Relmada Therapeutics, Inc. — Form 10-Q Summary
Reporting period: The filing is for the quarter ended March 31, 2015, covering the three and nine months ended March 31, 2015, compared with the same periods in 2014. This differs from the request metadata’s “2014 Q3.” Financial statements are unaudited.
Business context
Relmada is a clinical-stage biopharmaceutical company developing pain treatments. Its four lead candidates are LevoCap ER, d-Methadone, BuTab and MepiGel. It had no approved products, product revenue, or sales and marketing infrastructure; it expects no revenue for the foreseeable future.
Financial performance and position
| Metric | Three months ended March 31, 2015 | Nine months ended March 31, 2015 |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | $2.27 million | $5.01 million |
| General and administrative expense | $2.29 million | $7.67 million |
| Net income (loss) | $(2.46) million | $(26.85) million |
| Basic and diluted loss per share | $(0.05) | $(0.56) |
| Operating cash flow | Not separately presented | $(11.74) million |
- Nine-month investing cash use was $19,456; financing provided $13.15 million, primarily from warrant exercises. Cash increased $1.39 million to $26.96 million.
- At March 31, 2015, current assets were $27.81 million and current liabilities $25.26 million. Total liabilities were $25.36 million, including $24.47 million of derivative liabilities; the insurance-related note payable had been paid off.
- Stockholders’ equity was $2.49 million, versus a deficit of $1.11 million at June 30, 2014. No meaningful revenue margin is available to assess.
Material changes versus the comparable period
- Quarterly operating expenses rose to $4.57 million from $0.71 million, mainly reflecting increased clinical activity and higher professional, consulting, personnel and stock-based compensation costs.
- Nine-month operating expenses increased to $12.68 million from $6.25 million, with G&A accounting for most of the increase. The 2014 comparison included a $3.75 million noncash R&D charge related to the Medeor acquisition.
- Nine-month net loss widened from $0.24 million to $26.85 million, substantially affected by a $14.18 million noncash loss from remeasuring derivative liabilities; the prior-year period recorded a $6.31 million noncash gain.
- Operating cash use increased from $1.85 million to $11.74 million. Warrant exercises generated approximately $13.44 million in net financing proceeds.
Outlook, risks and notable items
- Management estimated that March 31 cash could fund operations through the end of calendar 2016, but said additional capital would be needed to continue clinical trials. Financing may be unavailable or dilutive; insufficient funds could delay, reduce or end development programs.
- Management reported $2.8 million of commitments, primarily clinical research contracts through December 2015.
- Development updates: d-Methadone was undergoing Phase I studies; Health Canada cleared dose escalation in April 2015. A BuTab pharmacokinetic study began in April 2015. MepiGel Phase I work was planned for 2015. LevoCap ER remained in preparation for a Phase III program, including planned FDA discussions.
- The company identified clinical, regulatory, financing, key-personnel and product-approval risks. Its warrant derivative liabilities use Level 3 valuation inputs and can create substantial noncash earnings volatility. Cash deposits exceeded federally insured limits.
- After quarter-end, President and Chief Science Officer Eliseo Salinas resigned effective May 20, 2015. The company said development would continue under Dr. Richard Mangano without seeking a replacement. Legal proceedings: none reported. Management said disclosure controls were effective and there were no material internal-control changes.
Important facts for investors to verify
- Confirm the intended reporting period: the filing itself covers the quarter ended March 31, 2015, not 2014 Q3.
- Reconcile diluted EPS for the three months ended March 31, 2014: the financial statements report $0.42, while the MD&A text states $0.10.
- Assess the assumptions and potential earnings impact of the $24.47 million Level 3 warrant derivative liability, including the effect of warrant exercises, expirations and any listing-related change to anti-dilution terms.
- Evaluate whether the stated cash runway through year-end 2016 remains adequate given operating cash burn, clinical commitments and the need for future financing.
- Track clinical-study progress, regulatory requirements and development plans following the CSO’s departure.