Relmada Therapeutics, Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021; filed August 10, 2021. Relmada is a clinical-stage biotechnology company developing esmethadone (REL-1017), with no approved products and no revenue.
Financial performance and position
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | None; the company reports it has not generated revenue. | |||
| Research and development expense | $17.33 million | $5.32 million | $31.35 million | $9.83 million |
| General and administrative expense | $9.13 million | $7.43 million | $17.51 million | $12.90 million |
| Total operating expenses / operating loss | $26.46 million | $12.76 million | $48.87 million | $22.73 million |
| Net loss | $26.55 million | $11.12 million | $48.77 million | $21.79 million |
| Loss per share, basic and diluted | $1.56 | $0.73 | $2.90 | $1.45 |
Cash flow and liquidity: For the six months, operating cash use was $33.30 million, investing activities provided $9.55 million (primarily net investment sales), and financing provided $25.92 million. Cash and cash equivalents were $4.67 million and short-term investments were $104.40 million at June 30, for combined liquidity of $109.07 million. At August 10, the company reported approximately $97.7 million in cash, cash equivalents, and short-term investments. Management expected funds to support ongoing operations for at least 12 months after filing, with anticipated burn of $75–$85 million over that timeframe. Current liabilities were $13.92 million; no debt balance was reported.
Margins: Not meaningful because the company had no revenue. Accumulated deficit was $228.08 million at June 30. Stock-based compensation was $14.12 million for the first half.
Material changes versus prior comparable periods
- Q2 net loss increased to $26.55 million from $11.12 million; first-half net loss rose to $48.77 million from $21.79 million.
- First-half R&D expense increased $21.52 million, mainly from Phase 2/3 study costs and consultants supporting Phase 3 trials. First-half G&A expense increased $4.61 million, including higher stock compensation and consulting costs.
- Investment results weakened year over year: first-half 2021 included $466,000 of unrealized losses, versus $287,000 of unrealized gains in first-half 2020.
- First-half financing included $23.46 million of net ATM offering proceeds, $1.94 million from warrant exercises, and $517,000 from option exercises. Shares outstanding increased to 17.47 million at June 30 from 16.33 million at year-end 2020.
Outlook, developments, and risks
- RELIANCE I and RELIANCE II, sister Phase 3 adjunctive-treatment trials for major depressive disorder, were underway. Management anticipated results in the first half of 2022; an open-label extension was also planned.
- Management identified IV ketamine human abuse-potential study results as an expected fourth-quarter 2021 milestone. Separately, the company reported July 2021 top-line results from its REL-1017 abuse-potential study; all tested doses differed from oxycodone on the primary drug-liking measure (reported p<0.001).
- After quarter-end, Relmada executed a psilocybin-program license agreement with Arbormentis. Terms disclosed include an approximately $15 million upfront fee, a mix of cash and equity, potential development and commercialization milestones exceeding $150 million, and a low-single-digit royalty on net sales. The filing notes that senior Relmada scientific/medical personnel are affiliated with Arbormentis.
- Key risks include clinical-trial execution and outcomes, regulatory approval, future financing needs, and the company’s dependence on successful development of unapproved products. The company said it had no material change to previously disclosed risk factors and did not expect a material COVID-19 impact based on its then-current assessment.
- Potential obligations under licenses include royalties and milestone payments if products are commercialized; no revenue had been generated under the referenced third-party license as of June 30. A former employee’s employment-related lawsuit was settled in April 2021 for an amount described as immaterial.
Important facts for investors to verify
- Phase 3 enrollment, trial results, safety data, and the timing and requirements for any FDA submission.
- Whether the stated $75–$85 million burn estimate and at-least-12-month runway remain valid as trial and licensing spending progresses.
- The cash/equity composition and dilution from the Arbormentis upfront fee, as well as the conditions attached to its milestone payments and royalties.
- Potential dilution from outstanding options and warrants, and the effect of substantial unrecognized stock-based compensation.
- That all financial and trial data are interim or company-reported; the filing cautions that forward-looking statements and clinical outcomes are uncertain.