Relmada Therapeutics, Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. Relmada is a clinical-stage biotechnology company developing esmethadone (REL-1017), principally for major depressive disorder (MDD), and a low-dose modified-release psilocybin program for metabolic indications. It has no approved products and reported no revenue.
Financial results and position
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | None reported | None reported | None reported | None reported |
| Research and development | $10.5 million | $30.5 million | $40.1 million | $86.5 million |
| General and administrative | $12.2 million | $8.2 million | $36.8 million | $36.1 million |
| Total operating expenses | $22.7 million | $38.7 million | $76.9 million | $122.5 million |
| Net loss | $22.0 million | $39.4 million | $73.6 million | $119.1 million |
| Loss per share, basic and diluted | $0.73 | $1.31 | $2.45 | $4.04 |
Cash flow and liquidity: Operating cash use was $41.4 million for the first nine months of 2023, versus $67.9 million a year earlier. Investing activities provided $42.7 million, mainly from sales of short-term investments; financing cash flow was zero. At September 30, cash and cash equivalents were $6.7 million and short-term investments were $99.6 million, totaling $106.3 million. Current liabilities were $8.4 million; stockholders’ equity was $100.7 million. No debt is reported on the balance sheet. Management said available cash and investments should fund operating and capital requirements for at least 12 months from issuance of the statements.
Gross margin and operating margin are not meaningful because the company reported no revenue. The nine-month accumulated deficit was $535.7 million. Cash deposits exceeded federally insured limits. The filing does not provide a clear numeric estimate of cash runway beyond management’s statement of at least 12 months.
Material changes and unusual items
- Operating expenses and net loss declined year over year, mainly because RELIANCE I and III trial and related consulting costs fell after those studies concluded in 2022.
- Quarterly G&A increased, primarily due to higher stock-based compensation. Nine-month stock-based compensation was $33.9 million, including approximately $1.2 million of expense from modifications that accelerated vesting and extended exercise periods for a departing director’s options.
- Investment income increased with higher interest rates and yields. The 2022 comparison included a $6.4 million gain on settlement of fees, which did not recur in 2023.
- No common shares were issued during the first nine months of 2023. Outstanding shares were 30,099,203 as of November 6, 2023.
Outlook, development and risks
- Relmada plans to complete enrollment in the approximately 300-patient RELIANCE II trial in the first half of 2024 and the approximately 300-patient RELIGHT trial in the second half of 2024. It also expected to initiate a Phase 1 trial of its modified-release psilocybin program in early 2024, followed by a planned Phase 2a proof-of-concept study.
- Clinical execution is a central risk: RELIANCE I and RELIANCE III did not meet their primary endpoints. RELIANCE II and RELIGHT remain ongoing. Management also reported favorable long-term open-label Study 310 results, but these were not a placebo-controlled primary-endpoint result.
- The filing describes the psilocybin evidence as preclinical and the planned human program as prospective. None of the company’s candidates is approved for sale; further clinical trials and regulatory approvals are required.
- The company reported no material changes to previously disclosed risk factors, no known legal proceedings expected to have a material adverse effect, and no subsequent events. It has potential licensing royalties and milestone obligations, including up to approximately $160 million in development and commercialization milestones under the Arbormentis agreement.
- Management stated that additional financing may be needed beyond the stated 12-month funding period, depending on future operations and clinical-trial scope. The company is dependent on clinical progress, regulatory outcomes and access to financing; actual results may differ from forward-looking statements.
Important facts for investors to verify
- Trial enrollment, timelines and results for RELIANCE II and RELIGHT, particularly given prior Phase 3 primary-endpoint failures.
- Whether cash and short-term investments remain sufficient as trial spending changes, and the timing and terms of any future financing.
- Clinical and regulatory progress for REL-1017 and the planned psilocybin program; neither has established commercial revenue.
- Potential dilution from outstanding options and warrants: 12.5 million options and 3.0 million warrants were outstanding at September 30, 2023; these were excluded from diluted loss per share as anti-dilutive.
- The scale and timing of contractual license payments, including contingent milestones and royalties, and the effect of stock-based compensation on reported expenses.