Relmada Therapeutics, Inc. — Form 10-Q Summary
Business context and reporting period
Clinical-stage biotechnology company developing REL-1017 (dextromethadone) for depression and other potential central nervous system indications. This report covers the three months ended September 30, 2019 (the first quarter of fiscal 2020), compared with the three months ended September 30, 2018. The interim financial statements are unaudited. The company reported no product revenue.
Financial results and liquidity
- Operating expenses were $3.71 million, up $1.30 million from $2.41 million. Research and development expense was $1.89 million, up $466,000; general and administrative expense was $1.82 million, up $830,000.
- Operating loss was $3.71 million. Net loss was $3.67 million versus $3.38 million in the prior-year quarter. Basic and diluted net loss per share was $0.38 versus $1.08; weighted-average shares were 9.76 million versus 3.14 million. Share and per-share amounts were retrospectively adjusted for the 1-for-4 reverse split.
- Cash and cash equivalents were $7.85 million at September 30, 2019, down from $9.22 million at June 30. Current assets were $8.30 million and current liabilities $2.54 million. Total liabilities were $2.54 million, including $255,925 of notes payable due within one year. No margin measure is meaningful given the absence of revenue.
- Operating cash use was $2.53 million, compared with $1.67 million in the prior-year quarter. Financing provided $1.17 million, including $825,749 from common-stock issuance and $450,000 from warrant exercises. Cash declined by $1.37 million. Accumulated deficit was $115.33 million.
- After quarter-end, 327,568 warrants were exercised for approximately $2.02 million in cash; the company reported approximately $8.01 million of cash at November 8, 2019. Management stated this was sufficient to fund operations for at least 12 months from issuance of the statements.
Material changes and notable items
- G&A expense increased mainly from compensation and stock-based compensation, as well as professional services and investor relations costs; lower patent legal and litigation fees partially offset the increases. R&D growth reflected Phase 2 study costs and compensation.
- The company reported $757,716 of stock-based compensation, compared with $152,800 in the prior-year quarter. It granted 900,000 options in July 2019; approximately $9.05 million of compensation expense remained unrecognized at quarter-end.
- The company completed a 1-for-4 reverse stock split effective September 30, 2019. Its common stock began trading on Nasdaq under RLMD on October 10.
- There were no derivative liabilities at September 30, 2019. The prior-year quarter included derivative-liability fair-value loss and substantial net interest expense; the current quarter reported $37,916 of net interest income.
Outlook, clinical update, risks, and contingencies
- Management estimated cash burn of $5–6 million for the 12 months ending December 31, 2020, including approximately $2 million of discretionary R&D spending for Phase 2 data analysis and planning for a subsequent trial. Spending may be adjusted. Costs for subsequent trials are contingent on raising additional financing.
- On October 15, 2019, the company reported positive top-line results from its 62-patient Phase 2 trial of REL-1017 as adjunctive treatment for treatment-resistant depression. It reported statistically significant improvements versus placebo on multiple measures at Days 4, 7, and 14 for both dose groups, and no serious adverse events or significant safety differences between groups. These are company-reported results; the product remains investigational and is not approved.
- Other candidates—LevoCap ER, BuTab, and MepiGel—were not in active development or were receiving limited investment as the company focused on REL-1017.
- Key risks include clinical and regulatory uncertainty, the need for additional financing for later trials, and the company’s ongoing operating cash use and accumulated deficit. Cash deposits exceeded federally insured limits. A $500,000 legal-settlement accrual was included in accrued expenses; the company said it knew of no legal matters likely to have a material adverse effect.
- The company reported no material changes to previously disclosed risk factors, no material off-balance-sheet arrangements, and effective disclosure controls as of September 30, 2019.
Important facts for investors to verify
- Review the full Phase 2 results, including statistical methods, complete safety data, and any subsequent regulatory or clinical updates.
- Track cash burn against management’s $5–6 million estimate and assess the timing, cost, and financing plan for subsequent trials.
- Confirm the post-quarter warrant-exercise proceeds and current cash balance, and monitor potential dilution from outstanding options and warrants.
- Review the $500,000 settlement accrual and the terms and remaining obligations under licensing agreements.