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

Good afternoon. Welcome to the Relmada Therapeutics, Inc. Second Quarter 2024 Earnings Conference Call. [Operator Instructions] This call is being recorded on Wednesday, August 7, 2024. I would now like to turn the conference over to Tim McCarty, LifeSci Advisors. Please go ahead, sir.

Thank you, operator, and thank you all for joining us this afternoon. With me on today's call are Dr. Sergio Traversa, Chief Executive Officer; and Maged Shenouda, Chief Financial Officer. This afternoon, Relmada issued a press release providing a business update and announcing financial results for the quarter ended June 30, 2024. Please note that certain information discussed on the call today is covered under the safe 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 31, 2023, and with subsequent filings, including the second quarter 2024 10-Q filed after the close today. This conference call also contains time-sensitive information that is accurate only as of the date of this live broadcast on August 7, 2024. Relmada undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call. Now I'd like to turn the call over to Sergio. Sergio?

Thank you, Tim, and thanks to everyone for taking time to join us this afternoon. Relmada is dedicated to the development of transformative medicine for people living with central nervous system disorder. And I'm pleased to report that Relmada's clinical program has made meaningful progress over the last 5 months. We believe that the portfolio led by the Phase III program for REL-1017 has the potential adjunctive treatment for Major Defense Disorder of MDD is poised to reach several important milestones, and we are encouraged by the company's progress. As a quick reminder, REL-1017 is a small molecule that preferentially bought a high proactive brain channel called NMDA receptor that is associated with MDD. REL-1017 has been designed to rapidly improve symptoms and provide these patients with a new treatment options on top of their current regimen. Completing the Phase III program of REL-1017 is Relmada's #1 objective, and it will complete the study package required to file the NDA. During today's call, we will discuss the planned interim analysis planned by year-end 2024 for the Reliance II study, review the timing to complete enrollment in the 2 Phase III studies in the REL-1017 program. Outlined time to initiate the Phase I study for a proprieties psilocybin program, REL-P11, in development for metabolic diseases and comments on our cash balance, which we expect to support our branded operation into 2025 and several key clinical milestones, especially for the REL-1017 program. I'll briefly review our program. And in a few minutes, Maged, will provide you with a summary of our second quarter financials. After that, I will make a few closing remarks, and then we will open the call for your questions. Starting with the REL-1017. We are enrolling 2 pivotal Phase III studies for REL-1017, Reliance II and Relight. This study is built on positive Phase II data with REL-1017 for the consumptive treatment of depression. Our clinical data set also demonstrated that REL-1017 is well tolerated with no indication of abuse potential. Our ongoing Phase III studies are designed to assess the impact of REL-1017 of the MADRS as an indicator of the depression severity. The studies are evaluating REL-1017 in patients with documented clinical depression undergoing treatment with an approved antidepressant. Each of the ongoing studies Reliance II and Relight is rolling up to 340 subjects. The studies are randomized one-to-one and designed and powered to detect 2, 2.5-point delta in the MADRS score at day 28. The protocols have been thoughtfully designed to incorporate several elements intended to derisk each study with a thorough patient adjudication process. And in nutshell, the features that we have emphasized in the Reliance II and Relight studies of [indiscernible], optimizing the protocol, carefully selecting study sites and monitoring the number of patients per site, and most importantly, carefully verifying the diagnosis of depression and each patient's medical history to ensure involvement of patient with clinical depression. We have been especially focused on defining the patient involvement [indiscernible]. The current protocols include a review of medical and pharmacy record. The studies also require that patients have been treated with an abrupt anti-depressant for at least 6 weeks and have experienced an improvement of less than 50% since starting treatment. Adoption of these elements has increased our confidence that we are appropriately enrolled in the most suitable patients into Reliance II and Relight. As a result of these efforts, changing in the screen failure rate can be considered one way to assess the stringency of the enhanced in volume criteria. As of today, we are observing an approximately 80% screen failure rate versus a 50% screen failure in the Reliance I study. We intend to reach 2 important milestones by end of the year, reporting the output of a preplanned interim analysis and completion of enrollment of Reliance II. We expect completion of enrollment of Reliance II to follow approximately 6 months after that. The preplanned interim analysis of Reliance II study is intended to be a derisking tool to increase the probability of a successful study outcome. The analysis will include a futility analysis and sample size re-estimation, if necessary, with the potential to adjust the sample size to ensure proper statistical powering. There are 3 potential outcomes from the interim analysis. The study is vital. The study can continue with the addition of certain number of patients, and the study can continue with a preplanned number of patients that, of course, is what would be our preferred outcome. We will confirm the interim analysis and expect to report the outcome of this analysis before year-end 2024. Now I would like to spend a few moments on REL-P11. We identified the metabolic activity of REL-P11 as part of our preclinical evaluation on its potential effect on neurodegenerative disease. As a quick reminder, REL-P11 is a low dose modified release formulation of psilocybin. Compelling data from a recognized preclinical rodent model of metabolic dysfunction associated steatotic liver disease or MASLD, published last year at November at the American Association for the study of liver disease is a cornerstone of our programs. These data showed that REL-P11 has a benefit on multiple metabolic parameters, including triglyceride levels and glucose levels. Besides reducing steatosis of the liver, the REL-P11 reduced blood glucose and body weight without producing any side effect on the CNS. This data led to our valuation of P11 as a candidate for the treatment of metabolic disorders, such as obesity. We plan to initiate the Phase I single agent dosing or SAD study in this subject for REL-P11 shortly. The Phase I study was defined the pharmacokinetic safety and tolerability profile for REL-P11 and allow us to select a dose for evaluation in the Phase II SAD study. We expect to complete the Phase I SAD study and initiate the Phase III study in H1 first half of 2025. Now I would like to turn the call over to our Chief Financial Officer, Maged Shenouda, to review our recent financial results. Maged?

Thank you, Sergio. This afternoon, we issued a press release announcing our business and financial results for the 3 and 6 months ended June 30, 2024. During today's call, I will provide a brief overview of the 3-month financial results. All details are available in our press release and 10-Q filing on our website located in the news and SEC Filings tab of the Investor Relations page. Research and development expense for the 3 months ended June 30, 2024, were approximately $10.7 million compared to $13.7 million for the same period in 2023, a decrease of $3 million. The decrease was primarily driven by a decrease in study costs associated with the completion of 2 Phase III trials and the long-term open-label safety Reliance III trial or study 310. General and administrative expense for the 3 months ended June 30, 2024, were approximately $8.1 million compared to $12.3 million for the same period in 2023, a decrease of approximately $4.2 million. The decrease was primarily driven by a decrease in stock-based compensation expense. The net loss for the 3 months ended June 30, 2024, was $17.8 million or $0.59 per basic and diluted share compared with a net loss of $25.3 million or $0.84 per basic and diluted share for the same period in 2023. We I will also note that the company had 30.17 million common shares outstanding as of August 2, 2024. As of June 30, 2024, Relmada had cash, cash equivalents and short-term investments of approximately $70.4 million compared to $96.3 million as of December 31, 2023. Cash used in operations for the second quarter was $13.3 million. Based on our current clinical development plans, we believe our current cash position is adequate to support operations into 2025 through key milestones, including the top line data from the Reliance II study. Before we go to your questions, I'll turn back to Sergio to make a few closing comments. Sergio?

Thank you, Maged. As we conclude the prepared remarks on this afternoon's call, I would like to leave you with a few key messages. Our 2 Phase III studies for our lead program, REL-1017 for MDD has been thoughtfully designed and are being carried out with a properly adjudicated patients with potentially no risk in the studies. We expect 2 important milestones from the Reliance II study before the end of the year. With the output of a preplanned interim analysis, which include both a futility analysis and the simple size re-estimation if necessary, and the completion of enrollment of the Reliance II study. We expect completion of enrollment of Reliance II will follow approximately 6 months after that. Preparation on track to begin the clinical program for REL-P11, our proprieties psilocybin formulation for metabolic disorders later this quarter or early next quarter. We believe our financial resources will support our planned operations into 2025 through key milestones, including top line data from the Reliance II study. At this point, operator, we can open the call for questions.

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Marc Goodman with Leerink Partners.

This is Rudy on the line for Marc. Can you remind us the baseline measure for an ongoing Reliance II study and product compares with the Phase II [indiscernible] trial and the Phase III Reliance I study?

Well, thank you for the question. And so baseline MADRS average when the patient population starts, they're very similar. It's right in the mid-30s, like 33-34 range for all the studies, that's pretty difficult for depression studies.

Got it. Just a quick follow-up. What gives you the confidence that Reliance-- we finished enrollment 6 months after Reliance II and with a potential sample size re-estimation impact the time line for that drop?

Yes. Well, the confidence that when Reliance II will be over and if successful, as we hope, then all the resources will be put on Reliance. So we have like close to 100 sites that would be available. Of course, if we may not involve all of them. So the full resource is dedicated to this studies. And so we do our confidence that based on the enrollment rates that we are seeing now, we can finish in about 6 months. And sorry, the second question was how we're confident about the time lines for the sample size re-estimation?

No, I was asking whether the sample size re-estimation will impact the time line for the second trial?

That's a good question. Well, we will address it when we know how many patients will have to involve, but it could, but is probably not going to be very material. When we're talking about sample size re-estimation, we are not talking about adding like 200 patients to the study that would be probably a problem in general. And so, like sample sizes re-estimation will evaluate how many if and how many patients would have to involve. So the answer to your question is that it may, but it's not going to be a material time line change.

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

So on clinical trials, we noticed there are some changes to the estimated patient number to 340. I think you mentioned it in the prepared remarks. So can you talk about why that number changed from 300 to 340?

Yes, sure, Andrew. Well, clinical trial is more a general like indication that is made mostly for to the FDA and that it's an indication, right? The patient population would be up to 340. It doesn't mean that we will go to 340. You don't want to change like the update clinical trial that go up too frequently. And so you put some guidelines that you expect to be meeting. And also, you have to like it depends if you include dropouts and non-dropouts, but the number of patients is up to 340. That doesn't mean that we have to go to 340 assuming no sample re-estimation. I will not take that as the final number. The final number will be determined by the statistical plans that we have not finalized. We usually stand to the FDA the statistical plan as close to the end as possible because there is no upside in defining numbers before. It depends on the enrollment rate and values parameter. So I hope I answered your question. I don't take the 340 as the final absolute number. It's up to 340.

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

Thanks, Andrew, for asking the question because it's very important and we did spend the last, I would say, a couple of months to work on the statistical plan. And I'll tell you why. Because when we had in the Study 301 we had an interim review. And what we get from the data monitoring committee was they stopped the trial as early as possible. But we had absolutely no indication of what was the reason for that could have been futility or could have been efficacy. And that one was actually didn't really help Relmada because we stopped as indicated at the earliest, there was like 227 patients. And the results were not the ones we were expecting. If we would have gone to the 300 plus there was the plan, maybe the study based on the numbers could have been statistically significant, especially because the second part of the trial was conducted when they COVID restrictions were lifted, and you may remember that the results of the last 63 patients enrolled in 301 were actually very, very good compared to the previous 165 patients. So that inter-analysis was not only not very helpful. It's actually created a little bit of a problem. So this time, we don't want to end up in the same situation. So we have been very carefully planning the interim analysis and we want within the boundary of what can be done, of course, we want to get some information that can help to derisk the program. And so, we inserted futility analysis. So at least we want to know -- we not, but we want to know if the study is full-out, then we may decide that it is not the case to continue to preserve the cash that we already have is significant that as we are already in our hands. And then there is a second scenario that is temporary estimation that DMC will give us an indication how many patients we should add to get to a likely p-value. Then there is the first [indiscernible] the one that is the one everybody likes the most. They will tell us that we can stop the trial at the planned number of patients that would be around 300-310 or whatever is the final number would be defined in the statistical analysis and statistical plan. And we will know if that would be what the DMC will tell us, we will know that the study is not futile because if it is futile will be informed. And then we don't have to add any patients to get to a potential p-value. It's not guaranteed in the study was successful because we may have some more patients to add and they are not incorporated in the statistical analysis at the interim, but clearly, it would give some good sense that we are on the right direction. And the last of your question was the statistical penalty. So there is no alpha penalty in the futility analysis because there is no analysis on the efficacy, and there is no early stop. So you don't pay any alpha penalty. It was a long answer, but I wanted to be very clear and specific on this.

Yes. And my last one is, what would be the threshold for futility if the placebo-adjusted delta is below a certain point on address? Or do you have any color on that.

That's a more difficult to answer, not because we don't want to, but we haven't finished to finalize the analysis. And then we get into the like heavy complicated statistics. But in general, we will set the futility close to what can be a non-clinically meaningful threshold, right? If the study would not have a chance to reach like many clinically meaningful results than probably would not be worth to continue. But we haven't finalized what the numbers will be.

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

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

Let me make sure I understand your question. Do we have another trial before the interim analysis? No, the only 2 trials that are ongoing for is Reliance II and Relight. Everything else has been completed, long-term safety. They're all done.

I'm so sorry. I was just asking in terms of the interim analysis that's being conducted or planned for Reliance II, I guess, maybe what proportion of that study? I think you may have mentioned in the past that it's around 80% to 90% of the trial, at which point the interim analysis will take place.

Yes, I got it. Again, sorry, I misunderstood. Theoretically, the latest you do it, the better. Now there is the incremental benefit that you get it going like, let's say, a 70% or 75%, 80% become smaller and smaller. So we'll try to do it as late as possible, but we also want to know. And so, it is going to be like before year end. Over the next -- it's August so next, I would say, 3, 4 months. It takes a couple of months to prepare it. And so, we are pretty close.

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

Well, it depends on many patients will have to enroll, but it's not going to be that far away. I don't have the exact number, but we are planning to finish enroll by year end. So you can imagine that it can be by year end or sometime early 2025. But it's not too long after. If they tell us that we don't need to enroll any more patients as we hope it's going to be pretty short after that.

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

Yes. Well, the visibility in Canada for 2 main reasons, right? One is that Canada for some reason, they have very good structure for Phase 1. Just to give you an example, less than 70% Phase 1 was done in Toronto and Canada because they have very good facilities. And the second one is that the Canadian agency, it is very used to psychedelic and is used to more than the FDA. So the regulatory hurdles are easier in Canada than in the U.S. So the combination of these 2 reason made us do it in Canada, nothing else really.

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

This is Charles on for Uy. I guess I had a question on the re-estimation analysis. Just I guess, kind of dig into how many more patients you might add potentially in this analysis. Is that kind of a preset number? Or will they give you that number? And then also on the run rate guidance, is the run rate still expected to read out for Relight as well?

Thank you, Charles. Maged will answer the second question. But the first one is the number will be recommended by the DCM and so it can be anywhere, right? Clearly, if the target number is somewhere north of 300, and we don't expect to double that number of patients or to add like 200 patients. And that would be an indication that the signal may not be that strong. So it would be a reasonable amount of patients that is also feasible in a reasonable amount of time.

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

Operator, there are any more questions? Doesn't seem to have any more questions. Well, I assume there are no more questions pending. So we are not showing any more questions, I can go to the closing remarks.

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

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

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