Relmada Therapeutics, Inc. Q3 FY2023 Earnings Call

Good afternoon, ladies and gentlemen. And welcome to Relmada Therapeutics, Inc. Third Quarter 2023 Earnings Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. This call is being recorded on Wednesday, November 8, 2023. I would now like to turn the conference over to Tim McCarthy of LifeSci Advisors. 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, Sergio Traversa, and Chief Financial Officer, Maged Shenouda; and Dr. Cedric O'Gorman, Chief Medical Officer. This afternoon, Relmada issued a press release providing a business update, announcing financial results for the three and nine months ended September 30, 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, 2022, and subsequent filings. This conference call also contains time-sensitive information that is accurate only as of the date of this live broadcast, November 8, 2023. 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 would like to turn the call over to Sergio. Sergio?

Thank you, Tim, as always. And good afternoon to everyone and welcome to Relmada third quarter 2023 conference call. We have achieved some important clinical milestones recently in the ongoing Phase 3 program for REL-1017 in major depressive disorder, or MDD, as well as in our promising preclinical novel psilocybin program that I will briefly cover today. Following this, Maged will review the third quarter financial results and then we will take your questions. Let's begin with an update on the Phase 3 program for REL-1017, which continues to proceed as planned. As a reminder, 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. The amended Study 302 protocol has been implemented across all our clinical sites. Enrollment is progressing as we leverage our close relationship with the study sites and the number of ongoing initiatives to drive prior awareness with prospective patients. As a reminder, we are planning to enroll approximately 300 patients and continue to expect that RELIANCE II will be completed in the first half of 2024, most likely toward the end of the first half, so around mid-year. In the second Phase 3 trial of REL-1017 named Relight, or Study 3042, we began dosing patients during the third quarter. Relight also has a planned enrollment of approximately 300 patients. Completion of enrollment in this trial continues to be anticipated in the second half of 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, the change in the MADRS total score from baseline to day 28 for REL-1017 as compared to placebo. Also, during the third quarter, we announced efficacy and safety results from the open-label, one-year safety study for REL-1017, Study 310. These long-term safety exposure data are required for the purpose of the NDA filing. More specifically, in September, we shared efficacy results for the 204 de novo or new to treatment patients and safety results for all 627 study subjects. Study REL-1017 310 was a long-term, open-label, non-comparative registrational Phase 3 trial designed to evaluate the efficacy and safety of REL-1017 administered once daily in patients with MDD for up to one year. I will now reiterate some of the previously communicated results in the de novo patients. Rapid and sustained improvement in MADRS scores were observed with REL-1017 in the de novo patient and the entire study population. As the de novo patients reflect a more reliable picture of the real-world condition, I will highlight the de novo patient results. The mean MADRS total score was 33.8 at baseline. Treatment with REL-1017 in this patient population resulted in meaningful improvement from baseline in the MADRS total score of 16.8 points at month one, 19.9 points at month three and six, and 22.5 points at month 12. High rates of clinical response, both rapid and sustained, were seen in de novo patients. When treated with REL-1017, 26.6% of de novo patients achieved a clinical response at day 7, which increased to 51% by month one and 77.2% by month 12. A virtual absence of depressive symptoms or clinical remission was achieved by 12.1% of de novo patients at day 7, which increased to 30.1% at month one and then again to 54.4% at month 12. Clinical remission is defined as a MADRS total score of less than or equal to 10. In summary, patients treated daily with REL-1017 for up to one year experienced a rapid, clinically meaningful, and sustained improvement in depression symptoms and associated functional impairment. Importantly, the overall MADRS change and response and remission results in Study REL-1017 310 for the de novo patients and the full analysis were consistent in both groups. For all the REL-1017 310 subjects, REL-1017 was well tolerated, with long-term dosing showing low rates of adverse events and discontinuation due to adverse events. No new safety signals were detected. Moving now to our promising preclinical novel modified release psilocybin program. At the AASLD meeting this weekend, new data will be presented in a poster presentation. The data demonstrate the beneficial effect of non-psychedelic low-dose psilocybin on multiple metabolic parameters in a rodent model of metabolic dysfunction associated with steatotic liver disease, or MASLD. As a reminder, there are currently no approved drugs for MASLD. These initial preclinical results support the therapeutic potential of non-psychedelic, low-dose psilocybin. Based on this data, non-psychedelic low-dose psilocybin could improve lipid and glucose levels, with the potential for fewer side effects compared to other investigative treatment approaches, such as GLP-1s. We intend to initiate a single ascending dose Phase 1 trial in obese patients with steatotic liver disease in early 2024 to define the pharmacokinetics, safety, and tolerability profile of our modified release psilocybin formulation in this population, followed by a Phase 2a trial in the same patient population to establish clinical proof of concept. Moving on, Maged will provide a detailed review of our financials. But I would like to emphasize that Relmada remains sufficiently funded to fully execute our plans to reach data readouts for both REL-1017 Phase 3 trials, RELIANCE II and RELIGHT. I will now turn the call over to Maged to review our second quarter financial results. Maged?

Thank you, Sergio. Today, we issued a press release announcing our business and financial results for the three and nine months ended September 30, 2023, which I will now review. For the third quarter ended September 30, 2023, total research and development expenses were approximately $10.5 million as compared to $30.5 million for the comparable period of 2022, a decrease of approximately $20 million. The decrease was primarily associated with the completion of RELIANCE I (that's Study 301) and RELIANCE III (Study 303) in late 2022. The non-cash charge related to stock-based compensation totaled $1.7 million in the most recently completed third quarter. Total general and administrative expenses for the third quarter ended September 30, 2023, were approximately $12.2 million as compared to $8.2 million for the comparable period of 2022, an increase of approximately $4 million. The increase was primarily driven by an increase in stock-based compensation. This non-cash charge totaled $9.6 million in the most recently completed third quarter. Net cash used in operating activities for the three months ended September 30, 2023, totaled $11.6 million compared to $26.9 million for the three months ended September 30, 2022. For the third quarter ended September 30, 2023, the net loss was $22 million or $0.73 per basic and diluted share compared with a net loss of $39.4 million or $1.31 per basic and diluted share in the comparable period of 2022. Turning to the results for the nine months ended September 30, 2023, total research and development expenses were approximately $40.1 million as compared to $86.5 million for the comparable period of 2022, a decrease of approximately $46.4 million. Again, the decrease was primarily associated with the completion of RELIANCE I (Study 301) and RELIANCE III (Study 303) in late 2022. The non-cash charge related to stock-based compensation totaled $5.5 million in the most recently completed nine-month period. For the nine months ended September 30, 2023, total general and administrative expenses were approximately $36.8 million as compared to $36.1 million for the comparable period of 2022, an increase of approximately $700,000. The increase was primarily driven by an increase in stock-based compensation. This non-cash charge totaled $28.5 million in the most recently completed nine-month period. Net cash used in operating activities for the nine months ended September 30, 2023 totaled $41.4 million compared to $67.9 million for the nine months ended September 30, 2022. For the nine months ended September 30, 2023, net loss was approximately $73.6 million or $2.45 per basic and diluted share compared to a net loss of $119.1 million or $4.04 per basic and diluted share in the comparable period of 2022. As of September 30, 2023, we had cash, cash equivalents, and short-term investments of approximately $106.3 million compared to approximately $148.3 million as of December 31, 2022. Again, cash used in operations for the third quarter was $11.6 million. Based on our clinical development plan, our current cash position provides us with ample runway through the end of 2024. Of note, this time period, as Sergio mentioned, includes data readouts from both Phase 3 trials – RELIANCE II (that's Study 302) and RELIGHT (that's Study 304) as well as the initiation of our planned Phase 1 trial for our modified release psilocybin formulation.

Your first question comes from Marc Goodman at Leerink Partners.

This is Basma on for Marc. Congratulations on the quarter. I have a question regarding the RELIANCE OLS study. Was this study conducted in the same sites as RELIANCE I and RELIANCE III? And I also have a question about RELIANCE I and RELIANCE III regarding the patient characteristics. Can you remind us again about the average age of the participants after you looked at the data, after you unblinded the data? And have you noticed any correlation between the inaccurate diagnosis of MTP and the age of the participants?

I do believe that Cedric, our Chief Medical Officer, is the most appropriate to address them. Cedric?

Yes, as is very common, when you have controlled trials, you also have an open-label extension trial that's offered. So, therefore, yes, the sites that were part of RELIANCE I and RELIANCE III also had the opportunity to be part of the open-label study and contribute subjects to that long-term study. There was a question then about the average age. And these studies are run in adults 18 to 65 years of age. And, of course, major depressive disorder is represented as a 2 to 1 ratio in females compared to males. We haven't looked at age breakdown. There's a lot of interesting analysis that we want to do but can't comment on a correlation or outcomes by age. But the average age was probably in the area of the 40s or 50s.

Your next question comes from Uy Ear, Mizuho.

This is Charles on for Uy. I guess I kind of had a follow-up question to that, if there was any other read-throughs from the open-label de novo patients to the Phase 3 studies. And then also if you saw a difference between the adjunctive and mono therapy patients from that open-label.

Sergio here. Let me try to give you a little bit more like top down and then Cedric can go more in detail. So, the long-term safety studies, 12 months, and we looked at the MADRS improvement data. The conclusions are simple but significant and material because these represent real-world experience. So, what we have seen is that there is a rapid effect and a clear effect. 70% plus of the patients responded after 12 months with sustainability, so there is no loss of efficacy over time. The safety is confirmed that the drug is extremely safe and well tolerated. So these are really the key learnings in a real-world experience. The question regarding the difference in adjunctive and monotherapy in the 12-month studies shows not really significant variation that would justify differentiation. It's a mix. It would be unfair to separate monotherapy from adjunctive because we don't know, in 12 months, how patients are actually being treated. Some may take medication, and some may stop. Therefore, we don't have a reliable set of information. However, we look at the de novo and the overall population from the two Phase 3 studies - over 500 to 600 patients. There is no remarkable difference that would indicate the drug didn't work or worked extremely well. It's pretty consistent, and that makes us comfortable because this is a real-world experience. Cedric, do you want to add anything to my remarks?

I think you said it all. Just to confirm what you said, there is a consistent improvement trajectory with rapid onset. The de novo are the ideal group to look at when you're considering efficacy in the open label because that study isn't as well controlled as our placebo-controlled trials regarding who gets included. So there is a variety of subjects, and there are also many common medications that they're on. So it's quite a mixed bag. But one thing is consistently observed is that whatever the treatment setting, patients got better quickly, with very high response and remission rates in the open label, consistent with our observations in the controlled trials.

Your next question comes from Andrew Tsai, Jeffries.

This is Dina on for Andrew. We just had a couple of quick questions. What are each of your two Phase 3 studies powered to show in terms of MADRS separation versus placebo? And a question for Cedric; operationally speaking, how can you say with high confidence the study integrity for the two Phase 3 studies in 1017 are similar to how Axsome's successful studies were run? Are you seeing a lot of similarities between those two programs, and if you could just elaborate on?

Maybe Cedric should answer that. I just would like to try to answer your last question on the comparison with Axsome. Cedric runs both our trial and Axsome's trial. But these are very, very, very different drugs. So I don't know how much would be reliable to compare the two programs. Cedric, do you want to try to answer?

I think that anybody who's in the drug development space, particularly in major depressive disorder, very much tries to run as high-quality a program as possible. And that really comes down to three things: the protocol, the site selection, and subject selection. And so, it doesn't matter which sponsor you work for, you want to have a very tight, efficient protocol that aims to reduce placebo response. You also want to work with the best sites that are conducting MDD trials. Those of us who work in clinical research for depression know that the same sites are often known to the sponsor. Therefore, you would expect that there is knowledge and familiarity because these sites are the best in major depressive disorder. Finally, you need to ensure a rigorous eligibility process that guarantees you're enrolling the right patients with a confirmed diagnosis of MDD while avoiding professional patients who are more prone to having a high placebo response. We ensure this rigorous eligibility process allows us to include subjects in the trial. As for the question regarding statistical powering, we haven't actually revealed that yet. However, if you consider the Phase 2 data and account for Study 301 or 303 where placebo was controlled to about a 10 or 11-point improvement on the MADRS, you could probably infer how we're powering it since we are targeting approximately 300 subjects as Sergio mentioned at the beginning. I hope that provides a bit of clarity regarding your question.

Just one quick point. According to KOLs and the literature history, a difference in MADRS score versus placebo of 2 to 2.5 points is considered clinically meaningful and sufficient for approval. So, you may imagine that we will file the statistical plan according to these parameters. Therefore, the statistic will be set up to detect a MADRS difference from placebo that is clinically meaningful and good enough for approval. Hope I answered your question appropriately.

Your next question comes from Yatin Suneja, Guggenheim.

This is Salma on for Yatin. So I have a few questions on the psilocybin program. I just wanted to ask if you have already filed the IND for the Phase 1 trial and how many doses you are planning to use there. Are any of these doses expected to trigger a psychedelic experience?

Sergio here. I will answer the first part of your request, and then if you don't mind repeating the second one because I couldn't hear you very well. No, we haven't filed the IND. We are in the process of preparing the IND, and I believe it will be filed relatively soon. However, we are planning to initiate the Phase 1 single dose ascending trial in Q1 of next year, so in about two to three months. Can you please repeat the second part?

I was just asking how many doses you are planning to test there. And if any of these doses are expected to trigger a psychedelic experience?

How many doses? No, we haven't finalized the exact dose regimen. We'll discuss in the IND. But what I can share with you is what will be the dose-limiting toxicity, and it is not real toxicity because we know from literature and history that psilocybin is generally well tolerated. Other ongoing programs are using 20 mg, 25 mg in a single dose. We intend to use one-tenth of that. So, it's a fair assumption that the dose we'll be using will not be toxic or poorly tolerated in general terms. The dose-limiting toxicity that we're trying to determine is related to when you start experiencing psychoactive symptoms, if I could put it in that way, when you start to feel that the drug is affecting your psychology. We aim to develop a low-dose extended release formulation that is non-psychedelic. Therefore, the dose-limiting toxicity will be the psychedelic effect. We do not have a precise figure for the dose yet, but we assume that it will be below 3 to 4 mg daily.

Thank you. There are no further questions at this time. Please proceed.

Well, thank you. In summary, we remain confident that we have an approvable drug in REL-1017, and we are excited about the potential of the novel psilocybin in derivative problems. We look forward to reporting on the progress of our pipeline in the months ahead. I remain grateful to the Relmada team for their continued hard work and dedication to executing our mission. I would like to extend my sincere thanks to the patients and clinical partners involved in the REL-1017 trials for their participation in advancing this promising investigational medicine to development. Thanks a lot to everyone, and we'll reconnect soon.

Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.