Earnings Call Transcript - RLMD Q2 2021

Operator, Operator

Thank you for your patience. This is the conference operator. Welcome to the Relmada Therapeutics Second Quarter 2021 Earnings Call. I will now hand the conference over to Mr. Tim McCarthy from LifeSci Advisors. Please proceed.

Timothy McCarthy, Chief Executive Officer

Thank you, Rachel, and thank you all for joining us this afternoon. With me on today's call are Chief Executive Officer, Sergio Traversa; 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 3 and 6 months ended June 30, 2021, 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, 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 30, 2020, and subsequent filings. This conference call also contains time-sensitive information that is accurate only as of the date of this live broadcast, August 10, 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 would like to turn the call over to Sergio.

Sergio Traversa, CEO

Thank you, Tim. Good afternoon, everyone. I'm pleased to welcome you to Relmada's Second Quarter 2021 Conference Call. On today's call, I will provide an update on the comprehensive development program for our lead product candidate for the adjunctive treatment of depression, REL-1017, highlight the substantial market opportunity for this compelling product candidate, and review upcoming milestones. Following this, I will turn the call over to Chuck Ence, Chief Accounting and Compliance Officer, for a review of the financials. I will then provide a brief overview of our recent acquisition of the development and commercial rights to a novel psilocybin and derivative program for neurodegenerative indications. I want to reiterate the significant news shared last week in our top line results from the abuse of human potential (HAP) study, evaluating REL-1017 versus oxycodone 40 milligrams as the active control. As many of you already know, REL-1017 is also known as esmethadone, which is the dextro or right-side isomer of racemic methadone. While there is considerable existing published data supporting a lack of clinically relevant opioid effect, including a very clear statement from the Drug Enforcement Administration (DEA), we conducted this work per FDA guidance, as commonly done for CNS-active drugs to support the comprehensive data package for our New Drug Application (NDA) for REL-1017 as an adjunctive treatment for Major Depressive Disorder (MDD). Importantly, our study was designed in a manner that followed the FDA 2017 guidance on the assessment of the abuse potential of drugs. Top line results for the primary endpoint showed that all three doses of REL-1017 evaluated in recreational opioid users demonstrated a highly statistically significant difference versus those rating for oxycodone 40 milligrams. Notably, the highly statistically significant difference was confirmed between the active control and 150 milligrams of REL-1017, which is the maximum tolerated dose and is six times the proposed therapeutic dose. The results for the secondary endpoints, which included scores for global overall liking and the desire to take the drug again, were consistent with those of the primary endpoints, demonstrating no evidence of any meaningful abuse potential. More specifically, the results demonstrated that REL-1017 had similarly highly statistically significant differences versus oxycodone at all doses, and the placebo results were consistent with approved drugs that are unscheduled, Schedule IV, or Schedule V. The secondary endpoint data further strengthened the overall results of the study and are important in that they inform the FDA's view of the future NDA for REL-1017. We believe that these collective results have addressed any residual concern regarding human abuse liability as a potential risk for FDA approval by establishing clear separation from the active control that is scheduled to new opioid substances. In addition, the results for REL-1017 in comparison to placebo were comparable to or better than those achieved by many drugs that have been FDA approved as either unscheduled, Schedule V, or Schedule IV. I would like to note that we are again joined today by Dr. Charles Gorodetzky, the former Scientific Director of the National Institute of Drug Abuse Addiction Research Center, who will be available to answer any questions in regard to the HAP study during the Q&A session. With that, I will now provide an update on RELIANCE, the ongoing Phase III program for REL-1017, which consists of two arms, placebo-controlled pivotal studies, RELIANCE I and RELIANCE II. Each of these studies will include 364 participants across 55 sites. It also includes RELIANCE-OLS, the long-term open-label safety study, which is enrolling both rollover participants from the pivotal study as well as new participants. As a reminder, these studies are designed to evaluate REL-1017 as an adjunctive treatment for MDD and includes two arms: placebo and 25 milligrams of REL-1017, both of which are in addition to standard antidepressant treatment for participants who have already unsuccessfully tried a minimum of one and up to three existing antidepressant therapies. The primary endpoint is change in the Montgomery-Åsberg Depression Rating Scale (MADRS) at day 28. Key secondary endpoints include the change in MADRS score at day 7 and change in Clinical Global Impression severity score at day 28. Both RELIANCE I and RELIANCE II are progressing with top line data expected in the first half of next year. RELIANCE-OLS, the long-term safety study, is also ongoing and enrolling participants as planned. Data from this long-term open-label safety study will be part of the NDA filing package. Additionally, we have started dosing in RELIANCE III to evaluate the use of REL-1017 as a monotherapy for MDD. As a reminder, the most significant difference between this trial and the ongoing clinical study is the population. The planned MDD monotherapy study will consist of individuals who are diagnosed with depression and are not currently taking standard antidepressant therapy. We anticipate completing this study prior to the conclusion of RELIANCE I and RELIANCE II. Moving on, planning for our second human abuse potential study has started. This one assesses REL-1017 versus intravenous ketamine, which has an established history as an effective positive control, and is ongoing. We will provide details on the timing of the top line results of this study in the next couple of months based on recruitment speed and broadly expect those results by the end of this year or the first quarter of 2022. I wanted to take a moment to reaffirm the need for a new therapeutic option with the potential clinical profile that REL-1017 presents. Depression is common, but for many who suffer, current options are not effective enough. Over 17 million individuals in the U.S. suffer from MDD, and they currently have limited therapeutic options to help. Traditional antidepressants can take up to four to six weeks to show efficacy and have significant side effects. Moreover, approximately 65% of MDD patients do not respond well to the first antidepressant treatment, and approximately 30% of MDD patients do not respond to any of the current oral antidepressants. Adjunctive treatment options are crucial because they enable a change in therapy without requiring the significant time that SSRIs and other drugs require when switching agents. Despite these challenges, there are currently only three FDA-approved adjunctive treatments for MDD, and all three of them are antipsychotics. Based on its novel mechanism of action and the collective positive data generated to date, including Phase II results that showed statistically significant, rapid, and sustained antidepressant effect with a favorable safety and tolerability profile, we believe REL-1017 has the potential to be the first oral antidepressant FDA approved for adjunctive treatment of MDD. I'm now passing the call over to Chuck for his review of the financials, after which I will touch on our recent acquisition of the development and commercial rights to a novel psilocybin and derivative program for neurodegenerative indications. Chuck, it's all yours.

Charles Ence, CFO

Thank you, Sergio, and good afternoon, everyone. Today, we issued a press release announcing our business and financial results for the 3 and 6 months ended June 30, 2021, which I will now review. For the second quarter ended June 30, 2021, total research and development expense was approximately $17.3 million, as compared to $5.3 million for the comparable period of 2020. The increase was primarily related to increased costs associated with the execution of a broader clinical program for REL-1017. Total general and administrative expense for the second quarter ended June 30, 2021, was approximately $9.1 million, compared to $7.4 million for the comparable period of 2020. This increase was primarily due to increases in personnel costs, stock-based compensation, and consulting services. For the second quarter ended June 30, 2021, we recorded a net loss of approximately $26.6 million, or $1.56 per basic and diluted share, compared to a net loss of $11.1 million, or $0.73 per basic and diluted share in the comparable period of 2020. Turning to the results for the 6 months ended June 30, 2021, total research and development expense was approximately $31.4 million, compared to $9.8 million for the comparable period of 2020. Again, this increase was primarily related to increased costs associated with a more robust clinical program for REL-1017. For the 6 months ended June 30, 2021, general and administrative expense was approximately $17.5 million, compared to $12.9 million for the comparable period of 2020. This increase was primarily due to increases in personnel costs, stock-based compensation, and consulting services. For the 6 months ended June 30, 2021, we recorded a net loss of approximately $48.8 million, or $2.90 per basic and diluted share, compared to a net loss of $21.8 million, or $1.45 per basic and diluted share in the comparable period of 2020. On June 30, 2021, the company had cash, cash equivalents, and short-term investments of $109.1 million, compared to $117.1 million on December 31, 2020. We continue to expect that this strong cash position will support us through at least the multiple data readouts we anticipate through the first half of 2022. I will now hand the call back to Sergio for his further remarks on the most recent progress.

Sergio Traversa, CEO

Thank you, Chuck. Last month, we announced the acquisition of development and commercial rights to another psilocybin and derivative program from Arbormentis for all ex-Asia territories, including the U.S. and Europe. At this time, we cannot share too much about the program for competitive reasons, but importantly, we can share that this program will focus on neurodegenerative disorders, distinct from and complementary to the REL-1017 program, which is focused on psychiatry. This agreement expands our development pipeline and particularly leverages our core expertise in neuroplasticity, while simultaneously broadening our work into indications outside of depression and psychiatry. In summary, the REL-1017 development program remains on track and was recently further derisked by the results of the HAP/oxycodone study that were consistent with our studies to date and confirm the extensive body of literature indicating the lack of abuse potential of REL-1017. Looking ahead, we anticipate multiple key data readouts over the next 12 months and have added a potential long-term growth driver with the acquisition and development of commercial rights to another psilocybin and derivative program. Importantly, as Chuck noted, our robust R&D initiatives are supported by a strong balance sheet. In closing, I remain grateful to the Relmada team for their continued hard work and dedication to executing our mission. I would also like to extend my sincere thanks to the participants and clinical partners involved in the REL-1017 clinical trials for their efforts in advancing this important therapy to the clinic as expeditiously as possible. We'd also like to thank Dr. Gorodetzky for being able to participate in these calls. Dr. Gorodetzky is one of the well-recognized authorities in the field concerning abuse and narcotics. And it would be a great opportunity if there are any questions regarding our study that could be addressed to Dr. Gorodetzky to obtain an educated and credible answer. We can now open up the call for questions. Operator, can you please open up?

Operator, Operator

Your first question comes from Marc Goodman from SVB Leerink.

Marc Goodman, Analyst

Sergio, could you remind us of the locations of the 55 sites for RELIANCE I, specifically distinguishing between those in the U.S. and outside the U.S.? Can you also provide an update on whether everything is progressing as planned? Of course, we recognize that COVID is affecting many clinical studies, so I'm interested in how your study is faring. Additionally, are you still collaborating with the same FDA personnel in the division that approved your Phase III program? I ask this because we have seen recent setbacks at other companies, sometimes related to changes within the FDA. I'm just trying to confirm that there haven't been any such changes on your end.

Sergio Traversa, CEO

Thank you, Marc. The first part of your question is straightforward. The 55 sites are all in the U.S. So we are a U.S. company. We have no operations outside of the U.S., except collaborations with very high-end universities, like those in Switzerland and Italy. Regarding the study's progress, we commenced a few months ago, and it is a large program. We are currently running 4 different clinical trials now that we have completed the human abuse potential study. There are two Phase III studies, a long-term safety study, and the monotherapy study that just started recruiting. We will provide more precise information on the timing soon. However, concerning the impact of COVID, we have not experienced any major complaints or feedback from the sites about it. Recent months have been relatively quiet, though there has been a small resurgence. Still, I can assure you that we do not expect any major delay or impact from COVID. Much of the work is now conducted remotely, including interviews or the MADRS assessments, which is well-received as patients prefer not to travel to the hospital frequently. In our study, participants are required to visit the hospital only once a week for 4 weeks, amounting to four visits. Regarding the FDA, we are unsure about specific companies you mentioned, such as Acadia and Axsome. Each has its own specific issues not related to a general extraneous approach from the FDA's psychiatry division. We have not faced any issues with the FDA, no delays or additional questions raised beyond the normal course of business. So far, the FDA has been quite supportive in helping us develop this product. They clearly recognize the need for such drugs more than presenting obstacles. I hope I have addressed your questions satisfactorily.

Operator, Operator

Your next question comes from Andrea Tan from Goldman Sachs.

Andrea Tan, Analyst

Sergio, maybe one for you. Can you provide more color on the nature of your discussions with the FDA regarding RELIANCE III? Just wondering if this could be considered a registrational data set. And are you thinking that you would look to include the data within the initial filing package?

Sergio Traversa, CEO

Yes. Thanks, Andrea, for the question. I have to be a little vague on this one because the abuse data is very fresh. The FDA will look at this data, and we will provide it as soon as we have reportable information. The top line data alone is not sufficient. Concerning the monotherapy study, we do not have any data yet. Therefore, it would be a stretch to contact the FDA for a claim about starting Phase III and conducting registration trials. But with the completed HAP study and animal studies, our package for preclinical data is strengthening. While I can't answer your question directly yet due to the uncertainty, I would say there's a chance we may consider something different from the monotherapy to convert it into a registration trial. The only difference would be to expand the patient number, but it's still too early to give you a definite answer. We will update everyone as soon as we have more certainty.

Operator, Operator

Your next question comes from Andrew Tsai from Jefferies.

Andrew Tsai, Analyst

Okay. Great. Maybe a question for Chuck. Our understanding is that the eventual scheduling of methadone or any drug boils down to the 8-factor analysis. So I was wondering if you could talk about some of the, I guess, 7 other factors. What are they? And then as it relates to them, could you talk about the strength of the data and evidence you've seen for esmethadone in terms of those factors? And finally, are these factors weighted equally? Or does the abuse liability study carry more weight?

Charles Gorodetzky, Consultant

I don't have the eight factors in front of me, but I believe they put significant weight at this point on the abuse liability study. It is arguably the single most predictive study you can run to ascertain potential abuse liability before a drug enters the market. The preliminary data we have analyzed looks very favorable, as Sergio summarized. I think there is no specific single factor that the FDA scrutinizes; they will consider the entire picture and all available data. However, I do think they will place considerable weight on a study such as this one that was very well conducted, adhering to the latest methodology. The statistical analysis follows all recommendations from the FDA, and the data appears very positive. This reflects a drug with a very low risk of abuse potential, consistent with either no scheduling or very low-level scheduling, like in Schedule IV or V.

Andrew Tsai, Analyst

Makes sense. My second question is, are there precedents where the highest dose of a drug has shown a rating above 65 on the Visual Analog Scale (VAS) and still received a favorable DEA scheduling?

Charles Gorodetzky, Consultant

Yes, I believe there are examples even among opioids and certainly among antiepileptic and antimigraine drugs, where a drug can show a significant difference from a positive control, in this case, oxycodone, but may also present very slight liking. Even that seems to be somewhat nonspecific so far and could show a difference from placebo while still being either unscheduled or very lightly scheduled. For instance, the drug Viberzi for irritable bowel syndrome demonstrated significant differences from placebo at doses just 2 or 3 times above the recommended therapeutic dose and still ended up in Schedule IV. Therefore, there are precedents indicating that a drug may have low abuse potential, not precisely at zero, and still qualify for very low scheduling.

Operator, Operator

Your next question is from Joon Lee from Truist Securities.

Joon Lee, Analyst

Where are you in terms of enrollment for the ongoing RELIANCE programs? Are you on track to report top line data in the first half of next year? Do you expect data from RELIANCE III before RELIANCE I and RELIANCE II? What does that mean? Are we getting data early next year, in Q1 or Q2? I'd love to hear some color on that. Could you also remind us about the design of RELIANCE III, including the doses and study arms involved in that study? And just to clarify, is this a Phase II study?

Sergio Traversa, CEO

Thank you, Joon. Yes, I will respond similarly to Andrea. It's still too early to definitively comment on recruitment status; however, we are actively enrolling participants. A data point that may provide clarity is the number of sites involved. We currently have 52 sites on study 301, with the first one commencing very late in December; 27 sites are active and running in study 302; and 10 sites in study 303. Study 303 will typically enroll a smaller participant number, as it started very recently. Most of these sites will cater to both studies 301 and 302. To sum up, while we acknowledge the ongoing recruitment, it’s essential to have a clearer timeline in the coming months. Regarding COVID, just to clarify, we have a high number of sites engaging remotely and are unable to see any significant impacts from COVID so far. Finally, to answer your question on study design: the monotherapy study will also include naive patients. For those currently on antidepressants, we will ensure proper washout periods. I can share exact details offline later. However, the washout period is considerably longer than just a few weeks, as SSRIs have evident withdrawal impacts.

Operator, Operator

This does conclude the question-and-answer session. I would like to turn the conference back over to Sergio Traversa for any closing remarks.

Sergio Traversa, CEO

Thank you, operator. Thank you all for joining us on the call today. We have been pleased to share our recent progress with you regarding the REL-1017 clinical development program. It continues to advance. We are excited about the important catalysts that lie ahead and will keep you updated on clinical results and activities through the remainder of 2021. Thank you once again for joining us, and enjoy the rest of the day.

Operator, Operator

Thank you. This does conclude the conference for today. Thank you for participating. You may now disconnect.