Relmada Therapeutics, Inc. — Q1 2020 Form 10-Q
Business and period. Unaudited results for the three months ended March 31, 2020. Relmada is a clinical-stage biotechnology company developing REL-1017 (dextromethadone), principally for major depressive disorder (MDD); it had no approved products, commercial sales, or revenue. The company changed its fiscal year-end to December 31 effective in 2020.
Financial performance and position
| Metric | Q1 2020 | Q1 2019 / prior date |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $4.51 million | $1.28 million |
| General and administrative expense | $5.47 million | $1.43 million |
| Total operating expenses | $9.97 million | $2.70 million |
| Net loss | $10.67 million | $2.69 million |
| Basic and diluted loss per share | $0.72 | $0.36 |
| Cash used in operating activities | $3.42 million | $2.01 million |
| Cash and cash equivalents | $12.23 million | $36.28 million at Dec. 31, 2019 |
| Short-term investments | $102.69 million | $80.16 million at Dec. 31, 2019 |
| Total assets | $115.42 million | $117.14 million at Dec. 31, 2019 |
| Current liabilities | $2.26 million | $1.46 million at Dec. 31, 2019 |
Operating expenses rose $7.27 million year over year. R&D growth reflected clinical-study and manufacturing costs and higher compensation; G&A growth included higher compensation, investor-relations and professional-service costs. Stock-based compensation was $5.04 million, versus $0.39 million in Q1 2019, including approximately $1.5 million related to the former executive’s separation agreement. The company also recorded $1.11 million of realized and unrealized investment losses, partly offset by $0.41 million of interest and investment income. No margin measure is meaningful because the company had no revenue.
Investing activities used $23.63 million, mainly from net purchases of short-term investments. Financing activities provided $3.00 million, principally from warrant and option exercises. The company had no notes payable at March 31, 2020; it had repaid the remaining $0.11 million balance during the quarter. Cash plus short-term investments totaled approximately $114.92 million at quarter-end. Management reported approximately $115.38 million of cash, cash equivalents, and short-term investments at May 13, including about $1.52 million of post-quarter option and warrant exercise proceeds.
Clinical outlook, risks, and other material items
- REL-1017 trial: Management reported positive top-line Phase 2a results for adjunctive MDD treatment: both dose groups showed statistically significant improvement versus placebo on reported measures, with MADRS differences evident by Day 4 and maintained through Day 14. The company described tolerability as favorable, with no serious adverse events reported in the study. These are company-reported findings; the filing does not establish regulatory approval or confirm future efficacy.
- Planned milestones: The company anticipated presenting full Phase 2 results, receiving FDA feedback following an End-of-Phase 2 meeting by the end of H1 2020, and beginning later-stage studies in H2 2020. It also separately lists a planned Phase 2 MDD study in H2 2020; the filing does not clearly reconcile that item with the completed Phase 2a study or the stated pivotal-study plans.
- Liquidity outlook: Management believed available funds were sufficient for at least 12 months from issuance of the quarterly financial statements, based on budgeted needs and its ability to adjust spending. Funding beyond that period, including for subsequent trials, may require equity or debt financing, collaboration, or licensing.
- Potential dilution: On May 15, 2020, after quarter-end, Relmada entered into an at-the-market sales agreement allowing up to $75 million of common stock sales. It was not obligated to sell shares; Jefferies may receive commissions of up to 3% of gross proceeds.
- COVID-19 and development risks: Management did not then expect a material impact on long-term development timelines or liquidity, but said it was monitoring potential effects on operations, suppliers, workforce, and financial condition. The company remains exposed to clinical, regulatory, financing, and commercialization risks common to biotechnology companies.
- Other items: The company reported no legal proceedings expected to have a material adverse effect. It has contractual license obligations that may include ongoing payments, royalties, and milestone or sublicense payments if applicable products advance or generate sales.
Most important facts for investors to verify
- Whether full REL-1017 Phase 2 data and FDA feedback support the stated development and trial-start timelines.
- Actual cash burn, investment balances, and runway as clinical spending changes; management’s 12-month estimate is based on its budget and assumptions.
- Whether the $75 million ATM is used, the price and volume of any sales, and resulting dilution.
- The magnitude and timing of future stock-based compensation and potential dilution from outstanding options and warrants.
- Whether COVID-19 or other operational, regulatory, or clinical factors alter trial execution or financing needs.