Relmada Therapeutics, Inc. — FY 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; filed March 25, 2022. Relmada is a clinical-stage biotechnology company with no approved products or commercial revenue. Its lead candidate, esmethadone (REL-1017), is being developed for major depressive disorder (MDD).
Financial performance and position
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $90.6 million | $36.0 million |
| General and administrative expense | $35.1 million | $24.9 million |
| Net loss | $125.8 million | $59.5 million |
| Net loss per share, basic and diluted | $7.16 | $3.81 |
| Cash used in operating activities | $91.9 million | $27.8 million |
| Cash and cash equivalents at year-end | $44.4 million | $2.5 million |
| Short-term investments at year-end | $167.5 million | $114.6 million |
Year-end cash and short-term investments totaled approximately $211.9 million. Total assets were $223.3 million; total liabilities were $15.1 million, all current, comprising accounts payable and accrued expenses. No debt balance is reported on the balance sheet. With no revenue, a revenue-based margin is not meaningful.
Cash used in investing activities was $54.1 million, primarily reflecting purchases of short-term investments exceeding sales. Financing activities provided $187.9 million, including $184.6 million in net common-stock proceeds. Management said available funding was sufficient for at least 12 months from the filing date, based on its budget.
Material changes and notable items
- Net loss more than doubled year over year, while operating cash use increased by $64.1 million. R&D spending rose $54.6 million, mainly as the company advanced three Phase 3 trials and an open-label extension; G&A increased $10.2 million.
- Common shares outstanding increased from 16.3 million at year-end 2020 to 27.7 million at year-end 2021, primarily reflecting equity offerings and exercises. The December 2021 underwritten offering generated $161.2 million in net proceeds; the ATM program generated $23.4 million.
- Stock-based compensation was $40.5 million, versus $20.8 million in 2020. The company reported $143.2 million of unrecognized compensation expense related to unvested options at year-end. A substantial December option grant was partly subject to shareholder approval of a proposed plan-share increase.
- In July 2021, Relmada licensed rights to a psilocybin and derivative program for an upfront fee of $12.7 million in cash and warrants, with potential milestone payments of up to approximately $160 million and low-single-digit royalties.
- Other investment results moved from $1.4 million of net other income in 2020 to $48,000 of net other expense in 2021, including realized and unrealized investment losses.
Outlook, development program, and risks
- RELIANCE I and II are placebo-controlled Phase 3 adjunctive MDD trials; RELIANCE III is a monotherapy trial. The filing anticipated RELIANCE III results in mid-2022 and results from RELIANCE I, II, and the long-term open-label study in the second half of 2022. These are forward-looking expectations, not reported outcomes.
- The earlier 62-subject Phase 2 study reported statistically significant improvement versus placebo on several depression measures at specified time points. The filing cautions that small early-stage studies and preliminary results may not predict pivotal-trial results. The company reported favorable top-line abuse-potential comparisons with oxycodone in 2021 and ketamine in February 2022; these do not establish efficacy or regulatory approval.
- The FDA indicated that, based on data available at the time, a two-year carcinogenicity study and a human Thorough QT study were not required for potential submissions. The drug’s cardiac safety still requires evaluation, and the filing highlights the boxed warning on racemic methadone as a relevant concern.
- Key risks include failure or delay in clinical trials, inability to obtain FDA approval, competition, dependence on third-party manufacturers and trial operators, and DEA controls and quotas because esmethadone is a Schedule II controlled substance. Relmada has no commercial products and expects continuing losses.
- Relmada disclosed no product-liability insurance. Its esmethadone license includes potential termination rights and CEO-related “key man” provisions through December 31, 2022, as described in the filing. The company also faces dilution risk from outstanding options and warrants and a proposed increase of 3.9 million shares under its 2021 equity plan, subject to shareholder approval.
- The employee pay-related lawsuit was settled in April 2021 for an immaterial amount. The company reported no other known legal proceeding likely to have a material adverse effect. Management assessed disclosure controls and internal control over financial reporting as effective; the auditor issued an unqualified opinion and reported no critical audit matters.
Important facts for investors to verify
- Current status and full results of RELIANCE I, II, III, and the open-label study, including safety findings and whether endpoints were met.
- Cash burn, committed clinical and manufacturing costs, and whether available liquidity supports operations beyond management’s stated 12-month period.
- Shareholder approval and final treatment of the 3.9-million-share plan amendment and options contingent on approval; review potential dilution from options and warrants.
- Regulatory requirements for esmethadone, including cardiac safety, controlled-substance scheduling and supply, and any additional studies or restrictions required by the FDA or DEA.
- Terms and future funding obligations under the psilocybin license, including milestone triggers, royalties, and the strategic impact on resources devoted to REL-1017.