REL-1017 Phase 3 trials, RELIANCE II and RELIGHT, as well as conduct the planned Phase 1, for our modified release psilocybin formulation.

I will now turn the call over to Maged, to review our fourth quarter and full year financial results. Maged?

Maged Shenouda: Thank you, Sergio. Today we issued a press release announcing, our business and financial results, for the three and 12 months ended December 31, 2023, which I will now review. For the fourth quarter ended December 31, 2023, total research and development expense was approximately $14.8 million, as compared to $26.9 million, for the comparable period of 2022, a decrease of approximately $12.1 million. The decrease was primarily associated with the completion of two Phase 3 trials, and the long-term open label safety trial, Study 310. The research and development non-cash charge, related to stock-based compensation, totaled $1.8 million in most recently, completed fourth quarter. Total general and administrative expense for the fourth quarter, ended December 31, 2023, was approximately $12.1 million, as compared to $11.8 million, for the comparable period of 2022, an increase of approximately $243,000.

The increase was primarily driven, by an increase in compensation expense, due to higher employee-related costs. The general and administrative non-cash charge related to stock-based compensation totaled $8.1 million in the most recently completed fourth quarter. For the fourth quarter ended December 31, 2023, the net loss was $25.2 million, or $0.84, per basic and diluted share, compared with a net loss of $37.9 million, or $1.28 per basic, and diluted share in the comparable period, of 2022. Turning to the results, for the full year ended December 31, 2023. Total research and development expense, was approximately $54.8 million, as compared to $113.3 million, for the year ended December 31, 2022, representing a decrease of $58.5 million. Again, the decrease, was primarily driven by a reduction in study costs, associated with the completion of two Phase 3 trials and the long-term open labels safety trial Study 310.

For the year ended December 31, 2023, total general and administrative expense, was approximately $48.9 million, as compared to $47.9 million, for the year ended December 31, 2022. Again, increase was primarily driven, by an increase in compensation expense, due to higher employee related costs. For the year ended December 31, 2023, the net loss was approximately $98.8 million, or $3.28, per basic and diluted share, compared with a net loss of $157 million, or $5.30, per basic and diluted share, for the year ended December 31, 2022. As of December 31, 2023, we had cash, cash equivalents and short-term investments of approximately $96.3 million, compared to approximately $148.3 million, as of December 31, 2022. Cash used in operations for full year 2023, was $51.7 million.

Based on our current clinical development plan, our current cash position provides us, with ample runway into 2025. Of note, this time period includes data readouts, from both Phase 3 trials, RELIANCE II, Study 302 and RELIGHT Study 304, as well as the initiation of our planned Phase 1 trial of our modified release psilocybin formulation. I will now ask the operator to please open the call for questions. Operator?

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Q&A Session

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

Basma Radwan: Hi, good afternoon. This is Basma on for Marc. For RELIANCE II, could you please remind us again, how many patients were enrolled, before the protocol amendments? And do you expect that, due to the inclusion of these patients prior to the amendments, that there will be any source of, I would say, noise – or, to the trial? Or were you able, to go back and check the inclusion criteria? Thank you.

Sergio Traversa: Yes. Thank you. Sergio here. That’s a great question. Previously to the amendment, we enrolled about 80, 90 patients. And so the, as of now, I mean – they will be included in the final analysis. And the, like, we have noticed, if I can expand for a bit, we have noticed that, there was a big difference in patient enrolled, when the COVID restriction were in place. And after the COVID restriction were lifted, so of these 80, 90 patients, about half were enrolled, after the COVID restriction were lifted. So, I mean, the data are blinded, so we don’t really know, how the data will look like. But like, we don’t have any reason to believe that, right, the, this patient would carry any particular baggage. Also, because the sites that, where the issue with data, was generated in the previous trials.

They have never been phrased in RELIANCE II. So, the bottom line is that, yes, this patient will be included in the final analysis, but we don’t have any particular reason, to believe that would carry, any particular burden on the final review. And we do have, on the call, Dr. Andrew Cutler, that is our Special Advisor for Clinical Development. And maybe, Andrew, if you are online, you may want to expand a little bit on the question, that is, right, will these patients enrolled previous to the protocol amendment, carry any weight on the final results?

Andrew Cutler: Well, thank you very much. I’m here. Excuse me. I think it’s a very reasonable question, but I’m pretty confident, I would say I’m very confident that we should be successful. The previous study, really was very close to being positive. It just missed. And so, you don’t have to be perfect here. We just have to be better. I think the changes that have been made, particularly, with respect to analyzing the quality of the sites. And the protocol amendment, will make the quality – of the second cohort here, which is going to be the majority of the patients, I think will carry through. So, I’m very confident that despite having some patients enrolled previously, I still think, we’re going to be successful overall.

Sergio Traversa: Thank you. I hope that answers your question.

Basma Radwan: Yes, thank you.

Operator: Thank you. And your next question comes from the line of the Uy Ear from Mizuho. Please go ahead.

Uy Ear: I’m taking your questions. So I have a couple. So just following up on the previous question, at these sites that enroll patients previously, could you maybe elaborate on, or remind us just like were most of these patients referral, by physicians and were there large volumes of patients, or were just a few patients at these sites? Yes, so that’s sort of the first question. And I’ll ask a second question after that? Thanks.

Sergio Traversa: Yes, sure. Thank you. The study, there were two sites, with together they enroll about 20% of the Study 301, the adjunctive treatment study. And that they’ve never been present in 302. And then, there were a couple of issues there. We don’t really know, why the data of these two sites, were the opposite, or completely different, from the other 41 sites in the trial. But, just to accept that, that was reality. But they’ve never been in the Study 302. And now, we – are limiting the number of patients enrolled, for each site. So, we won’t have any site that, will like make a major impact on the final number. So, we feel confident that with these measures, we won’t, what happened in the Study 301, will not happen again.

Uy Ear: Okay.

Maged Shenouda: Yes, if I could add one other quick thing. Another modification we made, was requiring medical records, to ensure that these were legitimate patients, who actually were taking an antidepressant. And that was not done in the 301 Study. So that’s another improvement we’ve made.

Uy Ear: All right, thanks. And maybe more presently, could you provide some color, on maybe the proportion of patients, who’ve been so far enrolled in RELIANCE II? And maybe RELIGHT as well? And after that, maybe just briefly, Maged, like just tell us, help us think, to think about, how to model the gains of spending. Is it sort of relatively flattish, or would it sort of, go down towards the end of the year? Thanks.

Sergio Traversa: Yes, I’ll take the first one. We may not want to go like in real details, about number of patients, but like we passed half of the trial, at the end of last year. And well, it’s progressing steadily with some variability, maybe week-to-week. But it’s on track. And we are confident that the, we are top line data in the second half of this year. Like when we get closer, we’ll be a little bit more precise. And, but we – stay with, these a little bit broad guidance about second half of this year. And reason being that we are screening a quite a bit of patients. I mean, I don’t well – the number of screen patient is very large. What we have noticed with the improvement on the protocol, clearly the screening failure, it went up significantly.

We were around 50% on the previous trial. I think I mentioned that before. We are now approaching 80%. So I mean, the selectivity in enrolling patients is – it’s much higher. We did look, if I can expand on the reason why, these patients are not enrolled, and have been screened, and they are legitimate reasons. And so, these are the patient that, generated the issue in the previous trials. And definitely we don’t want these kinds of patients again in the new trials. So, the screening process, it’s going very, very well. And the screening failure for legitimate reasons, it’s much higher. So, we do believe that the quality is very, very good in this trial. I don’t know, Andrew, if you want to add something.