Earnings Call Transcript - RLMD Q2 2023

Tim McCarthy, Host, LifeSci Advisors

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 six months ended June 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, August 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 Traversa, CEO

Thank you, Tim, as always, and good afternoon to everyone, and welcome to the Relmada second quarter 2023 conference call. I am pleased to report today that the ongoing Phase 3 program for REL-1017 in major depressive disorder or MDD is proceeding as planned. I will first provide you with a brief update, followed by Relmada's review of our second quarter financial results. And then we will take your questions. 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 Phase 3 2-arm placebo-controlled pivotal study evaluating REL-1017 at 25 milligrams for adjunctive MDD. The amended Study 302 protocol continues to be implemented across all our clinical sites. The protocol amendment has significantly lessened the burden to both subjects and sites by reducing 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 leverages our learning from the completed controlled trials from the RELIANCE development programs and optimizes the potential for reduction in the high placebo response seen in these completed studies. As enrollment continues over the next several months, we will keep you updated on the trial progress. We are planning to enroll approximately 300 patients and currently expect that the RELIANCE II Study 302 to be completed in the first half of 2024. Screening has commenced for the newly initiated trial Study 304, which we named Relight, that also has a planned enrollment of approximately 300 patients. Completion of this study is currently anticipated in the second half of 2024. Like RELIANCE II, Relight is a randomized, double-blind, placebo-controlled 4-week trial, evaluating the efficacy and safety of REL-1017 as an adjunctive treatment of 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. Relight has been designed to reduce the time spent at the sites and emphasize the quality of patient enrollment. We recently had successful investigator meetings with participating sites for both Phase 3 studies. During the investigator meetings, our team focused on providing intensive training on topics including appropriate subject enrollment, data quality, strategies for controlling placebo response, and increased investigator engagement. The open-label 1-year safety study for REL-1017, Study 310, has concluded with the attainment of the necessary long-term safety exposure required for the purpose of the NDA filing, and we expect these data to be available during the current quarter. As we continue to execute on the Phase 3 clinical development plan for REL-1017, we also remain focused on further enhancing the plethora of published and presented data in support of our late-stage product candidate. To this end, we'll have a significant presence at several important scientific conferences over the next few months including the presentation of multiple posters. We expect to present two posters at the 36th Annual ECNP Congress in October in Barcelona, among other scientific conferences in the second half of 2023. In addition, REL-1017, human abuse potential data were recently published in the peer-reviewed journal Translational Psychiatry. 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 Phase 3 trials, RELIANCE II and Relight. I will now turn the call over to Maged to review our second quarter financial results.

Maged Shenouda, CFO

Thank you, Sergio. Today, we issued a press release announcing our business and financial results for the three and six months ended June 30, 2023, which I will now review. For the second quarter ended June 30, 2023, total research and development expense was approximately $13.7 million as compared to $30.9 million for the comparable period of 2022, a decrease of approximately $17.2 million. The decrease was primarily associated with the completion of RELIANCE I Study 301 and RELIANCE III Study 303 in late 2022. The noncash charge related to stock-based compensation totaled $1.7 million in the most recently completed second quarter. Total general and administrative expense for the second quarter ended June 30, 2023, was approximately $12.3 million as compared to $14.6 million for the comparable period of 2022, a decrease of approximately $2.3 million. The decrease was primarily driven by a decrease in stock-based compensation. This noncash charge totaled $9.4 million in the most recently completed second quarter. For the second quarter ended June 30, 2023, the net loss was $25.3 million or $0.84 per basic and diluted share compared to a net loss of $39.9 million, or $1.33 per basic and diluted share in the comparable period of 2022. Turning to the results for the six months ended June 30, 2023, total research and development expense was approximately $29.6 million as compared to $55.9 million for the comparable period of 2022, a decrease of approximately $26.3 million. Again, the decrease was primarily associated with the completion of RELIANCE I, Study 301 and RELIANCE III, Study 303 in late 2022. The noncash charge related to stock-based compensation totaled $3.7 million in the most recently completed six-month period. For the six months ended June 30, 2023, total general and administrative expense was approximately $24.6 million as compared to $27.9 million for the comparable period of 2022, a decrease of approximately $3.3 million. The decrease was primarily driven by a decrease in stock-based compensation. This noncash charge totaled $18.8 million in the most recently completed six-month period. For the six months ended June 30, 2023, the net loss was approximately $51.6 million, or $1.72 per basic and diluted share compared with a net loss of $79.7 million or $2.73 per basic and diluted share in the comparable period of 2022. As of June 30, 2023, we had cash, cash equivalents, and short-term investments of approximately $118.5 million compared to approximately $148.3 million as of December 31, 2022. Cash used in operations for the second quarter was $13.3 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 includes data readouts from both Phase 3 trials, RELIANCE II Study 302 and Relight Study 304. I will now ask the operator to please open the call for questions.

Operator, Operator

Thank you. Our first question comes from Marc Goodman, Leerink Partner. Please go ahead.

Rudy Li, Analyst

Hi. This is Rudy on the line for Marc. Thanks for taking my questions. Can you provide more color on the enrollment progress for Study 302? And what gives you the confidence that you can finish the study in the first half of '24? And also, can you remind us of the powering of Study 302 and 304? Thanks.

Sergio Traversa, CEO

Yes, sure. Good afternoon. And thanks for the questions. We do have Cedric O'Gorman, who is our Chief Medical Officer, run the entire development plan. So, I think it's most appropriate for him to answer this question. Cedric, can you help?

Cedric O'Gorman, CMO

Thanks, Sergio. And hi, Rudy. Thanks for the questions. With regards to enrollment, we're targeting approximately 50 sites for both Studies 302 and 304. So, our efforts have been refocused on engaging, initiating, and making those sites active for screening and enrollment. We have seen an uptick, and we previously let you know that we were above 100 subjects randomized in the 302 study. We've seen an uptick in both screening and randomization in recent weeks, and we'll give you an update further on that once we have more numbers to share. And with Study 304, we are now actively screening; we haven't got the first patient in yet, but we now have two Phase 3 studies, adjunctive treatment of MDD, actively screening and enrolling. As regards to the power, we have ensured that the powering assumptions for both 302 and 304 are robust.

Rudy Li, Analyst

Got it. That's very helpful. Just a quick follow-up. You mentioned that you had hosted the investigator meetings recently. Just curious what feedback you've got from investigators regarding your new protocol?

Sergio Traversa, CEO

Go ahead, Cedric.

Cedric O'Gorman, CMO

Yes. Sorry, Sergio. Yes, we held both remote and in-person investigator meetings. The feedback from the sites has been one of gratitude and appreciation that people are able to get back and attend in-person meetings, which I think are much more educational and illustrative. The feedback on the streamlined amended 302 protocol, as well as the new, if you like, streamlined 304 protocol has been very positive, both from the feedback from the PIs and the study coordinators at the site level through these engagements. Additionally, we've had the chance for subjects to already randomize under the current amended protocol on 302, and we've heard directly from sites that it's moving much more efficiently, swiftly, and without hiccups. So it's going very well from a scale assessment perspective and from a data entry perspective, and we're very pleased with the feedback.

Rudy Li, Analyst

Got it. Very helpful. Thanks.

Cedric O'Gorman, CMO

Thank you.

Operator, Operator

Our next question comes from Andrew Tsai, Jefferies. Please, sir, go ahead.

Unidentified Analyst, Analyst

Hi. This is A.J. for Andrew. Thanks for taking the question. My first one is on a possible interim scenario. So I guess, first of all, would an interim look be possible? And if so, when would that occur? And what could those outcomes look like? And then I have a follow-up.

Sergio Traversa, CEO

Yes. Sorry, A.J. I couldn't hear the first part. So the first question is about the interim analysis?

Unidentified Analyst, Analyst

First question is just whether an interim readout or some sort of interim look would be possible, yes?

Sergio Traversa, CEO

I understand. Cedric, I believe this is for you as well.

Cedric O'Gorman, CMO

Thanks, Sergio. And thank you, A.J. for the question. Yes, an interim analysis is certainly possible. We've looked at various scenarios and what we might consider doing that. We have included in the protocol an opportunity to do that as well. But in terms of giving granular detail on which point, and what that interim would assess, we haven't disclosed that yet.

Unidentified Analyst, Analyst

Got it. Got it. Okay. And then my second question would be on the drug effect for REL-1017. So REL-1017 has shown a pretty consistent MADRS reduction across the study. So, is there a reason to believe that the efficacy in RELIANCE II and RELIANCE IV, could be even larger than what we saw in RELIANCE I and III?

Sergio Traversa, CEO

Cedric, why don't you try and then eventually, I will pick it up if I have anything to add.

Cedric O'Gorman, CMO

Right. I was just waiting for you to ask me to answer that. But yes, absolutely. I think that you're right, A.J. In terms of the change on the MADRS from baseline to endpoint, we've consistently seen a 15 to 17-point change on the MADRS. You'll remember in Phase 2, the effect size was 0.7 or above, depending on which scale you look at. In the 301 and 303 studies that completed towards the end of last year, obviously, it was hampered by a high placebo response of the order of 13 or 14 points change in the MADRS, 13 in the adjunctive 301 and 14 in the monotherapy 303. The vast majority of the placebo change occurred in the first week of both those studies. So, you're absolutely right. We believe that if we run a high-quality, well-controlled study where we try to limit the effects of expectation, bias for subjects, and placebo response, we could align more closely with what we've observed in Phase 2. So, we're hopeful that if we can control for placebo response, and we believe we have the right sites, and we're now enrolling appropriate patients that have documented medical records confirming their diagnosis and we're out of the pandemic. There are many variables here, but we believe that yes, in the ideal scenario of a well-conducted trial, we could see something closer to what we've previously observed in the positive Phase 2.

Unidentified Analyst, Analyst

Got it. So it sounds like the underlying assumptions here are to keep the drug effect the same but reduce the placebo?

Sergio Traversa, CEO

Yes. The drug effect has been consistent, yes.

Unidentified Analyst, Analyst

Got it. Okay. Thank you very much.

Sergio Traversa, CEO

Thank you.

Operator, Operator

Our next question is from Yatin Suneja with Guggenheim.

Unidentified Analyst, Analyst

Hi. This is Salma for Yatin. Thanks for taking our question. So just a couple from us. About the Relight study. Can you clarify if the primary endpoint will be measured at four weeks or six weeks? And if you discussed the protocol with the FDA, what feedback did you hear from them? And then I would just like to confirm if you've already posted on clinicaltrials.gov any information about the RELIANCE study? Thank you so much.

Sergio Traversa, CEO

Yes. Sure. Cedric, you are in very high demand today. So, I think you should take this one as well.

Cedric O'Gorman, CMO

Yes, no problem. Thank you for the question. With regards to Relight, yes, the primary endpoint in both RELIANCE I and Relight is the four-week change in the MADRS total score from baseline drug versus placebo. It's important to keep that consistent so you can replicate the findings when determining efficacy. And as with all aspects of what we do in the R&D team and in our clinical trial design, we discuss everything with the FDA and make sure that our approach is appropriate and supported. That is correct. In terms of posting the records on clinicaltrials.gov, that will be imminent and within the expectations for compliance from a regulatory perspective with postings there. So, you'll see that shortly.

Unidentified Analyst, Analyst

Thank you.

Operator, Operator

Our next question is from Andrea Tan with Goldman Sachs.

Andrea Tan, Analyst

Good afternoon. Thanks for taking my questions. Cedric, maybe I'll stick with you and ask you one here. Just curious on the back of the FDA CRL for zuranolone for MDD. Just curious if that changes anything in terms of how you're thinking about or approaching RELIANCE II and the Relight study? And then I have a second question.

Cedric O'Gorman, CMO

Hi Andrea. Yes. Thank you, Andrea and Sergio. I don't think it really changes anything. I mean, these studies were designed with FDA input all along. We know what the FDA is looking for when developing an MDD drug as a once-daily adjunctive agent. I also think that our drug, if approved, would be a once-daily treatment add-on. There’s a lot of history and precedent for how one should develop these drugs to get approval. Our mode of administration and chronic ongoing treatment is quite traditional, as opposed to maybe some newer agents that have a different type of therapeutic approach. So, we don't feel that there's any influence from the FDA CRL for zuranolone impacting what we are doing.

Andrea Tan, Analyst

Got it. And then can you also speak to what needs to be done ahead of the open-label study reading out? And any updated thoughts on the extent of data that will be shared?

Cedric O'Gorman, CMO

Yes. We're very excited about – I'm sorry, Sergio sorry.

Sergio Traversa, CEO

No, no, go ahead. Go ahead. It's for you, I mean.

Cedric O'Gorman, CMO

Yes. I was just going to say, Andrea, that we're very excited about announcing these data. Of course, when a study locks, then you go through the extensive process of issuing queries to sites, cleaning the data, making sure that everything is accounted for and that you have a nice clean package. You deliver it to the statisticians, who do their analysis and compute the various outputs that you like to see when they are actually presented when we share the top line. As a reminder, we have fulfilled the ICH guidelines around drug exposure for safety and tolerability. The open-label was a one-year study. So, what that affords us is not only the required overall 1,000 subjects exposed and 100 for 12 months, and at least 300 subjects for six months. But also over time, you will be able to see how an open label, which sort of corresponds to real-world treatment, how patients improved in the near term and then sustained their improvement in the MADRS score and in their depressive symptoms over the course of 12 months. We look forward to sharing those data both from the efficacy perspective and also from safety and tolerability, which will give you a nice picture of what we believe are low rates of adverse reactions and really good continuation in the trial. Everything has been done. It's a matter of, as we announced, basically disclosing the results later this quarter.

Andrea Tan, Analyst

Got it. Thanks so much, guys.

Cedric O'Gorman, CMO

Thank you, Andrea.

Operator, Operator

Ladies and gentlemen, we have reached the end of the question-and-answer session. I would like to turn the call back to Sergio Traversa for closing comments.

Sergio Traversa, CEO

Thank you, Mauricio. So in summary, we remain confident that we have an approvable drug and that we have the right plan and team in place to achieve success. We look forward to reporting on progress with RELIANCE II and Relight throughout the remainder of the year. In closing, I remain grateful to the Relmada team for their continued hard work and dedication to executing our mission. I also would like to extend my sincere thanks to the patients and clinical partners involved in the REL-1017 trials for their participation in the advancement of this promising investigational medicine through development. Thank you very much to everyone, and I wish everybody a good end of the day.

Operator, Operator

Thank you. This concludes today's conference. You may disconnect your lines at this time.