Relmada Therapeutics, Inc. (RLMD) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Relmada Therapeutics, Inc. Fourth Quarter and Full Year 2023 Results Call. [Operator Instructions] This call is being recorded on Tuesday, March 19, 2024. I would now like to turn the conference over to Mr. Tim McCarthy. Thank you. Please go ahead.

Thank you, operator, and thank you all for joining us this afternoon. With me on today's call are Chief Executive Officer, Sergio Traversa; and Chief Financial Officer, Maged Shenouda. This afternoon, Relmada issued a press release providing a business update announcing financial results for the 3 and 12 months ended December 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, 2023, and subsequent filings. This conference call also contains time-sensitive information that is accurate only as of the date of this live broadcast, March 19, 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, as always. And good afternoon to everyone, and welcome to the Relmada Fourth Quarter and Full Year 2023 Conference Call. We are continuing to make solid progress in advancing the ongoing Phase III program for REL-1017 in major depressive disorder or MDD as well as in the promising preclinical novel psilocybin program, all of which I will briefly cover today. Following this, Maged will review our fourth quarter and full year 2023 financial results, and then we will take your questions. Let's begin with an update on the Phase III program for REL-1017. As you know, Relmada is focused on developing REL-1017 as an adjunctive treatment for MDD. As previously communicated, we have made critical changes to Reliance II, the ongoing Study 302, a Phase III, 2-arm placebo-controlled, pivotal study evaluating REL-1017 25 milligrams for adjunctive MDD aimed at controlling placebo response and improving the enrollment quality. The amendment Study 302 protocol has been implemented across all our clinical sites. Enrollment continues to steadily progress and our ability to leverage our close relationship with the study site is paying dividends. Moreover, the ongoing initiative we put in place to drive trial awareness with prospective patients are also bearing fruits. Importantly, we are evaluating the productivity of sites on a real-time basis and making changes where needed. As a reminder, we plan to enroll approximately 300 patients into Reliance II. Based on our current projection, we expect the enrollment into Reliance II to be completed in mid-2024. In our second Phase III trial for REL-1017, named Relight or Study 304, we began dosing patients during the third quarter of last year. Relight also has a planned enrollment of approximately 300 patients that is planned to be completed by year-end 2024. To reiterate what we have said previously, 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 for MDD in patients experiencing inadequate response to ongoing background antidepressant treatment. The primary endpoint of both studies is the same is the change in the MADRS total score from baseline to Day 28 as compared to placebo. I should highlight that we made significant changes to our screening and enrollment processes in order to ensure that we have patients that meet all the quality criteria. More specifically, we have instituted a comprehensive adjudication process through which we now require medical records for all patients enrolled in Reliance II and Relight. Given this, our screen failure rate in these studies is now approximately 80% versus 50% previously in Reliance I and Reliance III, our previously completed Phase III trials for REL-1017. We strongly believe that these changes will significantly enhance the probability of success of our current studies. Of note, we have completed all the necessary preclinical manufacturing and Phase I studies required for a potential REL-1017 NDA filing, and are now focused on execution of various pre-commercial readiness activities. Moving now to our promising, preclinical novel modified-release psilocybin program. You may recall that at last November AASLD meeting, the liver conference, compelling preclinical data were presented in a poster presentation. These data demonstrated the beneficial effect of low, chronic dose psilocybin on multiple metabolic parameters in a rodent model of metabolic dysfunction associated steatotic liver disease or MASLD. This initial promising preclinical results support the therapeutic potential of low, chronic dose of psilocybin. As we said previously, based on this data, low-dose psilocybin could improve lipids and glucose with potential fewer side effects over other investigative treatment approaches such as GLP-1, glucagon and GIP. We intend to initiate a single ascending dose Phase I trial in obese patients in the first half of 2024 to define the pharmacokinetic, safety and tolerability profile for our modified-release psilocybin formulation in this population. This will be followed by a Phase IIa trial to establish critical proof of concept. Data from the planned IIa study is anticipated in the first half of next year. Just to summarize, a multiple upcoming key milestones over the next 12, 18 months. We anticipate completing enrollment in the ongoing Reliance II study mid-2024 with top line in the second half. In addition, we plan to complete enrollment in the Relight study by the end of this year. Finally, we intend to initiate a Phase I clinical trial for the modified release formulation of psilocybin in the first half of this year. Moving on, while Maged will provide a detailed review of our financials, I would like to emphasize that with current cash on hand to take us into 2025. Relmada remains sufficiently funded to fully execute our plans to reach data readouts from both REL-1017 Phase III trials, Reliance II and Relight as well as conduct the planned Phase I for our modified-release psilocybin formulation. I will now turn the call over to Maged to review our fourth quarter and full year financial results. Maged?

Thank you, Sergio. Today, we issued a press release announcing our business and financial results for the 3 and 12 months ended December 31, 2023, which I will now review. For the fourth quarter ended December 31, 2023, total research and development expense was approximately $14.8 million as compared to $26.9 million for the comparable period of 2022, a decrease of approximately $12.1 million. The decrease was primarily associated with the completion of 2 Phase III trials and the long-term open-label safety trial, Study 310. The research and development noncash charge related to stock-based compensation totaled $1.8 million in the most recently completed fourth quarter. Total general and administrative expense for the fourth quarter ended December 31, 2023, was approximately $12.1 million as compared to $11.8 million for the comparable period of 2022, an increase of approximately $243,000. The increase was primarily driven by an increase in compensation expense due to higher employee-related costs. The general and administrative noncash charge related to stock-based compensation totaled $8.1 million in the most recently completed fourth quarter. For the fourth quarter ended December 31, 2023, the net loss was $25.2 million or $0.84 per basic and diluted share compared with a net loss of $37.9 million or $1.28 per basic and diluted share in the comparable period of 2022. Turning to the results for the full year ended December 31, 2023. Total research and development expense was approximately $54.8 million as compared to $113.3 million for the year ended December 31, 2022, representing a decrease of $58.5 million. Again, the decrease was primarily driven by a reduction in study costs associated with the completion of 2 Phase III trials and the long-term open label safety trial, Study 310. For the year ended December 31, 2023, total general and administrative expense was approximately $48.9 million as compared to $47.9 million for the year ended December 31, 2022, again, the increase was primarily driven by an increase in compensation expense due to higher employee-related costs. For the year ended December 31, 2023, the net loss was approximately $98.8 million or $3.28 per basic and diluted share compared with a net loss of $157 million or $5.30 per basic and diluted share for the year ended December 31, 2022. As of December 31, 2023, we had cash, cash equivalents and short-term investments of approximately $96.3 million compared to approximately $148.3 million as of December 31, 2022. Cash used in operations for the full year 2023 was $51.7 million. Based on our current clinical development plan, our current cash position provides us with ample runway into 2025. Of note, this time period includes data readouts from both Phase III trials, Reliance II, Study 302 and Relight, Study 304 as well as the initiative of our planned Phase I trial of our modified-release psilocybin formulation. I will now ask the operator to please open the call for questions. Operator?

[Operator Instructions] Your first question comes from the line of Marc Goodman from New Partners (sic) [ Leerink Partners ].

This is Basma on for Marc. For Reliance II, could you please remind us again how many patients were enrolled before the protocol amendments? And do you expect that due to the inclusion of these patients prior to the amendments that there will be any source of, I would say, noise or -- to the trial? Or were you able to go back and check the inclusion criteria?

Thank you. This is Sergio here. That's great a question. Previously to the amendment, we enrolled about 80, 90 patients. And so the -- as of now, I mean, they will be included in the final analysis. And like we have noticed, if I can spend for a bit, we've noticed that there was a big difference in patients enrolled when the COVID restriction there in place and after the COVID restrictions are lifted. So of this 80, 90 patients, about half were enrolled after the COVID restrictions were lifted. So I mean, the data are blinded, so we don't really know how the data will look like. But we don't have any reason to believe that, right, this patient would carry any particular baggage also because the sites where the issue with data was generated in the previous trials, they've never been [ phrased ] in Reliance II. So the bottom line is that, yes, this patient will be included in the final analysis, but we don't have any particular reason to believe that would carry any particular burden on the final review. And we do have on the call, Dr. Andrew Cutler that is our Special Advisor for Clinical Development. And maybe, Andrew, if you are online, you may want to expand a little bit on the question that is like, will these patients enrolled previous to the protocol amendment carry any weight on the final results.

Well, thank you very much. I'm here. I think it's a very reasonable question, but I'm pretty confident -- I would say I'm very confident that we should be successful. The previous study really was very close to being positive. It just missed. And so you don't have to be perfect here. We just have to be better. I think the changes that have been made, particularly with respect to analyzing the quality of the sites and the protocol amendment will make the quality of the second cohort here, which is going to be the majority of the patients I think, will carry through. So I'm very confident that despite having some patients enrolled previously, I still think we're going to be successful overall.

I hope that answered your question.

Yes.

And your next question comes from the line of Uy Ear from Mizuho.

So I have a couple. So just following up on the previous question. At these sites that enrolled patients previously, could you maybe elaborate on or remind us just like were most of these patients referred by physicians and were there large volumes of patients or just a few patients at these sites. Yes. So that's sort of the first question and I'll ask a second question after that.

Yes, sure. Thank you. Well, there were 2 sites with together, they enroll about 20% of the Study 301, the adjunctive treatment study, and they've never been present in 302. And there were a couple of issues there. We don't really know why the data of these 2 sites were the opposite or completely different from the other 41 sites in the trial, but just to accept that, that was reality. But they've never been in the Study 302. And now we will -- we are limiting the number of patients enrolled for each site, so we won't have any site that will make a major impact on the final numbers. So we feel confident that with these measures, we won't -- what happened in the study 301 will not happen again.

Yes, if I could add one other quick thing. Another modification we made was requiring medical records to ensure that these were legitimate patients who actually were taking an antidepressant and that was not done in the 301 study. So that's another improvement we've made.

All right. And maybe more presently, could you provide some color on maybe the proportion of patients who've been so far enrolled in Reliance II and maybe Relight as well. And after that, maybe just briefly, Maged, like just tell us -- help us think to think about how to model the cadence of spending? Is it sort of relatively flattish? Or would it sort of go down towards the end of the year?

Yes, I'll take the first one. We may not want to go like in real detail about a number of patients. But like we passed half of the trial at the end of last year. And enrollment is progressing steadily with some variability maybe week-to-week but it's on track. And we are confident that we'll have top line data in the second half of this year. Like when we get closer, we'll be a little bit more precise. But we stay with this a little bit broad guidance about second half of this year. And reason being that we are screening a quite bit of patients. I mean I don't -- but the big -- the number of screened patients is very large. What we have noticed with the improvement on the protocol, clearly, the screening failure had went up significantly. We were around 50% on the previous trial, I think I mentioned that before, we are now approaching 80%. So I mean the selectivity in enrolling patients is much higher. We did look if I can expand on the reason why these patients are not enrolled and they will be screened and they're all legitimate reasons. And so these are the patients that generated the issue in the previous trials. And definitely, we don't want this kind of patient again in the new trials. So the screening process, it's going very, very well. And the screen failure for legitimate reasons, it's much higher. So we do believe that the quality is very, very good in this trial. I don't know, Andrew, if you want to add something.

No, I think you've said it well. It's in line with what I said earlier. We're really trying to make sure we have the right patients with legitimately with the illness and not patients with mild depression or who are not legitimate patients. So we're really trying to be careful about selecting the right patients.

Maged, I think the second one is for you.

Sure. So Uy, thanks for the question. So G&A expense should follow the pattern we've had in 2023 on a quarterly basis. A lot depends on enrollment patterns, but our current expectation is that R&D should tick up a little bit in the third quarter and then -- excuse me, in the first quarter, in the first quarter and then again increase in the second quarter and then stay at that level through the third and fourth quarter as you can sort of see enrollment pick up in 302 and then pick up in 304 as well. So I hope that helps.

And your next question comes from the line of Andrew Tsai from Jefferies.

So first one, I noticed in your prepared remarks, you said how you're monitoring sites in real time, making changes accordingly. So what exactly are you monitoring for? And what kind of changes are you making on a day-to-day kind of basis? And then secondly, are there any learnings or thoughts that you might have on Sage's recent rejection for their MDD study and -- sorry, not study but the approval? And if there is any read-through or any lessons learned that you think you could apply to REL-1017?

Thank you, Andrew, and thanks for the call. I will ask you to repeat the second question because I didn't get it 100%. But the first question is, I think, Andrew can go a lot more in detail since he has run a site for 30 years and has done many, many CNS clinical trials. But there is no magic, right? You monitor -- in general, you monitor every like 3, 4 patients, 4, 5 patients enrolled by the site how the blinded data they look like. Of course, they're blinded, so you don't know if they are good but you definitely can have a good understanding if there is something wrong, right? When you have data that the variability week over week of the first 4 weeks is 1 week up, 1 week down and you go up and down, usually, that's not the behavior that placebo and the drug do, right, when there is trend, there is trend. So there's one signal. And then the overall quality of the site, right, how the quality is documenting data, they put the data in the database. So there is no one single factor. Is there a combination that can give you there some sense if the site is providing like the service that we would like to. Andrew, I mean you've done this for a long time, do you want to add anything?

Yes, there are various quality indicators you look for, and I think we're watching -- we're minding the store much more closely here, you look for things like are the rating scales consistent? Are they kind of all moving in the same direction, you look for adherence to the protocol and what we call protocol violations, which indicates sloppiness. This time, we're being careful to not let as Sergio said any sites just kind of get off to the races and recruit too many patients or too fast. So there are a variety of quality indicators you look for and consistency things you look for. As Sergio said, we're watching those. And then if there's a site that has issues, we're actually stopping their enrollment. We're trying to figure out what's going on and deciding if we want to continue with them or not.

Hope that answered your question, Andrew, and if you don't mind to repeat the second one because I didn't get it.

Perfect. Sage recently had their NDA rejected for MDD. And I'm just curious if the reason behind that rejection has any bearing or read through to your S-methadone basically?

Sergio, maybe I could help with this one because I was very involved with that. It's really apples and oranges. Their paradigm was very different. It was a 2-week treatment paradigm with a very different mechanism. And really, the problem was they didn't have a good story for how 2 weeks of treatment would hold a charge. And in their Phase II study, there was a suggestion that the efficacy continued on beyond the 2 weeks, However, it was not well replicated in Phase III. So the FDA had concerns about that. It's a very different paradigm, very different medicine. I don't see it as an issue or anything that would influence what we're doing.

[Operator Instructions] And your next question comes from the line of Andrea Tan from Goldman Sachs.

Sergio or Andrew, just curious if you're able to share what Reliance II and the Relight studies are powered to detect and remind us what you're assuming here for placebo response?

Yes, it's great. Thank you, Andrea, for the question. Well, we haven't filed with the FDA the final statistical plan. You usually do it at the very end. There is no advantage to do it in before. But it's a fair assumption that usually what you want to detect is a clinically meaningful effect that according to the expert in adjunctive treatment is like 2, 2.5 points. So the trial is designed to detect that kind of a change from placebo. And that is right, that would be the minimum, right? We hope we can do better than that based on the Phase II data. But that's a fair assumption that would be the statistical plan. And with 300 patients enrolled, it is feasible. It's realistic.

And then maybe just one quick question on REL-P11 here. Just I wanted to confirm which indication you're looking to study this in?

Yes. We actually did not discuss the indication. The reason being that we don't really know exactly what kind of indication we will look at -- like the -- we have to do Phase 1 and for the pharmacokinetic, all the parameters, the new formulations, the new concept, low-dose, chronic treatment. What we can see is the effect that had on the rodent model that according to the expert, it's somewhat relevant for what should happen in humans. And what we have seen is that there is a material decrease in body weight with no diet. We're continuing the high fat, high glucose diet. So despite like high fat and high glucose diet, the rodent they lost weight and not as much as a GLP-1, but enough to make it like a valuable drug to treat obesity. But at the same time, we have seen a material decrease in glucose level, like similar -- probably a little higher than metformin and we have seen a very material effect on fatty liver. And all these like continuing a diet with high fat, high glucose. So it kind of works on all the span of parameter of metabolic syndrome, so weight, glucose and fatty liver. So I mean, the fair assumption that the indication will be a metabolic one. We haven't decided yet and will be decided after Phase II proof of concept, specifically what the indication will be that could be like maybe not obesity by itself but it could be also a combination with the GLP-1 to overcome some of the limitation of the GLP-1 like muscle loss. But we need to see the data. And there is like a wide range of possibility all on the metabolic area and that's suitable. And we'll try to do something that is a reasonable, good way to get the drug approved in a relatively short amount of time. I don't have the straight question -- yes, the straight answer, but that's where we are now waiting for efficacy data to make the final decision where to go.

Got it. Maybe just one follow-up there. Have you seen evidence to date preclinically that you are avoiding loss of muscle when you've tracked the weight loss in these rodents?

Well, in the preclinical, no, we haven't looked at -- we haven't seen it because we haven't looked at it. And the -- but it's a fair assumption that right, since there is no change in diet, right, the model, the rodent don't lose weight because they stop eating or they reduced the food intake like with GLP-1. So psilocybin is a 5-HT2A agonist and it acts at the metabolic level. So pretty much it increases the metabolism of fat. So mechanistically, it's not really expected to have the loss of muscles unlike the GLP-1.

And your last question comes from the line of Delma Caiati from Guggenheim.

This is Delma for Yatin. So following up to the previous question, can you clarify if you already performed real-time stat checking in the previous Reliance studies? Or is it something that you have implemented new only now? And then I wanted to ask you about the statistical plan, if that is run by a third party or internally within the company?

Well, thank you for the question. If I understood correctly, the first question is that we did implement monitoring of the sites in the study in the previous studies. And the straight answer is no. And there was COVID, was a little bit more complicated to do it than now. And no, we didn't do it. But that's only one of the changes operational that we made in the new protocol. And so that was one, but the required for medical record is probably the biggest one. And so I mean the whole goal, as we discussed a few times or many times, is to really enroll patients that are affected by biological depression, and they have a history. This is an adjunctive trial, so the patient has to come in already on some antidepressant and to have access to medical and pharmacy records. It's a good proxy to be sure that the patient is a real patient. These are things that we didn't do in the previous trial for a variety of reasons. And sorry, can you repeat the second one?

And yes, I was asking if the statistical plan is designed by a third party or internally within your company?

Yes. No, it is -- well, it is -- design is a collaboration and so -- but it is -- we have the help of it like a large statistical company independent that advise us on the statistics.

There are no further questions at this time. Mr. Traversa, please go ahead.

Well, thank you. And in summary, we remain confident that we do have an approvable drug in REL-1017 and are excited by the potential of our novel psilocybin and derivative programs. So we look forward to reporting on progress with our pipeline in the months ahead. And to close, I'm grateful to the Relmada team for their continued hard work and dedication to executing on our mission. And I would also 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.

Thank you. That concludes our conference today. Thank you for participating. You may all disconnect.