Relmada Therapeutics, Inc. — Q1 2021 Form 10-Q
Business context and period. This unaudited quarterly report covers the three months ended March 31, 2021. Relmada is a clinical-stage biotechnology company developing esmethadone (REL-1017), principally for major depressive disorder (MDD). It had no commercial products and generated no revenue.
Financial results and position
- Revenue and margins: No revenue was reported. As a pre-commercial company, operating margins are not meaningful; operating expenses were $22.4 million.
- Expenses and loss: Research and development expense was $14.0 million, up $9.5 million year over year; general and administrative expense was $8.4 million, up about $2.9 million. Net loss was $22.2 million versus $10.7 million; loss per share was $1.34 versus $0.72.
- Cash flow: Operating cash use was $16.1 million, compared with $3.4 million in Q1 2020. Investing activities provided $15.5 million, primarily from net sales of short-term investments; financing activities provided $1.9 million from option and warrant exercises. Cash and cash equivalents increased $1.3 million to $3.8 million.
- Liquidity and debt: Cash and short-term investments totaled $102.7 million at quarter-end. Current assets were $103.8 million and current liabilities $12.7 million. The balance sheet reports no debt or notes payable outstanding.
- Other balance-sheet items: Total assets were $103.9 million, down from $118.2 million at December 31, 2020; stockholders’ equity was $91.1 million, down from $105.6 million. Accumulated deficit was $201.5 million.
Material changes versus Q1 2020
- Operating expenses increased $12.4 million, chiefly reflecting higher clinical-study costs and consultants supporting Phase 2 and Phase 3 work, alongside higher G&A and stock-based compensation.
- Net loss more than doubled, and operating cash use rose substantially.
- Short-term investment losses narrowed: unrealized losses were $0.2 million versus $0.9 million, while realized losses were $0.1 million versus $0.2 million.
- Share-based compensation expense was $5.9 million versus $5.0 million. The company issued 1.5 million options and 400,000 warrants during the quarter; unrecognized compensation expense was approximately $85.7 million for options and $13.6 million for warrants.
Outlook, risks, contingencies and notable items
- Management said available funds were expected to support ongoing operations for at least 12 months after filing. It reported approximately $96.8 million in cash, cash equivalents and short-term investments as of May 12, 2021, including approximately $0.4 million from post-quarter option and warrant exercises, and expected a $75–$100 million burn over the stated funding period.
- RELIANCE I, the first Phase 3 adjunctive-MDD trial, began enrolling in December 2020; RELIANCE II was initiated April 1, 2021. The company anticipated results from both trials in the first half of 2022, a Phase 2 monotherapy MDD trial start in the first half of 2021, and human abuse-potential study results in mid- and late 2021.
- Management cited clinical-development, regulatory-approval, financing, intellectual-property and execution risks. It said COVID-19 was not then expected to materially affect the long-term development timeline or liquidity, while noting it continued to monitor potential effects.
- A current employee’s employment-related lawsuit was settled after quarter-end for an amount described as immaterial. The company reported no other known legal proceeding expected 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 March 31, 2021.
Important facts for investors to verify
- Verify clinical-trial progress, timing and results against subsequent company and regulatory disclosures; trial milestones and efficacy are forward-looking or based on earlier-stage studies.
- Assess the cash runway against actual trial spending and the stated $75–$100 million burn expectation, including whether additional financing may be needed for later trials.
- Reconcile MD&A arithmetic and cash-flow discrepancies: its expense table reports a $2.806 million G&A increase, while the financial statements imply approximately $2.916 million; its stated total expense increase also does not match the reported periods. The cash-flow table in MD&A gives operating cash use of $16,085,745, versus $16,085,475 in the financial statements and elsewhere in the filing.
- Consider potential dilution from outstanding options and warrants and substantial unrecognized stock-based compensation expense.