Relmada Therapeutics, Inc. — Q2 2023 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2023. The unaudited filing was signed August 8, 2023. Relmada is a clinical-stage biotechnology company developing esmethadone (REL-1017); it has no commercial products and reported no revenue.
Financial performance and position
- Q2 net loss: $25.3 million, or $0.84 per basic and diluted share, versus $39.9 million, or $1.33 per share, in Q2 2022.
- First-half net loss: $51.6 million, or $1.72 per share, versus $79.7 million, or $2.73 per share, in the first half of 2022.
- Operating expenses: Q2 expenses were $26.0 million, down $19.5 million year over year; first-half expenses were $54.2 million, down $29.6 million. R&D was $13.7 million in Q2 and $29.6 million for the first half; G&A was $12.3 million and $24.6 million, respectively.
- Drivers of lower expenses: Primarily lower clinical-trial and related costs following completion of RELIANCE I and III in late 2022. Stock-based compensation was $22.5 million in the first half of 2023, a substantial noncash expense.
- Other income: First-half interest and investment income was $2.6 million; investment activity also included a $0.7 million realized loss and a $0.7 million unrealized gain. Q2 net other income was $0.7 million. The prior-year periods included a $6.4 million gain on settlement of fees.
- Cash flow: First-half operating cash use was $29.8 million, compared with $41.1 million in 2022. Investing activities provided $38.9 million, mainly from net sales of short-term investments; financing provided no cash. Cash and cash equivalents increased $9.1 million to $14.5 million.
- Liquidity and debt: Cash, cash equivalents, and short-term investments totaled $118.5 million at June 30, 2023, including $104.1 million of short-term investments. Current liabilities were $10.7 million; the filing reports no debt balance. Management said available funds should support operations and capital requirements for at least 12 months from issuance of the financial statements.
- Balance sheet: Total assets were $122.0 million, down from $152.9 million at December 31, 2022. Stockholders’ equity was $111.3 million, versus $140.4 million; accumulated deficit was $513.7 million. No profitability or revenue margins are reported.
Business developments, outlook, and risks
- RELIANCE I and RELIANCE III, Phase 3 studies of REL-1017 for major depressive disorder, did not meet their primary endpoints in 2022. The company planned to complete RELIANCE II and an additional adjunctive Phase 3 study, RELIGHT; it anticipated RELIGHT would commence in the second half of 2023. RELIANCE II results were expected in the first half of 2024.
- The long-term open-label study completed subject visits on July 11, 2023. Management had listed results in mid-2023 as an anticipated milestone; the filing does not provide results.
- Management reported FDA feedback that, based on information then available, a two-year carcinogenicity study and a human Thorough QT cardiac study would not be required to support potential submissions. Regulatory requirements and trial outcomes remain subject to change.
- The company has no product approvals and does not expect near-term revenue. It states that future financing may be needed beyond its projected 12-month runway, depending on future operations and clinical-trial scope.
- Key risks include clinical and regulatory uncertainty, including the two failed Phase 3 primary endpoints; ongoing cash burn; competition; and dependence on successful development, approvals, and financing. The filing says there were no material changes to previously disclosed risk factors and no known legal proceedings expected to have a material adverse effect.
- Potential obligations include development and commercial milestones of up to approximately $160 million under the Arbormentis license, royalties on any qualifying sales, and ongoing payments under the Inturrisi/Manfredi license. These are contingent or future obligations, not reported debt.
Important facts for investors to verify
- Current status, enrollment, timing, and endpoint design for RELIANCE II and RELIGHT, and whether expected milestones were subsequently achieved.
- Whether the clinical results and FDA feedback support the development and regulatory path after RELIANCE I and III missed their primary endpoints.
- Cash runway assumptions, operating cash burn, investment liquidity and risk, and the potential timing and terms of future financing.
- Potential dilution: 12.5 million options and 3.0 million warrants were outstanding at quarter-end; the company also had an ATM sales agreement with capacity up to $100 million, with no shares issued under it as of June 30, 2023.
- Magnitude and timing of future license milestones, royalties, and other contractual obligations if programs advance or products are commercialized.