Relmada Therapeutics, Inc. Q4 FY2020 Earnings Call

Greetings. Welcome to the Relmada Therapeutics Incorporated Fourth Quarter and Full Year 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note, this conference is being recorded. I will now turn the call over to your host Tim McCarthy. Please go ahead.

Thank you, operator. And thank you all for joining us this afternoon. With me on today’s call are Chief Executive Officer, Dr. Sergio Traversa; Chief Financial Officer, Maged Shenouda; and Chief Accounting and Compliance Officer, Chuck Ence. This afternoon, Relmada issued a news release providing a business update and announcing financial results for the fourth quarter and full year ended December 31, 2020. 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 the 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 the Annual Report on Form 10-K and subsequent filings. This conference call also contains time-sensitive information that is accurate only as of the date of this live broadcast, March 23, 2021. 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?

Thank you, team, and good afternoon to everyone. I’m very pleased to welcome you to Relmada's first-ever earnings conference call. We do believe that the company has reached a maturity time that is a good time, the right time to have a call. And since we expect a significant number of near-term catalysts moving forward, we intend to also update calls on a quarterly basis. The plan for today, because this is our first earnings call and some of the people connected may not be very familiar with the company, we’ll begin with a brief overview of Relmada, our promising lead product candidate for the adjunctive treatment of depression, REL-1017, and the large market opportunity that we are targeting. We’ll then turn the call over to Maged, who will review our financials. And after that, I will provide an update on our most recent accomplishments and review upcoming milestones, and do my best to leave as much time as possible for your questions. As a brief background on how we arrived at this critical point in our company’s corporate evolution, Relmada is a late-stage central nervous system, CNS company, focused on the development of REL-1017 which has the potential to address the significant unmet medical needs of major depressive disorder, MDD. There are about 17 million people in the U.S. affected by MDD, and they have limited safe and effective therapeutic options. A standard antidepressant can take up to four to six weeks to show efficacy, and up to 65% of the patients do not respond or do not respond well to their first antidepressant treatment, and there are about 30% of the patients who do not respond even to four different antidepressant treatments. REL-1017 has been developed as a new chemical entity; it’s orally administered as a once-daily pill. We have patent protection up to 2033, with additional patents filed that could extend exclusivity to 2038 and beyond. We have over 50 patents for REL-1017 and fast-track designation for the adjunctive treatment of MDD. So, based on the novel mechanism of action and phase 2 data that showed statistically significant rapid and sustained antidepressant effect with a favorable safety and tolerability profile, we do believe that REL-1017 has the potential to be the first FDA-approved antidepressant for the adjunctive treatment of MDD. In the phase 2 study, REL-1017 achieved statistical significance compared to placebo on all evaluated efficacy measures. Specifically, there were solid effects observed on the micro scale, a well-established measure of the severity of depression with P value below 0.03 and a large effect size of 0.7 to 1.0 from Day 4 to Day 14. The extended efficacy up to 14 days was well beyond the 7 days of dosing in the study, and it may suggest the potential neuroplastic and synaptogenic effect. Very importantly, there were no notable adverse events observed in the trial with no evidence of treatment-induced dissociative or psychotomimetic symptoms. In December of last year, we initiated RELIANCE I, which is the first trial of our phase 3 program of REL-1017 for the adjunctive treatment of depression. I will review the ongoing phase 3 program and discuss the upcoming milestones shortly. But before I do that, I will turn the call over to Maged for his review of the financials. Maged, it’s all yours.

Thank you, Sergio, and good afternoon, everyone. Today we issued a press release announcing our business and financial results for the fourth quarter and full year ended December 31, 2020, which I will now review. For the fourth quarter and year ended December 31, 2020, total research and development expense was approximately $14.9 million and $36 million, respectively, as compared to $1.6 million and $7.9 million for the same periods in 2019. The increase was primarily related to an increase in costs associated with the execution of a broader clinical program for REL-1017. Total general and administrative expenses for the fourth quarter and year ended December 31, 2020, were approximately $6 million and $24.9 million, respectively, as compared to $2.9 million and $7.2 million for the same periods of 2019. The increase was primarily due to an increase in salaries and stock-based compensation. For the fourth quarter and year ended December 31, 2020, we recorded a net loss of approximately $20.8 million or $1.28 per basic and diluted share, and $59.5 million or $3.81 per share, basic and diluted, respectively, compared to a net loss of $4.5 million, or $0.40 per basic and diluted share, and $15 million, or $1.62 per basic and diluted share in the same periods of 2019. At December 31, 2020, the company had cash, cash equivalents, and short-term investments of $117.1 million compared to $116.4 million at December 31, 2019. We expect this strong cash position to support us through at least multiple data readouts we anticipate through the first half of 2022. I will now hand the call back to Sergio for additional remarks. Sergio?

Thank you, Maged. As we had the recent announcement, I mean last week, I would like to start with an update on the human abuse potential, our HAP studies. We recently announced that we early discontinued study 120, which was assessing REL-17 liking versus oral ketamine as an active control. As a pre-planned and blinded analysis of the initial study completers representing approximately 20% of the planned 40 patients showed that a large percentage of these patients did not separate oral ketamine from placebo, which we believe was due to the poor bioavailability of oral ketamine. Very important, no dissociative or psychotomimetic events were observed in any of the treated subjects in all arms. To avoid the futility, we discontinued this study and we will submit a new study design protocol to the FDA within the next month, proposing an intravenous ketamine as an active control compared to REL-1017 that has a very established and good history as an effective positive control. We anticipate the top-line data from the IV ketamine control study by the end of this year. Again, we would like to underscore that neither in the discontinued study, nor in the previous clinical studies in our program or historically in existing literature, methadone has been associated with any psychotomimetic synergistic effect, and we are encouraged by the confirmatory effects of these results. The HAP study 124 that is comparing REL-1017 to oxycodone continues as planned, and we will expect top-line data from this study by the end of the second quarter. This HAP study will be important in supporting the NDA submission for REL-1017, specifically for the FDA evaluation and DEA determination of schedule, but they will also represent an important opportunity to add to the existing sound body of literature that clearly differentiates REL-1017 from methadone’s perceived association with dissociative symptoms or opioid effects. I will now share the key aspects of RELIANCE; i.e., our phase 3 program for REL-1017. The pivotal studies, RELIANCE I and II consist of two sister, two-arm placebo-controlled trials that include 364 patients for study across 55 sites. These studies will evaluate 25 milligrams of REL-1017 and placebo on top of the patient’s existing antidepressant treatment. These are patients who have failed to respond to a minimum of one up to three previous courses of antidepressant therapy in the current depression episode. The primary endpoint of this trial is changing model score at Day 28, key secondary endpoints include change in model score at Day 7, and CGIS score at Day 28. We believe that our phase 3 program is optimized to reduce the placebo effect risk based on the design as a true arm study, the strong focus on site selection and their training, and the multiple levels of screening to ensure accurate patient diagnosis. Our first phase 3 trial, RELIANCE I, is rolling as expected and sites have come online nicely. We continue to anticipate the top-line data from RELIANCE I in the first half of 2022. The second phase 3 trial, RELIANCE II, is a mirror study of RELIANCE I and is expected to begin immediately. Data from this trial top-line is also expected in the first half of next year. RELIANCE OLS, the open-label safety study, began recently and it is enrolling patients. This trial includes patients from RELIANCE I and RELIANCE II but also de novo patients. We are also on track to initiate our study evaluating the use of REL-1017 as a monotherapy for MDD in the second quarter. We are currently evaluating options for this study design and we will provide greater details once this is finalized. As you have just heard, it is an extremely busy clinical development period for Relmada with several key data results expected over the next three to 15 months. Importantly, as Maged highlighted, we have a strong balance sheet with enough cash to support us through all of these respective data points. I would like to take a moment to express my gratitude to the Relmada team for their hard work and dedication to executing on our mission. I would also like to extend my sincere thanks to the patients and clinical partners involved in the REL-1017 clinical trials for their efforts in advancing this important therapy through the clinic as expeditiously as possible. With that, we will now open the call for questions. Operator, can you please open up for questions.

Absolutely. Our first question comes from Andrew Tsai with Jefferies. Please go ahead. Andrew, your line is live.

Good afternoon. Thank you for taking my questions, and congratulations on all the progress. For those in the audience, can you help us understand at a high level? You have two abuse liability studies coming up soon. Can you remind us what you hope to see regarding the likability scores for both studies? What would positive results look like as we compare the three doses of 1017 to the two competitors and placebo? Please walk us through that. I also have a follow-up. Thank you.

Sure, thank you, Andrew. Maged, you want me to take this?

Sure.

The analysis is straightforward. For each of the three doses of REL-1017, we expect them to show statistically significant differences compared to the control group, which in this instance consists of 40 milligrams of oxycodone and the ketamine IV studies. These are the key points of interest. Additionally, I want to clarify a question we’ve been frequently asked: s-methadone does not have to be the same as a placebo. It is an antidepressant and a CNS active drug. Therefore, it is likely to differ from the placebo, as many CNS active drugs do not utilize placebos. The critical aspect is that there needs to be statistically significant control. I hope that addresses your question.

That’s very clear, Sergio. Thank you. And my second question is, I don’t know if you’ve thought this through. But for the oxycodone study that’s reading on Q2, I guess, what would be some AE’s of interest that would indicate euphoria, for example? And can we expect those AE’s to be disclosed in the upcoming top-line data beyond just likability scores? So basically, I’m just wondering, how are you thinking about sharing the top-line results when it happens? Thanks.

It’s a good question, Andrew. We will decide when we see the data, but, you know, top line, usually, you receive really just very limited information that matters. And then, you know, a few weeks later, you receive the more detailed data. I assume that if there is anything notable, the data will be provided to us. And we will, of course, disclose it. Ultimately, what really matters is the device score and the statistically significant results. We have treated many patients with s-methadone now, and we know how the profile looks like pretty well. So we have phase 1 and phase 2; we are not expecting any surprises from the s-methadone profile.

Thank you, guys. Appreciate it.

Thank you, Andrew.

Next question comes from Marc Goodman with Leerink. Please go ahead.

Yes, just to confirm a few things. One is when the oxy data comes out, that will be a press release. You’re not waiting for the ketamine data since now they’re both not coming out near the same timeline, right? Is that true?

Yes, it’s Maged. Good afternoon by the way. Yes, it’s absolutely true. The reason being that the oxycodone data is by far more important than.

I’ll just make sure that we will get that press release whenever it is in the second quarter. And then secondly, on oxy that have steady, so your view is that none of the doses can be relatively like oxy, right? I mean, that 150 can’t be like oxy even though it’s multiple times the 25 that you’re going to be using in the real world, right?

Correct. Look, we have this is not really a like tossing your coins kind of trial. We have 13 patients treated with 150 in phase 1. None of them showed any euphoric effect or oxycodone-like effect. We have 21 patients in phase 2 that was the 50 milligram arm that is a loading dose; none of them showed any oxycodone-like effects. And we do have enough evidence that even the 150 does not have any close to what the effects of oxycodone can be. Of course, we have to show it in a control study. But we have quite a bit of evidence already out there.

And then, lastly, could you just provide any update on enrollment? How many sites are up and running for RELIANCE I? That’s it. Thank you.

Yes, you got me. This is evolving very quickly. So I don’t have the exact number. Maged, do you know? We are getting close to having all sites involved because we will start very soon RELIANCE II, so we wanted to wait to have RELIANCE I well up and running before we start the second one. I don’t have the exact number, but it’s close to having all of them up and running.

Next question is from Joon Lee with Truist Securities. Please go ahead.

Hi, thanks for taking our questions and thanks for the update. So for the upcoming human abuse potential study, has there been a similar pre-planned analysis for the HAP study using oxycodone as an active competitor, as what was done for the ketamine study? And if so, was oxycodone behaving as they should be based on the historic data? And, you know, also what’s the explanation for the oral ketamine not separating from the placebo in your ketamine HAP study, and I have a follow-up. Thank you.

Okay, so the first one is, if the quality controls mean yes, the answer is yes, we usually — everybody does a blinded quality control data just to be sure that there is nothing unexpected or nothing we are about to data and it’s mostly done for safety. So we have seen that with oral ketamine, it was kind of also looking at utility that is not very complicated to understand it. Five arms, there was no likability at all, and one of the five arms even though it was blinded, but there has to be ketamine because every patient takes every arm. So, and it was obviously evident that wasn’t an issue with ketamine because it was behaving as a valuable control. So we haven’t done it yet. And the oxycodone study started a couple of months after the ketamine study, the only reason being that the size that is doing and need a little bit more time to get up and running; they were busy with other things. So we had to wait a couple more months. At some point, we will do the analysis, but if there is nothing notable, we will not even know it, that it happened; they only will notify us if something that we show has any unexpected effects or side effects or anything like it’s happened with ketamine, that said, look, this thing doesn’t look like it’s going in the right direction.

Or you weren’t alerted because the ketamine arm didn’t separate from placebo by whoever was conducting the study. But for the oxycodone, HAP study using oxycodone, you don’t know, and you won’t know if there is no real issue with the study.

Right, we will only be notified if there is something material that we need to know. The only side effect or something safety or something that make that the study will not generate any valuable, useful results like ketamine.

And then, like following up on Mark’s question; if one of the dosing arms actually does not separate from the active comparator statistically, do you automatically get scheduled to or what’s the sort of decision tree after that? I mean, the ideal situation would be as you described, none of the doses are likable. But if one of the doses happened to be likable, what’s the process?

Yes, it is a great question, Joon. Yes, we’re not hiding the likability of the results of the study is important, but it’s not the only factor that will determine the scheduling ordinal or non-scheduling of s-methadone. There are eight factors that the FDA considers when they determine the recommendation for the DEA. One is likability, and it’s very important. If you don’t like something, it’s more difficult for you to abuse it or to get dependent on it. But there are other factors. The FDA’s real focus is on safety. The reason that the oxycodone or the opioids are under scrutiny is not because they’re more abusable than ketamine or than alcohol; it’s because they’re dangerous, right? If you overdose on an opioid, you can have respiratory depression and unfortunately, you can have some serious consequences. If you overdose on ketamine, you can fall asleep; it is an anesthetic specifically because it does not give respiratory depression. The dangers or the potential risk is a very important factor in determining the schedule. That’s why ketamine is scheduled three, not because it’s less abusable than oxycodone, but because it’s less dangerous than oxycodone. There are a lot of these factors. To answer directly your question, if by chance one of the doses of s-methadone does not separate statistically from 40 milligrams of oxycodone, then it will depend on the FDA’s overall analysis and how they will consider the other factors. Consider that s-methadone in the past has been used and tested at 900 milligrams and nothing happened; people did not like it. And no one experienced any serious side effects. 900 milligrams is 36 times the therapeutic dose. So definitely we feel comfortable that safety is not the major potential risk for s-methadone.

So, it’s not an automatic schedule two, if one of the doses have.

Correct.

Next question is from Yatin Suneja with Guggenheim Securities. Please go ahead.

Hey, guys, this is Edie on for Yatin. Thanks for taking the questions. So just you talked about for RELIANCE I on sort of the checks that you are the screening multiple levels of screening that you’re taking. So can you just talk a little bit more about the steps and how you’re ensuring that you’re not enrolling professional patients? And then, what would be a placebo range for the major improvement that would give you confidence that you had a proper screening process? And then, I have a follow-up for the human study?

So, let me take this one. So how do we avoid or reduce the risk of having non-depressed patients in the phase 3 in RELIANCE? Besides two arms, the placebo effect is lower than multiple arms; specifically for patient selection. And one point that we’d like to make, we have been advised by our advisor that the major risk in running a phase 3 trial for depression is actually the patient selection. Because those are connected with the placebo effect. So we have multiple streams that the site selects the stream of the patients, and then they propose that the patient meets the criteria to be enrolled in this study. Then we have the CRO that themselves will review the data and evaluate if there is any risk of having a patient that may not be appropriate due to some other issues or maybe a personality disorder. The data is also seen by I believe I was CMO for the safety control and clearly the reason opinion here. There is probably the most important of the steps beyond these three steps is the review done by a group. Maged, can I say the name? Yes, CT&I is a group that was a bit from MGH or Harvard. What they do, they re-diagnose the patient. Only the site and CT&I have direct contact with the patient. So it’s a phone interview, and they administered a different scale. It’s not Hamilton, it’s not at another method; they administer a clinical scale that considers the patient as an entity. For example, they look at the history of the patient, whether they have been depressed in the past, and whether there has been an event that has generated the current episode of depression. So it gives a little bit more complete picture. They have the last say on the patient if they are suitable for the trial or not. So we have four different ways in which the one, the last one the CT&I, and we do believe it is effective. We use it in phase 2, and you have seen the results were pretty effective in this way. I hope I answered.

Yes, that’s great. Thanks for that color. And then for the ketamine abuse liability studies, can you just give a little more logistics on how they run a trial with multiple different routes of administration? And will the placebo also have to be IV or sort of how does that work in terms of making sure the patients are getting an accurate comparator if they’re getting oral versus IV drugs?

Yes, the answer is yes. There’s going to be an IV placebo and the IV oral.

Next question is from Jay Olson with Oppenheimer. Please go ahead.

Oh, hey, guys, congrats on the progress. And thank you for taking my questions. I was curious about the startup activities that remain to be completed before initiating the RELIANCE II second pivotal trial, and also the phase 2 monotherapy trial. And whether or not you expect to initiate the phase 2 monotherapy trial before or after RELIANCE II starts.

Yes, Maged, it's really helpful in looking at the operations entirely. Do you want to take this?

Sure. Thank you, Sergio. Thank you, Jay, for the question. So with regard to RELIANCE II, I can safely say that we are close to initiating that study; I think most of the operational pieces are in place right now. We’re not quite there yet. But look for that to officially start to kick off shortly. With regard to can you repeat the second question, Jay?

I was wondering about your phase 2 monotherapy trial? What remains to be done before you can initiate that study? And should we expect that before or after RELIANCE II initiates?

So, I’ll answer the second question first. Expect that after RELIANCE II starts, we still have a fair amount of work. We’ve completed the protocol. We’ve submitted it to the FDA; we’re about to submit it to the FDA. And, you know, we have also selected a CRO. So I think, you know, a lot of pieces are coming together. But our expectation remains that we’ll start that study by the end of the first half.

Okay, great. Thank you. And are there any details about the study design for the monotherapy study that you can share with us?

I think we’re not quite prepared to do that yet. So give us some time, and we will be able to give you a more full characterization of the study. You can expect it to be very similar to the RELIANCE I and RELIANCE II studies, in that it’ll be two arms; placebo versus 25 milligrams of REL-1017 de novo patients, but beyond that, we’re not ready to disclose the number of sides and such, limitations on patient selection.

Okay, got it.

Jay, the biggest difference is going to be the patients. So adjunctive treatment versus monotherapy.

Okay, got it. Thank you again for taking the questions.

Our next question comes from Salveen Richter with Goldman Sachs. Please go ahead.

Hi, everyone. Thanks for taking the question. This is Andrea on for Salveen. Sergio, maybe a question for you just based off of what you saw from the oral ketamine study. Understand the positive control didn’t separate here. But does this give you any increased confidence in the profile of REL-1017? And what you might expect to see versus the oxy's?

Well, good afternoon, Andrea, and thanks for the question. With the limited data, that is limitation that was a blinded analysis. So we don’t know who took what, but they all took all arms. We have seen no evidence of dissociation, hallucination, delirium, or out-of-body experiences in any of the patients that have been reviewed, that was 20% of the plan total. If clearly, s-methadone did not show anything, because even blinded, there was no sign of this in any of the answers. So yes, it gave us a good level of confidence that the profile confirms what we have seen in the historical literature, that we have seen in phase 1, in phase 2. And clearly, we have to prove it, but we see it is a bit unlikely that a drug will behave differently in a similar study just with a different control arm. So nobody liked it. Nobody experienced anything that could be likable in the ketamine study. So it is possible, but we see it is unlikely that we change totally behavior. Yes, the answer is yes; it gave us support that the confidence that we have that methadone is not a likable compound.

Yes, we’d like to turn the floor over to Sergio for closing comments.

Okay, well, thank you, operator. And thank you, all of you for joining our call today. It was our first one, so it will be remembered. But we look forward to the year ahead, and we will provide further updates throughout 2021. So, thank you all again, and I hope you enjoy the rest of the day.

This concludes today’s teleconference. You may disconnect your lines at this time, and thank you for your participation.

Thank you.