Relmada Therapeutics (RLMD) 7 Nov 242024 Q3 Earnings call transcript

Hello, and welcome to the Relmada Therapeutics Third Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded and will be available for replay on the location website. I would now like to turn the call over to Tim McCarthy from Lifesci Advisors. Please go ahead, Mr. McCarthy.

Good day, everyone, and thank you for joining us today. This afternoon, Relmada issued a press release providing a business update and outlining its financial results for the 3 months ended September 30, 2024. Please note that certain information discussed on the call today is covered under the safe harbor provision 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, including the third 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, November 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. With me on today's call are Relmada's CEO, Dr. Sergio Traversa, who will briefly provide a summary of recent business highlights; and Relmada's CFO, Maged Shenouda, who will provide a review of the company's Q3 financial results. After that, we will open the line for a brief Q&A session.

Now I would like to hand the call over to Sergio Traversa. Sergio?

Thank you, Tim, and good afternoon, and welcome, everyone, to the Relmada Third Quarter 2024 Conference Call. Relmada's #1 priority is to advance the development of new treatments for CNS disorders, including major depressive disorder or MDD.

Our #1 objective is to successfully complete the Phase III program and the NDA package for REL-1017 or esmethadone, with laser focus on derisking the study design and execution.

We expect to report the outcome of the interim analysis for the Reliance II Phase III study by year-end 2024, and believe that this could potentially be an important derisking event for the study and the REL-1017 program and the company.

As a reminder, with REL-1017, we aim to provide patients with MDD a new adjunctive treatment option to be used in combination with their current regimen. Approximately 10 million people were treated for a major depressive episode in the last year, and 40% of these patients, that is about 4 million people, required combination therapy. This is U.S. only.

Our Phase III registrational program has been designed to build on key learnings from our previously conducted Phase III and Phase II programs. In today's call, I will focus on REL-1017 and also provide a brief update on our psilocybin-based metabolic disease program. After that, Maged will review our financial results, and then we will take your questions. The clinical program for REL-1017 is comprised of 2 studies, Reliance II and Relight.

As a reminder, each study was designed as a double-blinded placebo-controlled randomized Phase III registrational clinical trial to evaluate REL-1017 in patients with clinical depression.

We are on track to provide the outcome of the planned sample size reestimation interim analysis for the Reliance II study by year-end 2024. There are 3 potential outcomes based on the DMC, data management committee, recommendations from the unblinded interim analysis.

The first potential outcome is that the study can continue with a preplanned number of patients. This is, of course, our preferred outcome and the basis of a top line data readout in the first half of 2025.

The second potential outcome would be a recommendation to continue the study with the addition of more patients. This would indicate that a promising efficacy signal was observed with the interim data and that an increased sample size is required to improve the power of the final analysis. We would view this as an encouraging signal from the study and worth the time and cost to ascend enrollment.

The third potential outcome is that the study is deemed to be futile. It is important to note that we set the futility level such that a clinically meaningful result in the final analysis would be highly unlikely.

Specifically, it translates to a drug placebo delta below approximately 2.2 (sic) [ 2 ] points. The outcome of these scenarios will provide a clear indication of how the study is going, and we do believe that this will be an important derisking event for REL-1017.

Before I ask Maged to review the financial results, I will provide a brief update on the psilocybin program for metabolic disease. The Phase I safety study from our investigational candidate, REL-P11, is screening subjects, and we expect the first randomization very soon. The study will be conducted in Canada with obese individuals and will allow us to define the pharmacokinetic safety and tolerability profile for a single dose of REL-P11 and select the optimal dose or doses for evaluation in a Phase IIa proof-of-concept study. We do expect to begin the Phase IIa study in 2025.

Now we'll turn the call to our CFO, Maged Shenouda. Maged?

Sure. Thank you, Sergio.

As noted by Tim, this afternoon, we issued a press release announcing our business and financial results for the third quarter ended September 30, 2024.

During today's call, I'll provide a brief overview of the financials. Full details are available in our press release and the 1Q (sic) [ 10-Q ] filing we completed today. These documents are available on our website in the News and SEC Filings tab on the Investor Relations page.

As of September 30, 2024, Relmada had cash, cash equivalents and short-term investments of approximately $54.1 million compared to $96.3 million as of December 31, 2023. Cash used in operations in the third quarter ended September 30, 2024, was $16.7 million compared to $11.6 million for the same period in 2023. Based on our current plan for clinical development, we expect our current cash position to support operations through key near-term milestones into 2025.

Moving through the rest of the financial results. Total research and development expense was approximately $11.1 million as compared to $10.5 million (sic) [ $10.4 million ] for the comparable period of 2023, an increase of approximately $0.6 million. The increase was primarily associated with the ramp-up of expenses related to the 302 and 304 studies in 2024. The noncash charge related to stock-based compensation for R&D totaled $1.7 million in the third quarter of 2024. Total general and administrative expense for the third quarter was approximately $11.9 million as compared to $12.2 million for the comparable period of 2023, a decrease of approximately $0.3 million (sic) [ $0.4 million ]. The decrease was primarily driven by a decrease in stock-based compensation expense. The noncash charge related to stock-based compensation expense for G&A totaled $6.2 million in the third quarter of 2024. The net loss for the third quarter of 2024 was $21.7 million or $0.72 per basic and diluted share compared with a net loss of $22 million or $0.73 per basic and diluted share in the comparable period of 2023. Note that the company had 30.2 million common shares outstanding as of November 4, 2024.

Before we open the call for questions, I'll turn back to Sergio for some closing comments. Sergio?

Thank you, Maged. I would like to leave you with these key messages from today's call. Relmada's #1 objective is to complete the Phase III program and the NDA package for REL-1017.

We expect to report the results, outcomes of the preplanned interim analysis for the Reliance II Phase III study by year-end 2024, and we do believe that this could be an important derisking event for the study and the REL-1017 program. We plan to enroll the first subject in the Phase I single ascending dosing study for P11 in development for metabolic disease very soon. With that said, we can open to questions. Operator?

[Operator Instructions] Our first question comes from the line of Andrew Tsai from Jefferies.

First question is what exactly can we expect you to say in the interim release? Will it be just a few sentences, or could it be something more detailed than that?

Andrew, thanks for the question. It's Sergio here. Well, it's difficult to do it to decide in advance. And really, we'll see what the outcome will be. And if there is any need for -- like go more in detail, we may have a call, or if it is a straightforward message, then we may not, but we will have to wait.

So what we can share is that we will give as many details as we can on the outcomes, so you will know what the DMC will tell us.

Okay. And I heard 2.2 points somewhere earlier in your prepared remarks, but is that for statistical significance? Just to clarify.

Yes. Thanks, Andrew. No, it was 2.0. I read 2 twice.

So it's about around 2 points delta. And we say approximately because it depends, of course, from the standard deviation.

So it can be slightly higher, slightly lower than 2.

Got it. And then what threshold are you setting for the futility? What kind of placebo-adjusted delta -- below what placebo-adjusted delta will you hit futility?

Yes. It's the same number, Andrew. It's about 2 points.

So 2 points is kind of the threshold between clinical and nonclinical significance.

So we would like -- if we have a product, we would like to be sure that it is also clinically meaningful.

So it's about 2 points.

So below 2 points plus/minus a little bit due to the standard deviation. If it is below 2 points, it's probably going to be futile.

Our next question comes from the line of Marc Goodman at Leerink Partners.

This is Basma on for Marc.

Regarding the interim readout, are you going to be able to have access to any other information such as baseline characteristics of the patients or unblinded data of [indiscernible] changes, for instance? Or is it mainly going to be the information related to the futility or not?

Yes, thanks for the question. No, the -- we will only know what the data management committee will share with us that is pretty much like the 3 outcomes. They won't provide any additional color or details. The DMC and we want to maintain the integrity of the data.

So we will only know, like if it is futile, we can continue as planned or if we need to add patients to increase the power. That's it.

Our next question comes from the line of Uy Ear from Mizuho.

It's Charles on for Uy.

So I was curious. If the DMC recommends no change, would you continue to enroll to 300? Or would that be that 400 or 340 number mentioned? Yes.

Yes, Charles. Well, that would be the best outcome. But it's difficult to give a straight answer. Technically, usually, you tend to enroll a little bit more than the planned number, like maybe a few percent more just to be sure to account for the dropouts, but the planned number is north of 300, between 300 and 340.

So it's going to be around that number.

Our next question comes from the line of [ Andrea Newkirk ] from Goldman Sachs.

This is [indiscernible] on for Andrea. Two from us.

First, from a statistical perspective, can you confirm you're not taking a hit to alpha by conducting the interim analysis? And then secondly, just wondering if you have any updates on the percent screen failure rates in Reliance II compared to those from the prior studies.

Yes, sure. I can confirm that there is no alpha penalty paid in the interim analysis, and the reason being that there is no early stop.

So it's not an efficacy interim analysis.

So there is no plan to stop the trial early. The best case scenario is to continue as planned, and that's one. And the second one was the dropout rate. It is low, right? It is in the single digit, mid-single digit, and it is lower than in the previous trial, but I would be cautious, everyone, to read anything into that. It just means that there is like compliance and the adherence of the patient in the trial is good.

So I would not translate anything from that in term of efficacy or something like that. It's about like mid-single digit.

There are no further questions at this time. I'd now like to turn the call over to Sergio Traversa for final closing comments.

Thank you. And in closing, as we get ready to read out on a very important upcoming clinical milestones of REL-1017 as a potential adjunct treatment for MDD, we want to thank you, everyone, for your support and for taking time to join the call today. Thank you, and have a wonderful rest of the day.

This concludes our question-and-answer session and call for today. Thank you, everyone.

You may now disconnect.