Relmada Therapeutics, Inc. Q2 FY2022 Earnings Call

Good day, ladies and gentlemen, and welcome to the Relmada Therapeutics, Inc. Second Quarter 2022 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brian Ritchie of LifeSci Advisors. Please go ahead, sir.

Thank you, operator, and thank you all for joining us this afternoon. With me on today's call are Chief Executive Officer, Sergio Traversa; John Hixon, Head of Commercial; and Chief Financial Officer, Maged Shenouda. This afternoon, Relmada issued a news release providing a business update announcing financial results for the three and six months ended June 30, 2022, and filed its quarterly report on Form 10-Q with the SEC. 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, while 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, 2021 and subsequent filings. This conference call also contains time-sensitive information that is accurate only as of the date of this live broadcast, August 11, 2022. 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. Please go ahead, Sergio.

Thank you, Brian. As always, good afternoon to everyone. I'm pleased to welcome you to the Relmada Second Quarter 2022 Conference Call. During today's call, I will review our recently achieved milestones and provide an update on the anticipated timelines associated with the multiple expected clinical trial readouts from REL-1017, our lead product candidate that we are currently studying as a paradigm shift in novel treatment for patients with major depressive disorder or MDD. Following my comments, Maged Shenouda, our Chief Financial Officer, will review our financial results and balance sheet, and we will then take your questions. We are approaching multiple key catalysts from our ongoing late-stage RELIANCE clinical development program. Specifically, we anticipate completing the enrollment of RELIANCE III, the ongoing monotherapy registrational Phase III trial shortly. More specifically, we expect to enroll the last patient in this trial before the end of August, probably earlier than that. This will be followed shortly thereafter by a topline readout of the study in the second half of this year. We also continue to expect topline results from RELIANCE I and RELIANCE II in the second half of 2022. As a reminder, RELIANCE I and RELIANCE II are two ongoing Phase III sister two-arm placebo-controlled pivotal studies, evaluating REL-1017, 25 milligrams as a potential adjunctive treatment for MDD. RELIANCE III is the ongoing Phase III two-arm placebo-controlled registrational study evaluating REL-1017 25 milligrams as a potential monotherapy treatment for MDD. All participants in all of the RELIANCE trials take a loading dose on day 1 of 75 milligrams, three targets of REL-1017. We are also delighted to share that the FDA very recently granted Fast-Track designation to REL-1017 as a monotherapy for the treatment of major depressive disorder. Our commercial preparations have also continued with an expansion of our senior management team. Most recently, we are thrilled to welcome John Hixon to Relmada's Head of Commercial. John has over 36 years of sales and marketing experience within the biopharmaceutical industry, including a 31-year career with Eli Lilly and Company. John is on the call, so before I go further, John, would you like to say a few words? It’s your first conference call with Relmada, and I'd be happy if you could say a few words.

Hi, everyone. It's a real pleasure to be with all of you, and I just want to say that I'm thrilled, humbled, and excited to be a part of this Relmada team. As Sergio said, I've got a pretty broad background in commercialization, all 31 years with Eli Lilly, in commercialization-related roles. I was fortunate to spend eight years outside of the U.S. in Spain, South Korea, and Australia. While in Australia, my team and I launched Zyprexa, the atypical antipsychotic. And then when I returned to the United States, I became the last Global Marketing Director for Prozac as it was late in its product life cycle. Once that role ended, I shifted over to be the brand launch leader for Cymbalta, Lilly's next antidepressant and pain drug. After launching this drug and being with it for several years post-launch, I shifted over to new product planning, where I worked with discovery and development scientists and provided assessments of commercial viability of Lilly's portfolio and also was actively engaged in various business development opportunities. Again, I'm just thrilled to have this opportunity. I know the depression space well. Depression is something that, like perhaps many of you, has impacted members of my family and close friends. Having this opportunity to bring forward a new approach to treat depression, if the drug is approved, is just very exciting for me and one that I'm very passionate about. I think the drug is truly an exciting new treatment option. So again, thank you very much. Let me turn this back over to Sergio so we can continue on with you all. Thank you.

Thank you, John, and we are really very happy to have you on board with us. Moving on to the current status of the Phase III program. As I said earlier, we continue to anticipate the completion of enrollment in RELIANCE III, the ongoing monotherapy Phase III trial with the last patient enrolled before the end of August, followed by the topline data readout shortly after the completion of the four-week treatment. Let me provide an update on the ongoing RELIANCE I and RELIANCE II studies. As a reminder, RELIANCE I and RELIANCE II are designed to evaluate REL-1017 as an adjunctive treatment for MDD. Both include two arms, placebo and 25 milligrams of REL-1017. Both studies have studied the use of REL-1017 in addition to a standard antidepressant for participants who have had inadequate responses to at least one and up to three standard antidepressant therapies. The primary endpoint is the change in MADRS score, which is used to evaluate the severity of patient depression at day 28. Key secondary endpoints include the change in MADRS score at day 7 and the change in the Clinical Global Impression Severity scale at day 28. The 28-day period was chosen as a primary endpoint in agreement with the FDA, with the understanding that depression is a chronic disease and that successful endpoints on day 28 are important for REL-1017 as a chronic treatment. Both RELIANCE I and RELIANCE II are progressing as planned, and we continue to expect the availability of topline data in the second half of this year. The RELIANCE development program also includes RELIANCE-OLS, the long-term open-label safety study enrolling both rollover participants from all three pivotal studies as well as de novo participants. RELIANCE-OLS is ongoing and continues to enroll participants as planned. We now expect top line data from this long-term open-label safety study in the first half of 2023, which will be part of the pending rolling NDA filing package. Finally, while Maged will review our financials in detail shortly, I would like to emphasize how strong our financial position is currently. You may recall that we completed an oversubscribed follow-on offering for gross proceeds of $172 million in late December 2021, when the capital markets for biotech companies were less challenging than they are today. This financing has provided us with maximum financial and operational flexibility as we ended the second quarter with cash, cash equivalents, and short-term investments of approximately $222 million. With that, I will now turn the call over to Maged for a review of the financials. Maged, the stage is yours.

Thank you, Sergio. Today, we issued a press release announcing our business and financial results for the three and six months ended June 30, 2022, which I will now review. For the second quarter ended June 30, 2022, total research and development expense was approximately $30.9 million, as compared to $17.3 million for the comparable period of 2021. The increase was primarily related to an increase in costs associated with executing a broader clinical program for REL-1017. Non-cash R&D expenses for the second quarter of 2022 amounted to $1.2 million. Total general and administrative expense for the second quarter ended June 30, 2022, was approximately $14.6 million, as compared to $9.1 million for the comparable period of 2021, an increase of approximately $5.5 million. This increase was primarily driven by an increase in stock-based compensation, which totaled $11.1 million in the most recently completed second quarter. For the second quarter ended June 30, 2022, the net loss was $39.9 million, or $1.33 per basic and diluted share, compared to a net loss of $26.6 million, or $1.56 per basic and diluted share in the comparable period of 2021. Turning to the results for the six months ended June 30, 2022, total research and development expense was approximately $55.9 million, as compared to $31.4 million for the comparable period of 2021. Again, the increase was primarily related to an increase in costs associated with executing a broader clinical program for REL-1017. Non-cash R&D expenses for the first half of 2022 amounted to $2.5 million. For the six months ended June 30, 2022, total general and administrative expense was approximately $27.9 million, as compared to $17.5 million for the comparable period of 2021. The increase was primarily driven by an increase in stock-based compensation, totaling $21.7 million in the most recently completed six-month period. For the six months ended June 30, 2022, the net loss was approximately $79.7 million, or $2.73 per basic and diluted share, compared to a net loss of $48.8 million or $2.90 per basic and diluted share in the comparable period of 2021. As of June 30, 2022, as Sergio mentioned, we had cash and cash equivalents and short-term investments of approximately $212 million, compared to cash, cash equivalents, and short-term investments of approximately $211.9 million at December 31, 2021. I will now ask the operator to please open the call for questions. Operator?

Thank you. We now have our first question from Andrew Tsai with Jefferies. Your line is open. Please go ahead.

Okay, thank you, and good afternoon. Thanks for taking my questions. Thanks for the update. So first one is that it sounds like RELIANCE III will have the monotherapy readout in maybe two months, give or take. I think you've said RELIANCE I, the first of two adjunct studies was tracking a few weeks behind RELIANCE III. Is that still the case? And if so, would you consider bucket both data sets together? Or would you choose to press release the two data sets at different times?

Good afternoon, Andrew, and thanks for the question. Let me answer the second part. No, we are not planning to release RELIANCE III and RELIANCE I together for a couple of reasons. One, they are probably not close enough that we could pack all the data together. The second and the most important reason is that we want to ensure that everybody will have enough time to digest the results. It's going to be quite a bit of data, with topline and primary and secondary endpoints as much as we can disclose. The two trials have their own independent life, although they are similar. But a single-agent monotherapy needs a different conversation compared to what is called the adjunctive treatment therapeutic choice. Hence, we will publish the topline data separately for these reasons. In terms of timing, we now have a pretty clear idea about it. We expect the last patient to be enrolled in RELIANCE III, as we said, before the end of August, probably not too far away from today. You can calculate the last patient in with four weeks of treatment, 20 days, so you go somewhere in September, and then two to four weeks after that we will get the topline results. So you can do the math—right? End of September or maybe very early October within this range. But we are getting there. RELIANCE I is a little bit more difficult to time precisely, but I would say that, maybe six to eight weeks after we should have completed that same process. Yes, we will announce the last patient out for both trials.

Perfect. Thanks, yes, and that's very clear. Second question is, can you remind us when the DSMB last looked at the blinded safety data? I think the last time was March. Did that happen to be looked at again? And if so, any updates on that front? And just to be clear, if the DSMB did see any issues across the Phase IIIs and the open-label portion, they would have alerted you, just to be clear.

Yes, the straight answer is yes, we would know if they alerted us about any issue related to withdrawal symptoms or any safety signal. They meet regularly, and sometimes we don’t even know if they met— the last time I remember was in June. They meet regularly and we haven’t heard anything except continued recommendation to proceed as planned. In biotechnology, when developing drugs, you can never assume zero risk, but we are at the very end of this massive program. We have all Phase I, Phase II data. We conducted a large abuse potential study with 100 patients treated with various doses. We have not encountered any safety issues. Therefore, we feel very comfortable that safety won't be a significant roadblock and that there are no concerns regarding abuse potential. We have ample information supporting this consistent view.

Fantastic, all right. Thanks for taking my questions. Best of luck.

Thank you, Andrew. I'm sure we will speak soon with data.

Thank you. We take our next question from Yatin Suneja with Guggenheim. Your line is open.

Hi guys, thank you for taking my questions. I have just one question, and this is on the tolerability side. From what we've seen, can you just put in context, Sergio, with this type of mechanism and MDA targeting mechanism—should we expect any sort of tolerance development? Just trying to get a sense of how much more benefit we should expect out to 28 days relative to the 7 days that you have produced? Anything that you can point out to, whether it’s ketamine or other NMDA channel blockers?

Yes, thank you, Yatin, and thanks for the question. So historically and scientifically, there is no indication that NMDA channel blockers generate any tolerance. Clinically, comparing against ketamine may not be appropriate since it’s administered intermittently for practical reasons; one is that it's nasal, and you must go to the clinic to administer it every day. These limitations make intermittent treatment the only feasible regimen. Dextromethorphan, one of our competitors, is trying to get approved and did not show signs of tolerance. Its efficacy continued to improve up to six weeks, to my recollection. In summary, we don’t expect REL-1017 to demonstrate any tolerance issues. Based on Phase II data, we should see a very sharp and fast effect around days 4, 5, and 7 and that efficacy could continue to increase up to day 28. Otherwise, it cannot be feasible.

Got it. One more, if I may. I think in the past, you’ve talked about blinded dropout rate for the study. Could you give us an update now that you are very close to the completion? What it is or how it's trending? Are there any differences that you’re seeing between adjunctive versus monotherapy? And then also, if you can comment on the percentage that might be rolling over to the OLE? Thank you so much.

Yes, thank you, Yatin. You always ask me tough questions. It's always dangerous to draw conclusions from the blinded data, and you know that better than anyone else. We look at the blinded data primarily for safety reasons, and we have observed nothing notable, which I mentioned earlier. However, in terms of efficacy, until we know what the placebo effect is, any number does not provide a reliable picture. What we can share is that, in a blinded context, they look somewhat similar or very comparable to the Phase II. The Phase II goes to day 14, while Phase III goes to day 28, so they’re not directly comparable. As things stand, they look very similar to Phase II data. Of course, we know the Phase II placebo effect since it has been published, but we do not know what the placebo is doing in Phase III.

Thank you, Sergio.

Thank you.

We take our next question from Andrea Tan with Goldman Sachs. Your line is open.

Good afternoon. Thanks for taking my questions. My first one here is just—can you speak a little bit more on what the Fast Track designation gives you related to the monotherapy indication? And just remind us maybe the nature or extent of your conversations with the agency regarding the use of RELIANCE III to support an expanded label?

Yes, good afternoon, Andrea, and thanks for the question. That’s a very interesting question. This one came— I don't want to say it was a surprise. We filed for the application expecting to receive the Fast Track designation, but this is noteworthy because there are 28 drugs approved in the United States for depression, and the fact that REL-1017 has been awarded Fast Track designation for its indication shows that there is a need for something new as a single-agent treatment for depression. We are pleased to see this. The FDA seems to believe that REL-1017 could bring something beneficial for patients, which is encouraging. In terms of advantages, you have more access to the FDA; they tend to respond more quickly, and there is greater informal communication regarding our application. This expedites the process.

Got it. Maybe a follow-on there. Just has the agency suggested that RELIANCE III can be utilized as a pivotal study to support expansion into the monotherapy setting?

Yes, we do—without a doubt, we think it is fair to assume RELIANCE III will be a pivotal trial supporting the approval of REL-1017 as a monotherapy treatment for depression. We will present the FDA with a full package and combine the data from RELIANCE I and RELIANCE II for a constructive evaluation.

Perfect, and then maybe if I can ask one question to John. Just— I would be curious to hear your thoughts on the evolving depression landscape just in the context of the new drugs that are potentially going to be approved over this year. Curious how you think REL-1017 compares to these drugs and your expectations for where it might be used in the treatment paradigm?

Yes, thanks, Andrea. That’s a good question because there continue to be dynamics in the depression market space. From my perspective, based upon my interactions with psychiatrists and KOLs regarding this, everyone is looking for new approaches to treat depression. They understand that true remission is hard to achieve for many patients, and patients tend to go through several treatments to find one that benefits them. With other agents in similar phases as ours, it’s good to bring new options to the marketplace, allowing for hopefully better opportunities for clinicians and patients to finally achieve wellness. Opportunities such as the psychedelics present interesting dynamics, which could challenge payer reimbursement. However, when I look back at REL-1017, the Phase II data I reviewed suggests this drug may provide rapid antidepressant relief to patients. This emerging timely benefit has been long sought after since the emergence of SSRIs, which often take a month or more to provide relief. I am optimistic that REL-1017 can meet this need, and its strong effect size could become a game change for our approach to treating depression. Moreover, the pill form offers patients a feasible option to achieve wellness.

Yes, great. Thank you so much, John.

Thank you.

We take our next question from Joon Lee with Truist Securities. Your line is open.

Hey, thanks for taking our questions. Are you also using a loading dose in Phase III as you did in Phase II? Are there other antidepressants that also use loading doses and the loading dose used in our human abuse potential studies?

Good afternoon, Joon, and thank you for the question. Yes, we do use the loading dose, and the same as in Phase II, all three Phase III trial patients take three tablets, 75 milligrams on the first day of treatment. The reason for this is to shorten the time to the steady state. Without the loading dose, it typically takes four to five days, but with the loading dose, it shortens down to two to three days. This is crucial for a drug like REL-1017 that is designed to act rapidly. Your other question was about whether the FDA had any concerns about the loading dose possibly causing unblinding of randomization?

No, no, thanks for the clarification. So the FDA wasn’t worried at all that having that three times the dose on the first day might possibly affect the blinding?

No, we have seen nothing in Phase II, nor in Phase III. It’s a benign drug, and the highest loading dose in Phase II was actually four tablets or 100 milligrams, with no signs that patients could distinguish between drug and placebo. To answer the other part of your question, there are antidepressants that use loading doses. I can’t recall any off the top of my head, but I know that some require titration due to side effects. But tolerability is a significant advantage: you can give a therapeutic dose quickly and mitigate the onset of effects. Other drugs may not be able to do this simply due to a lack of safety data.

Thank you so much.

Thank you, Joon.

Thank you.

We take our next question from Jay Olson with Oppenheimer. Your line is open.

Hey, thanks for taking the question. Maybe for John, just curious about the due diligence he did and congrats to him on joining Relmada. If you could please comment on feedback from KOLs that you spoke to? What are some of the lessons learned from your work at Eli Lilly and elsewhere that you hope to leverage at Relmada? What are the greatest challenges you expect in launching REL-1017? How do you plan to overcome those obstacles? I have one follow-up, if I could?

Jay, thank you very much for the questions. The due diligence that I performed was extensive. Since I've been in this space for a long time, I had already been watching Relmada's data from afar. When this opportunity arose, I reached out to many psychiatrist colleagues and asked for their thoughts about this drug based upon what they knew at this point. Every single one of them expressed that this drug appears extremely exciting to them. When I probed a little deeper to understand why, they noted that this drug seems to work rapidly and appears to be safe. They also indicated that while it carries the S-methadone name, robust safety data will win out over any reluctance some clinicians may have due to the drug’s history. The field is seeking an effective and safe treatment administered conveniently. This feedback made the decision to join the team an easy one for me. Regarding lessons learned from Eli Lilly, there are many. I’d first reflect on the experience with Prozac, realizing it was a revolutionary antidepressant. However, as competitors entered the market, I think we somewhat shifted away from our core messaging. We later learned to stick with our initial positioning concept that propelled Prozac's success. We employed the same principle when launching Cymbalta, realizing we were entering a marketplace with numerous antidepressants. We needed a unique, ownable positioning concept for depression, which was both emotional and physical. I want to carry this mindset with Relmada: develop a positioning concept that distinguishes our drug from potential new entrants. The main challenge we face moving forward relates to the S-methadone designation, which we will need to navigate from a compliance and regulatory perspective. However, we can draw on successful experiences of analogues, such as Epidiolex, which was initially designated as Schedule V and later removed. This gives us a helpful guide.

Yes, that was super helpful. Thank you so much and congrats again for joining Relmada. If I could maybe squeeze in one follow-up question for the team. Since most registrational MDD studies have more than 28 days of randomized treatment, can you comment on the guidance you would give to physicians for treatment durations beyond 28 days in REL-1017, and specifically how long patients should be on therapy?

Yes, we must first analyze the Phase III data. In general, for antidepressants, there is really no explicit guidance once the treatment period exceeds the study's duration, as patient needs can vary. However, we can offer reassurance about safety based on our ongoing long-term safety study. We have many patients that have completed six months and 12 months without any concerning safety or tolerability issues. Therefore, in terms of safety and tolerability, we will present this data to physicians and emphasize that nothing unexpected should arise. Regarding efficacy, patient responses differ; some may choose to continue treatment chronically, while others may cease if they feel better and potentially restart later if depressive symptoms return. Day 28 signifies chronic treatment, according to our discussions with the FDA. Simply put, after the initial 28 days, the treatment can be continued as long as patients require it.

Okay, thank you. That’s helpful.

We will take our next question from Uy Ear with Mizuho. Your line is open.

Hey, guys. Thanks for taking my questions. Just wondering if you guys have scheduled or plan to schedule a pre-NDA meeting with the FDA. Just curious to know if there's anything that needs to be aligned in terms of the NDA package, either on the preclinical level or the CMC level?

Thanks, Uy Ear, and thanks for the question. Yes, we will schedule a pre-NDA meeting. We would like to have at least one Phase III topline result before we approach the FDA so that we can present a more substantiated proposal. We’ll present the overall package from preclinical CMC to clinical, with the clinical aspects discussing the RELIANCE III data most prominently.

Can I sneak in another question? Just wondering the amount of cash that you ended the quarter with—could you remind us what that would take you through?

Sure. We ended the quarter with $212 million. Based on our internal estimates, that should take us up to mid-2024.

Okay, thanks.

Sure, thank you for the questions.

Thank you. It appears there are no further questions. At this time, I'd like to turn the call back to Sergio for any additional closing remarks.

Sure. Well, thanks to everyone for your time and interest in our program. In closing, I remain very grateful to the Relmada team for their continued hard work and dedication to the execution of our mission. I would like to extend my sincere thanks to the participants and clinical partners involved in the REL-1017 clinical trials for their efforts and the goal of advancing this important product candidate through clinical stages as expediently as possible. This program is large, and I can now confirm that we successfully managed to execute it largely due to the dedication of our team and the support of patients and clinicians. With that, I believe the call can be concluded. I wish everybody a wonderful rest of the day and evening. Thank you.

And ladies and gentlemen, that will conclude today's conference. We thank you for your participation. You may now disconnect.