Relmada Therapeutics, Inc. Q2 FY2024 Earnings Call

Good afternoon. Welcome to the Relmada Therapeutics Inc.'s Second Quarter 2024 Earnings Conference Call. At this time, all lines are in a listen-only mode. This call is being recorded on Wednesday, August 7, 2024. I would now like to turn the conference over to Tim McCarthy, 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 Dr. Sergio Traversa, Chief Executive Officer; and Maged Shenouda, Chief Financial Officer. This afternoon, Relmada issued a press release providing a business update and announcing financial results for the quarter ended June 30, 2024. Please note that certain information discussed on the call today is covered under the Safe Harbors 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 the annual report on Form 10-K for the year ended December 31, 2023, and with subsequent filings, including the second 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 on August 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. Now I'd like to turn the call over to Sergio. Sergio?

Thank you, Tim, and thanks to everyone for taking the time to join us this afternoon. Relmada is dedicated to the development of transformative medicine for people living with central nervous system disorders. I'm pleased to report that Relmada's clinical program has made meaningful progress over the last five months. We believe that the portfolio led by the Phase 3 program for REL-1017 as a potential adjunctive treatment for major depressive disorder, or MDD, is poised to reach several important milestones. We are encouraged by the company's progress. As a quick reminder, REL-1017 is a small molecule that preferentially blocks a hyperactive brain channel called NMNDI receptor that is associated with MDD. REL-1017 has been designed to rapidly improve symptoms and provide these patients with a new treatment on top of their current regimen. Completing the Phase 3 program of REL-1017 is Relmada's number one objective, and it will complete the study package required to file the NDA. During today's call, we will discuss the planned interim analysis, which is planned by year-end 2024, for the Reliance II study, review the timeline for completing enrollment in the two Phase 3 studies in the REL-1017 program, outline the timing to initiate a Phase 1 study for a proprietary psilocybin program, REL-P11, in development for metabolic diseases, and comment on our cash balance, which we expect to support our planned operations into 2025, and several key clinical milestones, especially for the REL-1017 program. I'll briefly review our program, and in a few minutes, Maged will provide you with a summary of our second quarter financials. After that, I will make a few closing remarks, and then we will open the call for your questions. Starting with REL-1017, we are enrolling two pivotal Phase 3 studies for REL-1017, Reliance II, and Relight. These studies build on positive Phase 2 data with REL-1017 for the objective treatment of depression. Our clinical data set also demonstrated that REL-1017 is well-tolerated with no indication of abuse potential. Our ongoing Phase 3 studies are designed to assess the impact of REL-1017 on the MADRS score as an indicator of depression severity. The studies are evaluating REL-1017 in patients with documented clinical depression undergoing treatment with an approved antidepressant. Each of the ongoing studies, Reliance II and Relight, is enrolling up to 340 subjects. The studies are randomized one-to-one and designed and powered to detect a 2 to 2.5 point delta in the MADRS score at day 28. The protocols have been thoughtfully designed to incorporate several elements intended to de-risk each study with a thorough patient adjudication process. As a snapshot, the features that we have emphasized in the Reliance II and Relight studies are focused on optimizing the protocol, carefully selecting study sites, monitoring the number of patients per site, and most importantly, carefully verifying the diagnosis of depression and each patient's medical history to ensure enrollment of patients with clinical depression. We have been especially focused on defining the patient enrollment criteria with extra care. The current protocols include a review of medical and pharmacy records. The studies also require that patients have been treated with an approved antidepressant for at least six weeks and have experienced an improvement of less than 50% since starting treatment. Adoption of these elements has increased our confidence that we are appropriately enrolling the most suitable patients into Reliance II and Relight. As a result of these efforts, changes in the screen failure rate can be considered one way to assess the stringency of the enhanced enrollment criteria. As of today, we are observing an approximately 80% screen failure rate versus a 50% screen failure in the Reliance I study. We intend to reach two important milestones by the end of the year, reporting the output of a preplanned interim analysis and the completion of enrollment for the Reliance studies. We expect completion of enrollment in Reliance II to follow approximately six months after that. The preplanned interim analysis of the Reliance II study is intended to be a de-risking tool to increase the probability of a successful study outcome. The analysis will include a futility analysis and a sample size re-estimation, if necessary, with the potential to adjust the sample size to ensure proper statistical results. There are three potential outcomes from the interim analysis. The study is futile, the study can continue with the addition of a certain number of patients, and the study can continue with the preplanned number of patients—that, of course, is the preferred outcome. We will conduct the interim analysis and expect to report the outcome of this analysis before year-end 2024. Now, I would like to spend a few moments on REL-P11. We identified the metabolic activity of REL-P11 as part of a preclinical evaluation of its potential effect on neurodegenerative disease. As a quick reminder, REL-P11 is a low-dose, modified release formulation of psilocybin. Comparing data from a recognized preclinical role and model of metabolic dysfunction associated with metabolic dysfunction-associated steatotic liver disease, or MASLD, published last year in November at the American Association for the Study of Liver Disease is the cornerstone of our program. This data shows that REL-P11 has benefits on multiple metabolic parameters, including triglyceride levels and glucose metabolism. Besides reducing the steatosis of the liver, REL-P11 reduces blood glucose and body weight without producing any side effect on the CNS. This data led to our evaluation of REL-P11 as a candidate for the treatment of metabolic disorders, such as obesity. We plan to initiate a Phase 1 single-attended dosing, or SAD, study in this subject for REL-P11 shortly. The Phase 1 study will define the pharmacokinetic safety and tolerability profile for REL-P11 and allow us to select a dose for evaluation in the Phase 2a approval process study. We expect to complete the Phase 1 SAD study and initiate the Phase 2a study in the first half of 2025. Now I would like to turn the call over to our Chief Financial Officer, Maged Shenouda. Maged?

Thank you, Sergio. This afternoon, we issued a press release announcing our business and financial results for the three and six months ending June 30, 2024. During today's call, I will provide a brief overview of the three-month financial results. Full details are available in our press release and 10-Q filing on our website located in the News and SEC Filings tabs of the Investor Relations page. Research and development expense for the three months ended June 30, 2024, was approximately $10.7 million, compared to $13.7 million for the same period in 2023, a decrease of $3 million. The decrease was primarily driven by a decrease in study costs associated with the completion of two Phase 3 trials in the long-term open label safety Reliance III trial. General and administrative expense for the three months ended June 30, 2024, was approximately $8.1 million, compared to $12.3 million for the same period in 2023, a decrease of approximately $4.2 million. The decrease was primarily driven by a decrease in stock-based compensation expense. The net loss for the three months ended June 30, 2024, was $17.8 million, or 59 cents per basic and diluted share, compared with a net loss of $25.3 million, or $0.84 per basic and diluted share for the same period in 2023. I will also note that the company had 30.17 million common shares outstanding as of August 2, 2024. As of June 30, 2024, Relmada had cash, cash equivalents, and short-term investments of approximately $70.4 million compared to $96.3 million as of December 31, 2023. Cash used in operations for the second quarter was $13.3 million. Based on our current clinical development plans, we believe our current cash position is adequate to support operations into 2025 through key milestones, including the top line from the Reliance II study. Before we go to your questions, I'll turn back to Sergio to make a few closing comments. Sergio.

Thank you, Maged. As we conclude the prepared remarks on this afternoon's call, I would like to leave you with a few key messages. Our two Phase 3 studies for our lead program, REL-1017 for MDD, have been thoughtfully designed and are being carried out with appropriately adjudicated patients, with potential for success. We expect two important milestones from the Reliance II study before the end of the year, with the output of a preplanned interim analysis, including both a futility analysis and a sample size re-estimation, if necessary, and the completion of enrollment of the Reliance II study. We expect completion of enrollment of Reliance II to follow approximately six months after that. Preparations are on track to begin the clinical program for REL-P11. Our preclinical data indicates that this silo-side formulation for metabolic disorders will be evaluated later this quarter or early next quarter. We believe our financial resources will support our planned operations into 2025 through key milestones, including top-line data from the Reliance II study. At this point, operator, we can open the call for questions.

Your first question comes from the line of Mark Goodman with Leerink Partners. Please go ahead.

Thanks for taking my question. This is Rudy on the line for Mark. Can you remind us of the baseline measures for the ongoing Reliance II study and how that compares with the Phase 2 Identity MDD trial and the Phase 3 Reliance I study?

Thank you for the question. The baseline MADRS average when the patient population starts is very similar. It's right in the mid-30s, around 33 to 34 range for all the studies. That's pretty typical for depression studies.

Got it. Yes, just a quick follow-up. Will you have the confidence that Reliance will finish enrollment six months after Reliance II? And would a potential sample size re-estimation impact the timeline for that trial?

Well, the confidence is that when Reliance II will be over, and if successful, as we hope, then all the resources will be put on Reliance. We have close to a hundred sites that will be available. Of course, we may not enroll all of them. So, we have confidence that based on the enrollment rates that we are seeing now, we can finish in about six months. And sorry, the second question was about confidence regarding the timelines for the sample size re-estimation?

No, I was asking whether the sample size re-estimation will impact the timeline for the second trial.

That's a good question. We will address it when we know how many patients we will have to enroll, but it could impact the timeline, but it's probably not going to be very material. When we talk about sample size re-estimation, we're not talking about adding like 200 patients to the study. That would probably cause issues. So, sample size re-estimation will evaluate how many patients we need to enroll.

Got it.

So, the answer to your question is that it may impact the timeline, but it's not going to be a material change.

Very helpful.

And your next question comes from the line of Andrew Tsai with Jefferies. Please go ahead.

Yes. Hi. Thanks for taking my question. On clinical trials, we noticed there are some changes to the estimated patient enrollment number to 340. I think you mentioned it in the prepared remarks. So, can you talk about why that number changed from 300 to 340?

Yes, sure, good afternoon, Andrew. The 340 is a more general indication that is made mostly for the FDA. If the patient population would be up to 340, that doesn't mean that we will go to 340. You don't want to change the clinical file too frequently. So, you put guidelines that you expect to meet, and also you have to account for dropouts and non-dropouts. The number of patients is up to 340. That doesn't mean that we have to go to 340, assuming no sample re-estimation. So, I would not take that as the final number. The final number will be determined by the statistical plan that we have not finalized. You usually send the FDA the statistical plan as close to the end as possible, because there is no upside in defining numbers beforehand; it depends on the enrollment rates and values parameters. So, I hope I answered your question. I don't take the 340 as the final absolute number; it's up to 340.

Got it. Yes, very helpful. And it sounds like there's a futility analysis in the interim now. So, did you have to change the protocol or the stats plan? And are you taking any statistical penalty with the futility option?

Thanks, Andrew, for asking the question, because it's very important. We spent the last couple of months working on the statistical plan. When we had in the study 301, we had an interim review, and what we got from the data monitoring committee was that they stopped the trial as early as possible, but we had no indication of what the reason was—it could have been futility or efficacy. That one was actually not helpful for Relmada because we stopped it as indicated at the earliest. There were like 220 patients. The results were not what we were expecting. If we had gone to the 300-plus that was the plan, maybe the study based on the numbers could have been statistically significant, especially because the second part of the trial was conducted when the COVID restrictions were lifted. The results of the last 63 patients enrolled in 301 were actually very good compared to the previous 165 patients. So, that interim analysis was not only not very helpful, it actually created a little bit of a problem. This time, we don't want to end up in the same situation. We have been carefully planning the interim analysis and, within the boundary of what can be done, we want to get some information that can help de-risk the program. We inserted the futility analysis so that we want to know—if the study is futile, we can decide to continue or preserve the cash we already have. The second scenario is sample size estimation, where the DMC gives us an indication of how many patients we should add to get to a likely p-value. The third scenario, which is the one everyone likes the most, is the DMC telling us that we can stop the trial at the planned number of patients, which would be around 300, 310, or whatever the final number defined in the statistical analysis is. We will know if the study is not futile because if it is futile, we will be informed and won't have to add any patients to get to a potential p-value. There's no guarantee that the study will be successful, but it does give a good sense that we are on the right direction. The last part of your question was the statistical penalty: no, there is no alpha penalty in the futility analysis because there is no analysis on efficacy and no early stop. So, you don't pay any alpha penalty. I hope it was a long answer, but I wanted to be very clear and specific.

Yes, thank you. And the very last one is what would be the threshold for futility? If the placebo-adjusted delta is below a certain point or do you have any color on that?

Yes, that's more difficult to answer, not because we don't want to, but we haven't finalized the analysis. Then we get into complicated statistics. In general, we will set the futility close to what can be a non-clinically meaningful threshold. If the study would not have a chance to reach any clinically meaningful results, then it probably would not be worth continuing. But we have to finalize what the numbers will be.

Thank you again.

Thank you, Andrew.

And your next question comes from the line of Andrea Tan with Goldman Sachs. Please go ahead.

Good afternoon. Thanks for taking the question. Sergio, just really quickly, could you remind us the extent of the trial that you expect to be completed ahead of the interim analysis? And following that, how soon after that could we expect to see the top line data?

Hi, Andrea. Good afternoon. The only two trials that are ongoing for REL-1017 are the Reliance II and Relight. Everything else has been completed—long-term safety, all done.

No, I'm so sorry. I was just asking about the interim analysis being conducted for Reliance II. I guess, maybe what proportion of that study is it? I think you may have mentioned in the past that it's around 80% to 90% of the trial, at which point the interim analysis will take place?

I got it again; sorry, I misunderstood. Theoretically, the latest you do it, the better. Now, there is the incremental benefit that you get going, and the right time to do it is when you have around 70, 75, or 80%. The incremental benefits become smaller and smaller. So, we will try to do it as late as possible, but we also want to know. It's going to be done before year-end, over the next couple of months. It takes a couple of months to prepare it, and we are pretty close.

Okay, and if the DMC advises that you could continue without additional patients being enrolled, maybe what is the expected time frame over which we could then expect the top line data?

It depends on how many patients we have to enroll, but it's not going to be that far away. I don't have the exact number, but we are planning to finish enrollment by year-end. You can imagine it could be by year-end or sometime early 2025, but not too long after. If they tell us that we don't need to enroll more patients, as we hope, it's going to be shortly after that.

Okay. And then, one quick question on the psilocybin study. Just curious, could you speak to the decision to run that study in Canada, and if that reflects any regulatory hurdles in the U.S. or maybe a difference in how the different agencies view psilocybin?

Yes. We chose to do it in Canada for two main reasons. One is that Canada has a very good structure for Phase 1 studies. Just to give you an example, REL-1017's Phase 1 was conducted in Toronto because they have excellent facilities. The second reason is that the Canadian agency is much more accustomed to dealing with psychedelic compounds than the FDA. So, the regulatory hurdles are easier to navigate in Canada compared to the U.S. The combination of these two reasons led us to choose Canada.

Got it. Okay, thank you so much.

Thanks, Andrea.

And your next question comes from the line of Uy Ear with Mizuho Financial Group. Please go ahead.

Hi, thanks for taking my question. This is Charles on for Uy. I guess I had a question on the re-estimation analysis. Can you delve into how many more patients you might add potentially in this analysis? Is that kind of a preset number, or will they give you that number? And then also on the runway guidance; is the runway still expected to extend to include the Relight study as well? Thank you.

Thank you, Charles. I'll answer the second question: the number will be recommended by the DMC. It can be anywhere, right? Clearly, if the target number is somewhere north of 300, we don't expect to double that number or add like 200 patients. That would be an indication that the signal may not be that strong. So, it would be a reasonable number of patients that is also feasible in a reasonable amount of time.

Yes, and Charles, thank you for the question. I'll take the finances question. I don't think we want to get that specific with regard to the readout from the Relight study. What we have said is it will take us into 2025, certainly with data from the Reliance II study. A lot depends on enrollment patterns, and that's developing day by day, so I can't be that specific at this point.

Okay. Thank you for taking my question.

Operator, are there any more questions? It doesn't seem there are any more questions.

Apologies. We don't have any questions at this moment. You can now proceed with your closing remarks.

Well, thanks a lot. Thank you everyone for joining us for Relmada's second quarter 2024 conference call today. We believe we are poised to achieve several important milestones that could represent an inflection point for Relmada. We look forward to updating you on our progress and thank you for joining us for this second quarter business update call. Have a great night.

Thank you, presenters, and ladies and gentlemen. This concludes today's conference call. Thank you all for participating. You may now disconnect.