Relmada Therapeutics, Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. The company is a clinical-stage biotechnology developer, with no approved products, sales infrastructure, or revenue. Its lead candidate, REL-1017 (esmethadone), is in Phase 3 development for major depressive disorder (MDD).
Financial results and position
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | None reported | None reported | None reported | None reported |
| Research and development expense | $30.9 million | $17.3 million | $55.9 million | $31.4 million |
| General and administrative expense | $14.6 million | $9.1 million | $27.9 million | $17.5 million |
| Total operating expenses | $45.5 million | $26.5 million | $83.8 million | $48.9 million |
| Net loss | $39.9 million | $26.6 million | $79.7 million | $48.8 million |
| Loss per share, basic and diluted | $1.33 | $1.56 | $2.73 | $2.90 |
At June 30, 2022, cash and cash equivalents were $37.3 million and short-term investments were $174.7 million, or $212.0 million combined. Current liabilities were $18.9 million, comprising accounts payable and accrued expenses; no debt is reported on the balance sheet. Stockholders’ equity was $196.9 million, with an accumulated deficit of $384.7 million. Margins are not meaningful given the absence of revenue.
For the first six months, operating cash outflow was $41.1 million, investing cash outflow was $10.2 million, and financing cash inflow was $44.0 million. Cash and cash equivalents declined by $7.2 million to $37.3 million. The company raised $42.7 million net through equity sales and received additional proceeds from option and warrant exercises.
Material changes and notable items
- Six-month R&D expense increased $24.6 million year over year, mainly from Phase 3 study costs and additional clinical-trial consultants and personnel. G&A expense rose $10.4 million, primarily due to higher stock-based compensation.
- Six-month net loss increased $30.9 million. Basic and diluted loss per share narrowed, alongside a higher weighted-average share count.
- Other income included a $6.35 million gain on settlement of fees, which reduced reported net loss; the filing text does not clearly explain the settlement’s underlying nature. Unrealized investment losses were $2.95 million for the first half.
- Stock-based compensation was $24.2 million for the first half. The filing reports $122.7 million of unrecognized compensation expense related to unvested options.
- On April 6, the company entered a new at-the-market agreement permitting up to $100 million of common-stock sales; it is not obligated to sell shares. Share issuance may dilute existing holders.
Outlook, risks, and contingencies
Management stated that existing cash and cash equivalents were expected to fund operating expenses and capital requirements for at least 12 months from issuance of the statements. It said additional financing may be needed for later clinical trials, with timing dependent on trial scope, and that such later-trial spending would not be incurred until financing is raised. The company reported negative operating cash flow and an accumulated deficit.
Management anticipated results from the RELIANCE III monotherapy and RELIANCE I and II adjunctive MDD Phase 3 trials in the second half of 2022, and from the long-term open-label study in the first half of 2023. The FDA granted REL-1017 Fast Track designation for MDD monotherapy on August 9, 2022. Clinical outcomes, safety, regulatory review, and financing needs remain material uncertainties. The company also disclosed COVID-19 monitoring, but did not expect a material impact on its long-term development timeline or liquidity based on its then-current assessment.
Commitments include potential Arbormentis development and commercialization milestone payments of up to approximately $160 million, plus royalties if products are commercialized. The company also pays a licensor $45,000 quarterly under an esmethadone license and may owe royalties and other milestone payments under license agreements. The company said it knew of no legal proceedings likely to have a material adverse effect.
Important facts for investors to verify
- Progress, enrollment, results, and timing of the three Phase 3 REL-1017 trials and the long-term study.
- Whether the stated minimum 12-month funding runway remains valid, given operating cash use and planned development spending.
- Actual use of the $100 million ATM facility, resulting share dilution, and any other financing plans.
- The nature and terms of the $6.35 million fee-settlement gain and whether similar gains or charges could recur.
- Potential clinical, regulatory, and commercial risks, as well as the timing and likelihood of license-related milestone and royalty obligations.