Earnings Call Transcript - RLMD Q1 2023

Operator, Operator

Good afternoon. Thank you for attending today's Relmada Therapeutics Inc. First Quarter 2023 Earnings Call. My name is Forum, and I will be your moderator for today's call. All lines will remain muted during the presentation portion of the call with an opportunity for questions and answers at the end. It is now my pleasure to pass the conference over to our host, Tim McCarthy from LifeSci Advisors.

Tim McCarthy, Moderator

Thank you, operator, and thank you all for joining us this afternoon. With me on today's call are Chief Executive Officer, Sergio Traversa; Chief Medical Officer, Dr. Cedric O'Gorman; and Chief Financial Officer, Maged Shenouda. This afternoon Relmada issued a press release providing a business update announcing financial results for the three months ended March 31, 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 May 11, 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?

Sergio Traversa, CEO

Thank you, Tim. Good afternoon to everyone. I am pleased to welcome you to the Relmada first quarter 2023 conference call. During today's call, we will provide an overview of our ongoing Phase 3 program for REL-1017 in major depressive disorder. Cedric will provide a clinical review and update and Maged will review our financial results and balance sheet. We will then take your questions. To begin, based on the results from Study 301, we intend to primarily focus on REL-1017 as an adjunctive treatment for major depressive disorder or MDD. We have implemented critical changes to the ongoing Study 302, a Phase 3 two-arm placebo-controlled pivotal study evaluating REL-1017 25 milligrams, and we will initiate our new trial Study 304 for adjunctive MDD. Our Study 302 protocol amendment was finalized and is now being implemented across all clinical sites. The new study 304 protocol has been drafted and will be ready for study initiation by mid-2023. The full results for REL-1017 in Study 301 reinforced that the two most important drivers for study success were recruiting the appropriate patient with true MDD and controlling for placebo response. REL-1017, unlike conventional monoaminergic antidepressants, acts by blocking the NMDA receptor and correcting the consequences of these regulated glutamatergic pathways believed to underlie the pathophysiological MDD. It does not affect mood by altering neurotransmitter levels independently of pathophysiology. It is believed that REL-1017 has no effect in the situation of the best patients, so its efficacy signal is dependent on enrolling appropriate subjects with true MDD pathophysiology and diagnosis into the trial. Since our last call, we have been focused on optimizing the design of our clinical trial for signal detection via the amendment of the Study 302 protocol and the drafting of a new streamlined study 304 protocol. Both result in protocols that concentrate on recruiting appropriately diagnosed subjects, controlling placebo response, and enhancing signal detection. Additionally, we have been finalizing the selection of preferred clinical sites and have been visiting these sites as we strengthen our relationship and collaboration with them on our clinical trials. I am also pleased to report that the open-label one-year safety study for REL-1017, Study 310, is concluding with all treatment visits completed and final safety follow-up visits occurring in the next couple of weeks, thereby attaining the necessary long-term safety exposure required for the purpose of our NDA filing. We expect to release data from this study later this year. Before moving on to provide further detail on the clinical progress in our first quarter financial results, I would like to emphasize that Relmada is sufficiently funded to fully execute our plans to reach data readouts from both Phase 3 trials. I will turn now the call over to Cedric, our Chief Medical Officer, to go over the clinical progress in the quarter and provide an update on the plans moving forward. Cedric?

Cedric O'Gorman, CMO

Thank you, Sergio. As Sergio indicated, we have now amended our Study 302 protocol, which has been IRB approved, and subjects are already being screened under the streamlined protocol. The amendment has significantly lessened the burden to both subjects and sites by reducing the required time spent by subjects at the site. This was achieved by removing duplicative assessments and evaluations that were of exploratory interest. The amended protocol capitalizes on our learnings from the completed controlled trials and optimizes the potential for reduction in the high placebo response seen in those completed studies. As you recall, when we analyzed the results of the 301 study, which failed to meet its primary endpoint, we saw in a post-hoc analysis of subjects from verifiable versus non-verifiable sources a striking difference. Verified source patients were defined as patients who were known to the sites, such as current patients, patients obtained from the site database, and healthcare professional referrals. All of these elements increase confidence in these subjects having a confirmed diagnosis of MDD, as contrasted with non-verified source subjects, who were those recruited through radio and TV ads, social media via the Internet, and recruitment agencies. We observed that reliably sourced subjects treated with REL-1017 had a change from baseline of 15.2 points on the MADRS total score at day 28 versus 11.8 points for placebo. This amounts to a 5.5 point placebo-adjusted difference, with a p-value of 0.016. From this post-hoc analysis of our Study 301 data, it is clear to us that in clinically depressed patients from verifiable sources, REL-1017 has a strong signal of efficacy. In the ongoing 302 Study and the upcoming 304 Study, we will require that patients coming from verified sources have documented evidence of their MDD diagnosis. We will require medical records from prospective subjects to verify their MDD diagnosis and antidepressant treatment history. Additionally, as you recall, two of our highest enrolling sites in the 301 Study were particularly impacted by paradoxical data and high placebo response. When we excluded all data from these two sites, the population was reduced by only approximately 40 patients, and we saw a 4.1 point placebo-adjusted difference at day 28 on the MADRS total score favoring REL-1017. These important post-hoc learnings have allowed us to make site selection improvements and prioritize moving forward with those sites that were better able to control for placebo response. Moreover, we intend to limit the number of patients enrolled per site so no single site can have a disproportionate effect on study outcomes, as was observed in the prior controlled trials. In the ongoing Study 302, we are planning to enroll approximately 300 patients and currently expect that trial to complete in the first half of 2024. Currently, we have enrolled over one-third, or over 100 patients, into this study. We plan to initiate the new study 304 in mid-2023, also with a planned enrollment of approximately 300 patients, with completion anticipated in the second half of 2024. Additionally, as Sergio mentioned, our open-label one-year safety study for REL-1017, Study 310, is concluding with final safety follow-up visits occurring over the next couple of weeks, fulfilling the long-term safety exposure requirements for our NDA filing. We expect data from this study to be available later this year. As we continue to advance our ongoing Phase 3 program for REL-1017, we are also focused on further enhancing the role of published and presented data in support of our promising late-stage product candidates. To this end, we have had two late-breaking posters accepted for presentation at the upcoming 2023 American Society of Clinical Psychopharmacology meeting or ASCP at the end of May. One presentation will highlight the per protocol efficacy results from Study 301. As a reminder, this was a pre-specified analysis; per protocol refers to the population of patients who were treated to day 28 and did not have major protocol deviations. This pre-specified analysis resulted in the exclusion of only 29 patients compared to the full analysis set. The per protocol comprised 198 subjects, compared to 227 in the full analysis set. The change in Relmada total score from baseline at day 28 was 15.6 points for REL-1017 and 12.5 points for placebo for a placebo-adjusted difference of 3.1 points and a p-value of 0.051, approaching statistical significance. The second presentation will review the safety results from Study 301, specifically the lack of indication of abuse potential and absence of withdrawal signs and symptoms in the trial. There was no difference between REL-1017 and placebo treatment groups in terms of drug likability, abuse potential, and withdrawal effects. I will now turn the call over to Maged to review our first quarter financial results. Maged?

Maged Shenouda, CFO

Sure. Thank you, Cedric. Today, we issued a press release announcing our business and financial results for the three months ended March 31, 2023, which I will now review. For the first quarter ended March 31, 2023, total research and development expense was approximately $15.9 million, compared to $25 million for the comparable period of 2022. The decrease was primarily associated with the completion of Study 301 and Study 303 in late 2022. The non-cash charge related to stock-based compensation totaled $2 million in the most recently completed first quarter. Total general and administrative expense for the first quarter ended March 31, 2023 was approximately $12.3 million, compared to $13.3 million for the comparable period of 2022, a decrease of approximately $1 million. The decrease was primarily driven by a decrease in stock-based compensation. This non-cash charge totaled $9.4 million in the most recently completed first quarter. For the first quarter ended March 31, 2023, the net loss was $26.3 million, or $0.87 per basic and diluted share compared with a net loss of $39.7 million, or $1.40 per basic and diluted share in the comparable period of 2022. Net cash used in operating activities for the three months ended March 31, 2023 totaled $16.5 million, compared to $19.4 million for the three months ended March 31, 2022. As of March 31, 2023, we had cash, cash equivalents, and short-term investments of approximately $132.4 million, compared to cash, cash equivalents, and short-term investments of approximately $148.3 million as of December 31, 2022. Based on our clinical development plan, our current cash position provides us with ample runway through the end of 2024. Of note, the conclusion of Study 310, which Sergio discussed earlier, as well as completion of certain earlier-stage studies will support this expected cash runway. I'll now ask the operator to please open the call for questions.

Operator, Operator

Certainly. Our first question comes from the line of Marc Goodman with SVB Securities. Marc, your line is now open.

Rudy Li, Analyst

Hi. Thanks for taking my question. This is really Rudy on the line for Marc. I was just wondering based on the current data from RELIANCE I and RELIANCE II, do you believe that four weeks is the right duration to move forward with another trial? And do you think a longer trial like maybe five or six weeks may have increased the separation?

Sergio Traversa, CEO

Thanks for the question. It's Sergio here. Cedric, I believe the question is for you.

Cedric O'Gorman, CMO

Yes. Thanks for the question. We have looked at that, and looking at the trajectory of the improvements observed with drug and placebo in the completed studies, we believe that if we can control placebo response and still see the trajectory of improvement, what essentially is a rapid-acting antidepressant through NMDA antagonism, we think that the four weeks is sufficient in order to separate and have a positive study. We have had that agreement with the regulatory agencies to pursue four weeks. So we think that the best approach now is to pursue four weeks. Also, when you look at the per protocol analysis and other post-hoc analysis, we believe that if we can control placebo response, four weeks would be of sufficient duration.

Rudy Li, Analyst

Got it. That’s very helpful.

Sergio Traversa, CEO

Thank you, Cedric. If I can add, if you look at the curve on the 301 data, it may be a little misleading because the placebo response in this trial was extremely high and unusual, characterized by an early high placebo response. Usually, placebo doesn't behave like that. So, on a normal placebo response rate curve, it would show that 28 days, four weeks would be an appropriate primary endpoint timeline. I hope we answered your question.

Rudy Li, Analyst

That makes sense. Appreciate the color.

Operator, Operator

Thank you for your question. Our next question comes from the line of Uy Ear with Mizuho. Your line is now open.

Uy Ear, Analyst

Thanks for taking my question. So I have two questions. My first question is, I think you said you have completed selection sites for the 304 studies. Just wondering, if there's any overlap with the 302 studies. And I think you also indicated you're limiting the number of patients enrolled in each of these sites. Just wondering how many patients you are expecting to enroll at each of the sites? And I guess, how many sites are there with 304 if you can share that? And my second question is, I think previously you indicated that you would read out the data for the RELIANCE long-term safety studies in mid-2023, but now you're just seeing 2023. Just wondering, if there's a change.

Sergio Traversa, CEO

Thank you, Uy. Cedric, I believe that also this question is for you.

Cedric O'Gorman, CMO

Sure. Hopefully, I'll hit on all the questions here. The first one was about the selection of sites for 304 and whether there's overlap with 302. No, because we will be starting the 304 study in mid-year. So therefore, 302 is ongoing and they are unique sites across the two studies. I think you asked how many sites per trial; approximately 50 is a good guide. In terms of number of patients per site, we're not going to provide an arbitrary number on which to cap, but we are carefully monitoring the activities so that they don't outweigh the rest of the sites performing on the trials. The last question was about guidance around data from the open label. We did say middle of the year, and the study is completing by the last follow-up safety visits occurring in the next two weeks. So then it's just a question of how quickly we can claim the data and get it to you. I wouldn't say that we are changing our expectation there, because we can still meet it as soon as we clean the data and generate the outputs. I don't know, Sergio maybe you want to add anything there?

Sergio Traversa, CEO

Yes. No, I think that's fine. The study has been completed or is on its way to being completed in the next few weeks. So it's 600-plus patients. There's a lot of data, and we want to ensure that we have a complete understanding of the data before we release them. It will provide quite a bit of new data, so we want to do it appropriately. It will be some time in the second half.

Uy Ear, Analyst

Okay. Thank you.

Operator, Operator

Thank you for your question. Our next question comes from the line of Andrew Tsai with Jefferies. Andrew, your line is now open.

Andrew Tsai, Analyst

Okay. Great, thanks; good afternoon. Thanks for the question, great job getting things up to speed. First question is maybe a holistic high-level question for you guys. At this stage, would you say how are you balancing quality of patients and sites versus getting the data as fast as possible for investors? Are you kind of operating in such a way that you are not taking any shortcuts whatsoever? Just so it's a high-level question to start.

Sergio Traversa, CEO

Yeah. I'll give you the top-down, and Cedric can expand and give his opinion as well. Given the experience we had with the other two studies, clearly, quality is the driver. We have to consider time too because the studies have to be concluded in a reasonable amount of time. Let's put it this way: plus or minus three months, we don't think that would make a difference for investors. As long as the results of the study are positive. Cedric, do you want to add?

Cedric O'Gorman, CMO

Yeah. I would just echo what Sergio said in terms of the focus being on quality, not on speed. We have selected quality sites based on what we learned from those that did a better job of controlling placebo response versus those that did not. Also, these sites did a better job at being able to verify confirmed diagnosis and get the right patients into the trial versus the more unverified resource patients. Additionally, we're applying a rigorous eligibility review process now. As a result, requiring medical records slows down the rate somewhat but ensures we don't cut corners, allowing us to get the most appropriate patients into the studies.

Andrew Tsai, Analyst

Makes sense. Another thing that came to mind is that last time you presented a sub-analysis showing how patients performed differently before and after COVID. If a new COVID variant were to emerge later this year, what would be your approach for the study? Would you consider pausing enrollment? I'm just interested in your thoughts on this. Thank you.

Sergio Traversa, CEO

Cedric, would you mind taking that?

Cedric O'Gorman, CMO

It's a very interesting question. Post-pandemic lifting of restrictions saw a much better effect and separation for drug versus placebo. The impact of COVID-19 across numerous trials has been documented already; it wasn't just our study. So, it's a valid concern. However, there are other aspects in the analysis showing a more profound effect when considering the verified patients with confirmed diagnosis versus unverified. Even the per protocol prespecified analysis demonstrated good retention throughout the study with very low discontinuation rates. REL-1017 exhibits a particularly placebo-like side effect profile, aiding continuation through the study. Trials can benefit somewhat from functional unblinding, as patients often cannot distinguish between drug and placebo. If another pandemic did occur, we would need to closely monitor the situation. We hope we are past that now, as evidenced by our studies rolling out currently.

Andrew Tsai, Analyst

Right, yes. Okay. Very good. Thanks for the update.

Cedric O'Gorman, CMO

Thank you, Andrew.

Operator, Operator

Thank you for your question. Our next question comes from the line of Andrea Tan with Goldman Sachs. Andrea, your line is now open.

Andrea Tan, Analyst

Hi, everyone. Thanks for taking my question. Two for me, please. First, with respect to the open-label safety study, I know you've spoken in the past about the potential to understand the real-world effect of treatment through that data set. But just given that these are patients who rolled over both from the failed RELIANCE 1 and 3 trials, just wondering if you could help frame expectations for that data read and how they should be interpreted within that context? Secondly, just curious if a data monitoring committee will be utilized in 302 and 304 with respect to recommending early stoppage of the study similar to what was done for 301. Thanks so much.

Sergio Traversa, CEO

Thank you, Andrea, and great question. I believe Cedric should answer.

Cedric O'Gorman, CMO

Sure. Thank you. You're absolutely right, Andrea. The open-label study reflects how patients might receive the drug in the real world and can provide very important information regarding response durability, continuation, and tolerability of the drug in the real world. It involves 12 months of long-term exposure with a considerable number of subjects in the study. Some are rollovers from the completed 301 and 303 studies, while others came in de novo into the open-label study, including a mix of monotherapy and adjunctive. We will look forward to parsing out various subsets and sharing insights with you as we clean the data. With regards to the safety data monitoring committee, we always have a rigorous safety review process for all our trials, and we would continue to use the data monitoring committee. We are also considering the potential to increase the size of the study if needed.

Andrea Tan, Analyst

Maybe just one - sorry one follow-up on the considerations for increasing the study size. Could you provide a little more color around that?

Sergio Traversa, CEO

Go ahead, Cedric.

Cedric O'Gorman, CMO

We haven't provided guidance about our plans for the trials, like 302 or 304, as the protocol is still in its final stages of development. Once finalized, the design will be shared, and they will be listed on clinicaltrials.gov. I would be hesitant to comment on plans for interim analysis or upsizing the trial prematurely.

Andrea Tan, Analyst

Okay. Thank you.

Operator, Operator

Thank you for your question. Our final question comes from the line of Yatin Suneja with Guggenheim Partners. Yatin, your line is now open.

Yatin Suneja, Analyst

Yes. A few questions for me. Could you comment on your interactions with the FDA? Have you met with them and discussed the amendment to the protocol of RELIANCE 2? You made the modification; there are patients that were added before the modification. How will the mixed data be analyzed? Just curious about the interaction and agreement.

Sergio Traversa, CEO

Yeah. Cedric, please.

Cedric O'Gorman, CMO

Regarding communications with the FDA, we don't comment on specific interactions, but there is an ongoing dialogue, and we wouldn't make any decisions without regulatory approval. Concerning patients before and after the amendment, we are finalizing the statistical analysis plan to submit to the FDA. We feel confident that if REL-1017 has a signal for efficacy, this can be a positive study based on our calculations regarding the first 100 patients in 302 versus expectations based on the subsequent 200.

Yatin Suneja, Analyst

One more if I may. This is regarding the onset of action. In the very first study, the onset was rapid with a nice separation within a week. What has changed? In a subset analysis when we take precautions and do a post-hoc, the onset looks a little slower and the curves are not similar. What's going on?

Sergio Traversa, CEO

Cedric, your thoughts?

Cedric O'Gorman, CMO

I'm glad you asked that question because you're right; in Phase II, we observed a week one profound improvement with the drug, with changes that were significantly greater than placebo. We face challenges transitioning from Phase II to Phase III due to the more difficult control of the outpatient population, as indicated by the post-hoc analyses. In the 301 study, most of the placebo responses occurred in the first week. The change from baseline with placebo in the 301 study was substantial. The extensive screenings and interactions may have contributed to placebo effects resembling real therapeutic outcomes. We're focusing on reducing site-patient interactions during the first week, hoping to isolate the REL-1017 effect with the amended protocols we’ve implemented.

Maged Shenouda, CFO

Yes. Thank you, Cedric. I can add a little color. We have substantial data showing that REL-1017 has a marked effect primarily when patients are really affected by MDD. The data from the studies that didn't perform as we anticipated showed a significant percentage of patients affected by situational depression or not depressed at all, which skewed the data towards less efficacy. We believe that if we enroll the right patients who are severely affected by the disorder, we should see a quicker response similar to that seen in Phase II.

Yatin Suneja, Analyst

Got it. Very helpful.

Sergio Traversa, CEO

Hope we answered your question?

Yatin Suneja, Analyst

Yes. No, that’s very helpful. One more question if I may. Maybe Maged can comment on the expenses. Nice control on the R&D side; curious how to think about the next three quarters, and G&A is still a little bit higher. I would love to understand how that will ship up?

Maged Shenouda, CFO

Sure. Thanks for the question, Yatin. On the G&A side, I would expect it to stay in the $2 million per quarter range for the remainder of the year. Slightly up or slightly down, but on average around this amount for the rest of the year. We haven't provided R&D guidance, but you can expect slightly higher R&D spending on a quarterly basis in the second quarter. Then the R&D spend should begin to moderate in the third and fourth quarters. We have trial startup expenditures in the third quarter but would estimate spending around the $15 million to $16 million range per quarter.

Yatin Suneja, Analyst

Very helpful.

Maged Shenouda, CFO

Okay. Thanks for the questions.

Yatin Suneja, Analyst

Thanks.

Operator, Operator

Thank you for your questions. This concludes our Q&A session for today's call. I will now pass back to the management team for any closing remarks. Thank you.

Sergio Traversa, CEO

Well, thank you. In summary, we remain confident that we have an approval drug and that we have the right plan and team in place to optimize the chances for success. We also believe we have the most reliable sites identified and understand how to identify the most suitable MDD patients affected by major depression. We have greatly improved our study protocols, and as a reminder, all other preclinical and clinical and CMC pieces are in place for a successful NDA filing for REL-1017. We are sufficiently funded to fully execute our plans for REL-1017 development. We look forward to reporting progress with Study 302 and 304 throughout the remainder of the year. 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 participants and clinical partners involved in the REL-1017 trials for their efforts in advancing this important product candidate through the clinic. Finally, we appreciate the opportunity to support our advocacy partners and their mental health awareness month initiative this May and are grateful for the chance to support the important work that they are doing. We thank all participants and everyone interested in Relmada's progress, and we will update you on the next developments in real time. Thank you.

Operator, Operator

This concludes today's Relmada Therapeutics Inc. first quarter 2023 earnings call. Thank you for your participation. You may now disconnect your lines.