Relmada Therapeutics, Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022; filed November 10, 2022. Relmada is a clinical-stage biotechnology company developing esmethadone (REL-1017), primarily for major depressive disorder (MDD). It has no approved products and reported no revenue.
Financial results
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Research and development | $30.5 million | $34.0 million | $86.5 million | $65.3 million |
| General and administrative | $8.2 million | $8.7 million | $36.1 million | $26.2 million |
| Total operating expenses | $38.7 million | $42.7 million | $122.5 million | $91.5 million |
| Net loss | $39.4 million | $42.6 million | $119.1 million | $91.4 million |
| Loss per share, basic and diluted | $1.31 | $2.44 | $4.04 | $5.36 |
As a pre-revenue company, Relmada reported no revenue or operating profit; gross margin is not applicable. Nine-month 2022 net loss included a $6.35 million gain on settlement of fees and $3.90 million of unrealized investment losses.
Liquidity and capital
- At September 30, cash and cash equivalents were $42.5 million and short-term investments were $141.6 million, totaling $184.2 million. Current assets were $187.1 million versus current liabilities of $20.8 million.
- Operating cash outflow was $67.9 million for the first nine months, compared with $54.2 million in 2021. Cash decreased by $1.9 million during the period.
- The company had no debt reported on the balance sheet. Accumulated deficit was $424.2 million.
- Financing provided $44.6 million in the first nine months, including $42.7 million net proceeds from stock sales, plus proceeds from option and warrant exercises. A new Jefferies ATM agreement permits up to $100 million in sales; none had been issued under it by September 30.
- Management said available cash and investments were expected to fund operations and capital requirements for at least 12 months from issuance of the statements. Funding later clinical trials may require additional financing.
Changes, outlook, and material developments
- Q3 operating expenses fell $3.9 million year over year, mainly because of lower stock-based compensation, partly offset by higher consultant costs. For the nine-month period, operating expenses rose $31.0 million, reflecting expanded Phase 3 trial activity and consulting costs; G&A also increased, including higher stock-based compensation.
- Management identified RELIANCE I results by year-end 2022, RELIANCE II results during 2023, and long-term open-label study results in the first half of 2023 as anticipated milestones. No financial or product revenue guidance was provided.
- Important subsequent development: On October 13, 2022, the company announced that the RELIANCE III monotherapy trial failed to meet its Day 28 primary endpoint. MADRS reduction was 14.8 points for REL-1017 versus 13.9 points for placebo; the company cited a higher-than-expected placebo response. This announcement occurred after the quarter end but before the filing.
- The FDA had granted REL-1017 Fast Track designation for MDD monotherapy in August 2022. The company also reported FDA feedback that, based on data then available, it would not require a two-year carcinogenicity study or a human thorough-QT cardiac study for potential adjunctive-treatment submissions.
- Investment losses included a $3.9 million unrealized loss for the first nine months. Cash deposits exceeded federally insured limits. Stock-based compensation was $32.6 million for the nine-month period, and substantial unrecognized compensation expense remained.
- Potential Arbormentis license payments include up to approximately $160 million in development and commercialization milestones, plus royalties. The filing reported no material litigation known to the company. Management said there were no material changes to previously disclosed risk factors; clinical and regulatory success, financing needs, and potential dilution remain significant risks.
Key facts investors should verify
- Results and implications of RELIANCE I and RELIANCE II, and any further regulatory or development plans following RELIANCE III’s failure.
- Cash burn, investment values, and the basis for management’s stated 12-month runway, particularly as additional trials may require new financing.
- Future use of the $100 million ATM, resulting dilution, and the impact of outstanding options and warrants.
- Milestone, royalty, and other obligations under the company’s license agreements, including Arbormentis.