Relmada Therapeutics, Inc. (RLMD) Q2 2021 Earnings Report, Transcript and Summary

Thank you for standing by. This is the conference operator. Welcome to the Relmada Therapeutics Second Quarter 2021 Earnings Call. [Operator Instructions]. I would now like to turn the conference over to Mr. Tim McCarthy from LifeSci Advisors. Please go ahead.

Thank you, Rachel, and thank you all for joining us this afternoon. With me on today's call are Chief Executive Officer, Sergio Traversa; and Chief Accounting and Compliance Officer, Chuck Ence. This afternoon, Relmada issued a news release providing a business update and announcing financial results for the 3 and 6 months ended June 30, 2021, and filed its quarterly report on Form 10-Q with the SEC. Please note that certain information discussed on the call today is covered under the safe harbor provision of the Private Securities Litigation Reform Act. We caution listeners that during this call, Relmada's management team will be making forward-looking statements. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements are qualified by the cautionary statements contained in Relmada's press release issued today and the company's SEC filings, including in the annual report on Form 10-K for the year ended December 30, 2020, and subsequent filings. This conference call also contains time-sensitive information that is accurate only as of the date of this live broadcast, August 10, 2021. Relmada undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call. Now I would like to turn the call over to Sergio. Sergio?

Thank you, Tim. Good afternoon, and as always, and to everyone. I'm pleased to welcome to Relmada's Second Quarter 2021 Conference Call. On today's call, I will provide an update on the comprehensive development program for our lead product candidate for the adjunctive treatment of depression REL-1017, highlight the substantial market opportunity for this compelling product candidate and review upcoming milestones. Following this, I will turn the call over to Chuck Ence, Chief Accounting and Compliance Officer for a review of the financials. I will then provide a brief overview of our recent acquisition of the development and commercial rights to a novel psilocybin and derivate program for neurodegenerative indication. With that, I'll begin to by reiterating the significant news shared last week in our top line results from the abuse of human potential or HAP study, evaluating REL-1017 versus oxycodone 40 milligrams as the active control. As many of you already know, REL-1017 is also known as esmethadone, that is the dextro or right-side isomer of racemic methadone. While there is considerable existing published data supporting a lack of clinical relevant opioid effect, including a very clear statement from the Drug Enforcement Agency, the DEA, we conducted this work per FDA guidance and as it is commonly done for CNS active drug to support the comprehensive data package for our New Drug Application, or NDA, for REL-1017 as an adjunctive treatment for MDD. Importantly, our study was designed in a manner that followed the FDA 2017 guidance on the assessment of the abuse potential of drugs. Top line results for the primary endpoint showed that all 3 doses of REL-1017 evaluated in recreation of opioid users demonstrated a highly statistically significant difference versus those rating for oxycodone 40 milligrams. Notably, the highly statistically significant difference was confirmed between the active control and 150 milligrams of REL-1017, which is the maximum tolerated dose and is 6x the proposed therapeutic dose. The results for the secondary endpoints, which included scores for global overall liking and the desire of taking the drug again were consistent with those of the primary endpoints. They demonstrated no evidence of any meaningful abuse potential. More specifically, the results demonstrated that REL-1017 was similarly highly statistically significant differences versus oxycodone at all doses, and the placebo results were consistent with approved drugs that are unscheduled, Scheduled IV or Schedule V. The secondary endpoint data further strengthened the overall results of the study and are important in that they also inform the FDA's view of the future NDA for REL-1017. We believe that these collective results have addressed any residual concern regarding human abuse liability as a potential risk for FDA approval by establishing clear separation from the active control that is scheduled to new opioid [indiscernible]. In addition, the results for REL-1017 in comparison to placebo were comparable or better to those achieved by many drugs that have been FDA approved, as either unscheduled, Schedule V or Schedule IV. I would like to note that we are again joined today by Dr. Charles Gorodetzky that is the Former Scientific Director of the National Institute of Drug Abuse Addiction Research Center. Dr. Gorodetzky will be available to answer any questions in regard to the HAP study during the Q&A session. With that, I will now provide an update on RELIANCE, the ongoing Phase III program for REL-1017, which consists of 2 sister -- 2-arm, placebo-controlled pivotal study, RELIANCE I and RELIANCE II, each of which will include 364 participants per study across 55 sets. It also includes RELIANCE-OLS, the long-term open-label safety study which is enrolled in both rollover participants from the pivotal study as well as the novel participants. As a reminder, these studies are designed to evaluate REL-1017 as an adjunctive treatment for major depressive disorder, or MDD, and includes 2 arms, placebo and 25 milligrams of REL-1017, both of which are on top of standard antidepressant treatment for participants, who have already unsuccessfully tried a minimum 1 and up to 3 existing antidepressant therapy. The primary endpoint is change in the MADRS at day 28. Key secondary endpoints include the change in MADRS score at day 7 and change in CGIs, the Clinical Global Impression severity score at day 28. Both RELIANCE I and RELIANCE II are progressing with top line data expected in the first half of next year. RELIANCE-OLS, the long-term safety study, is also ongoing and enrolling participants as planned. Data from this long-term open label safety study will be part of the NDA filing package. In addition, we have started dosing in RELIANCE III to evaluate the use of REL-1017 as a monotherapy for MDD. As a reminder, the most significantly different between this trial and the ongoing clinical study is the population. The planned MDD monotherapy study will consist of individuals who are diagnosed with depression and are not currently taking standard antidepressant therapy. We anticipate completing this study prior to the conclusion of RELIANCE I and RELIANCE II. Moving on, planning for our second human abuse potential study. This one assessed in REL-1017 versus intravenous ketamine, which has an established history as an effective positive control and is ongoing. We will be more precise on the timing of the top line results of this study in the next couple of months based on the speed of recruitment, and broadly expect those results by the end of this year or the first quarter of 2022. I wanted to take a moment to reaffirm the need for a new therapeutic option with the potential clinical profile that REL-1017 presents. Depression is common, but for many who suffer current options are not effective enough. Over 17 million individuals in the U.S. suffer from MDD and they are currently limited therapeutic options to help these patients. Traditional antidepressant can take up to 4, 6 weeks to show efficacy and have significant side effects. Moreover, approximately 65% of MDD patients do not respond well to the first antidepressant treatment and approximately 30% of MDD patients do not respond to any of the current oral antidepressants. Adjunctive treatment options are crucial because they enable a change in therapy without requiring the significant time that SSRIs and other drugs require when switching agents to the withdrawal and other potential side effects. Despite these challenges, there are only currently, 3 FDA-approved adjunctive treatment for major depressive disorder. And all 3 of them are all antipsychotics. Based on its novel mechanism of action and the collective positive data generated to date, including Phase II results that showed statistically significant, rapid and sustained antidepressant effect with a favorable safety and tolerability profile, we believe REL-1017 has the potential to be the first oral antidepressant FDA approved for adjunctive treatment of MDD. I'm now passing the call over to Chuck for his review of the financials, and I will then touch on our recent acquisition of the development and commercial rights to a novel psilocybin and derivate program for neurodegenerative indication. Chuck, it's all yours.

Thank you, Sergio, and good afternoon, everyone. Today, we issued a press release announcing our business and financial results for the 3 and 6 months ended June 30, 2021, which I will now review. For the second quarter ended June 30, 2021, total research and development expense was approximately $17.3 million as compared to $5.3 million for the comparable period of 2020. The increase was primarily related to an increase in costs associated with the execution of a broader clinical program for REL-1017. Total general and administrative expense for the second quarter ended June 30, 2021, was approximately $9.1 million as compared to $7.4 million for the comparable period of 2020. This increase was primarily due to increases in personnel costs, stock-based compensation and consulting services. For the second quarter ended June 30, 2021, we recorded a net loss of approximately $26.6 million or $1.56 per basic and diluted share compared to a net loss of $11.1 million or $0.73 per basic and diluted share in the comparable period of 2020. Turning to the results for the 6 months ended June 30, 2021. Total research and development expense was approximately $31.4 million as compared to $9.8 million for the comparable period of 2020. Again, the increase was primarily related to an increase in costs associated with the execution of a better clinical program for REL-1017. For the 6 months ended June 30, 2021, general and administrative expense was approximately $17.5 million as compared to $12.9 million for the comparable period of 2020. The increase was primarily due to increases in personnel costs, stock-based compensation and consulting services. For the 6 months ended June 30, 2021, we recorded a net loss of approximately $48.8 million or $2.90 per basic and diluted share compared to a net loss of $21.8 million or $1.45 per basic and diluted share in the comparable period of 2020. On June 30, 2021, the company had cash, cash equivalents and short-term investments of $109.1 million compared to $117.1 million on December 31, 2020. We continue to expect that this strong cash position will support us through at least the multiple data readouts we anticipate through the first half of 2022. I will now hand the call back to Sergio for his further remarks on the most recent progress. Sergio?

Thank you, Chuck. Last month, we announced the acquisition of development and commercial rights to another psilocybin and derivative program from Arbormentis for all ex Asia territories, including U.S. and Europe. At this time, you will have to bear with us, we cannot share too much about the program for competitive reasons, but importantly, what we can share is that with the program, we'll focus on neurodegenerative disorders, and this is distinct from and complementary to the REL-1017 program, which is focused on psychiatry. This agreement expands our development pipeline and in particular, leverages our core expertise in mechanism of neuroplasticity, but at the same time, expand our work into indication outside of the depression and psychiatry. In summary, REL-1017 development program remains on track and was recently further derisked by the results of the HAP/oxycodone study that were consistent with our studies to date and confirm the extensive body literature, indicating the lack of abuse potential of REL-1017. Looking ahead, we anticipate multiple key data readouts over the next 12 months and have added a potential long-term growth driver with the acquisition and development of commercial rights to another psilocybin and derivative program. Importantly, as Chuck noted, our robust R&D initiatives are supported by a strong balance sheet. In closing, I remain grateful to the Relmada team for their continued hard work and dedication to executing our mission. I would like to extend also my sincere thanks to the participants and clinical partners involved in the REL-1017 clinical trials for their effort in advancing this important therapy to the clinic and as expeditiously as possible. We'd also like to thank Dr. Gorodetzky for being able to participate to these calls. And Dr. Gorodetzky is one of the well-recognized authority in the field for abuse and narcotics and so on. And it would be -- it is a great opportunity, if there is any question regarding our study that -- to be addressed to Dr. Gorodetzky to get an educated and a very credible answer. We can now open up the call for questions. And operator, can you please open up?

[Operator Instructions]. Your first question comes from Marc Goodman from SVB Leerink.

Sergio, can you remind us where the 55 sites are of RELIANCE I, just kind of break down U.S. versus OUS? And just give us a sense of whether everything is kind of moving forward as you had planned? I mean obviously, COVID is having some impact again on a bunch of clinical studies out there, so just curious how it's doing there with your study. And second, just curious, are you working with the same people at FDA in the division that you were working with at the beginning who signed off on your Phase III program? And the reason I ask is, we've had a couple of setbacks recently at other companies. And just -- sometimes it's because there's changes in FDA. And -- so I'm just kind of checking the box, making sure there's no changes there.

Thank you, Marc. Well, the first part of your question, it's easy. The 55 sites are all in the U.S. So we are a U.S. company. We have nothing -- no operation, nothing outside of the U.S., except some collaboration with very high-end universities, like Switzerland, and I believe in Italy, too. And so the -- but for development, all the sites are in the U.S. How the study is going? Well, we started a few months ago. It is a large program. We are actually running 4 different clinical trials now that we have finished with the human abuse potential study. So it's 2 Phase III, then there is a long-term safety and then there is the monotherapy that just started -- it is recruiting. We will be more precise on the timing. But you're asking about the impact of COVID. We did not feel, right, the -- any major complaints or any major feedback from the sites about the impact of COVID. Now the last few months has been pretty quiet. Now there is a little bit of a resurge. So we'll be more specific in the next 2, 3 months. But straight answer is that no, we don't expect any major delay or any major impact from the COVID. A lot of work is now done remotely, like the interviews or the MADRS. They all -- most of them they have done remotely and both the operator -- or the readers and the patient actually like that, they don't have to go to the hospital. I believe they go in, in our study, they go only once a week for 4 weeks, so it's 4 visits in the hospital. Taking your question on the FDA. No, we don't really know what happens. I believe you mentioned 2. One might be Acadia and the other one must be Axsome. And we don't really know what the specifics are. What -- maybe the way I can best answer the question is that the -- we do believe that these are specific topics related to the programs, not a general like approach from the psychiatry division. And from our perspective, we did not have any particular issue with the FDA, no delays, no question raised beyond the normal course of business. So we did not have any of this issue or topic so far. Clearly, I mean, we did not file an NDA yet. So we cannot exclude everything. We'll know it when we file the NDA. So far, the FDA, I would say, has been pretty benign in helping us how to develop this product. One thing is they clearly recognize there is a need more than an issue. So they've been extremely cooperative. I hope I answered all your questions satisfactory way.

Your next question comes from Andrea Tan from Goldman Sachs.

Sergio, maybe one for you. Can you provide more color on the nature of your discussions with the FDA regarding RELIANCE III? Just wondering if this could be considered a registrational data set. And are you thinking that you would look to include the data within the initial filing package?

Yes. Thanks, Andrea, for the question. I have to be a little soft on this one because the abuse data, they are very fresh. And clearly, they will be -- the FDA will look at this data, and we will provide them as soon as we have something that is reportable to the FDA. The top line is not enough. And yes, there is -- the monotherapy, we don't have any data yet on monotherapy. So it would be a little bit aggressive to go directly to the FDA and to claim about starting Phase III and doing registration trials. But we have now -- we have the HAP study, we have the animal studies. So the package -- the preclinical package and the special population is becoming pretty strong. So I cannot answer your question directly yet because I don't have the answer, but yes, there is a chance that we may do something different from the monotherapy and to make it a registration trial. The only difference would be to expand the number of patients, but it's a bit too early to give you a straight answer. We will update everybody as soon as we get some certainty on what we can and what we cannot do.

Your next question comes from Andrew Tsai from Jefferies.

Okay. Great. Maybe a question for Chuck. Our understanding is the eventual scheduling of methadone or any drug out there, it will boil down to the 8-factor analysis. So I was wondering if you can talk about some of the, I guess, 7 other factors. What are they? And then as it relates to them, talk about the strength of the data and evidence you've seen for esmethadone as it relates to those factors? And at the end of the day, are these factors equally weighted? Or does the abuse liability study carry more weight? And then I have a follow-up, please.

Chuck, it's all yours. Chuck Gorodetzky.

I don't have the eight factors in front of me, but I think that they would put a good deal of weight at this point on this abuse liability study. It's probably the single most predictive kind of study that you could run to predict before the drug gets on the market, what the abuse is liable to be. And the preliminary data that we've seen so far in the analysis looks very, very positive, as Sergio summarized. So -- and I think that there's no specific one of the factors that FDA keys on. They will look at the whole picture. They will look at all of the data that we have. But I think they will put a good deal of weight on a study like this one that was done -- was very well done. Its most recent methodology. The statistical analysis follows all of their recommendations. And the data looks very positive. This looks like a drug that has very low, if any, abuse liability and is certainly consistent with either no scheduling, which would be difficult because of international treaty obligations or a very low-level scheduling, like in IV or V.

Makes sense. And my second question is, I mean, to your knowledge, are there precedents where, I guess, the highest dose of a drug has shown, I don't know, 65 on VAS and ended up getting a favorable DEA scheduling? I know this is wrong to think about, but I just want to know if it's common, I guess, for a positive abuse liability so does it kind of show a "shallow dose response positive," meaning that the drug ultimately got a favorable scheduling?

Handling that again, yes, I think there are examples even within the opioids and there's certainly some examples within the antiepileptics and even in antimigraine drug where the drug is significantly different from a positive control as it was here with oxycodone, but may show a very slight liking. And even that seems to be somewhat nonspecific so far and might show some difference from placebo and still be a very either unscheduled again or scheduled very low. I mean like the drug Viberzi for irritable bowel which did indeed show significant differences from placebo even at doses that were only 2 or 3x above the recommended therapeutic dose and still wound up down in Schedule IV. So I think that there are certainly precedents for it being a very low abuse potential, but not necessarily absolutely 0 and still be consistent with very low scheduling.

Your next question is from Joon Lee from Truist Securities.

Where are you in terms of enrollment for the ongoing RELIANCE programs? Are you on track to report top line data in the first half of next year? And do you expect data from RELIANCE III before RELIANCE I and RELIANCE II? So what does that mean? Are we getting data really early next year, first quarter or second quarter, I would love to hear some color on that. And then can you remind us what the design of RELIANCE III is, the doses and the study arms used in that study, and that's a Phase II, correct?

Thank you, Joon. Yes, I'll answer in the similar way, same way as I answered, Andrea. It's a bit too early to say how the recruitment is going, but clearly we're recruiting. Well, maybe the data point that would make more sense because it is more a clear answer, the number of sites. And I have the number in front of me because I answered them to come prepared to the call. So we have 52 sites on 301, the first one started very late in December. 27 sites already active, up and running in 302 and 10 sites in 303. So 303 is probably smaller. So it's normal to have a smaller size number, and we also started very recently. So I mean the vast majority of the sites that are up and running. Consider that a good part of this site, their share, not many, but some on 301 and 302. So when the site finishes the -- or reach the top of the number of patients that they can enroll in 301, they will automatically switch to enrolling patients in 302. The long-term safety study is open to everybody, including new patients. And the 303 that is the monotherapy, the reason that we say that it will be finished before is that I would not make a major comment on the number of patients because we are still in the thinking process and mode and also with the FDA to see how to, right, maximize the outcome and maximize the value of that trial. So we may expand the number of patients and make it a registration study, as I mentioned, to Andrea. And -- but the reason that we believe it will be finished earlier is that the recruitment of naive patients or patients that are not currently on antidepressant is much faster than as an adjunctive treatment. It is the protocol. It's exactly the same. The only difference is the patient population. But clearly, there are more patients that are not on treatment and especially that are more willing to start with a new antidepressant than to add something to a current antidepressant. So it's related with the -- not on the number of patients but it's related to the speed of recruitment. I hope my answer is satisfactory. We will update on this.

Got it. And then for -- as a monotherapy, do you think it's possible that you might want to consider higher dose? Or is higher dose still not really useful in your view, a 25 milligrams?

Yes. Thanks, Joon. No, it's the same dose. It's the same product we launch with the difference in patient population. 25 milligrams, and we look at all the data from the very early animal studies to the Phase II and 25 milligrams is the optimal dose. It's probably not very different from the 50 milligrams in terms of efficacy and in terms of side effect. The reason that the 25 is not because of tolerability or safety or it's just -- the real reason is to reduce the placebo effect, less harm, less placebo effect. So using only the 25, we only have two arms that is the minimal placebo effect in terms of number of arms that we can have. And adding the 50, we don't believe could have increased the placebo effect, but would not have improved or increase the efficacy of the drug. So that's the real reason of choosing 25 and it is across the board. All trials, they use 25.

Your next question is from Jay Olson from Oppenheimer.

Congrats on the progress. Have you seen any published reports of increasing diagnosis rates for MDD during the pandemic? And have you seen any differences between the baseline characteristics of patients enrolled in your studies versus previous MDD clinical trials? And then I had a separate question, if I could.

Yes. Well, thanks, Jay. Thanks for the question. The -- we have been reporting -- I think somebody that we just spoke on the call publish something on the very big increase in number of patients diagnosed for depression. And so it's -- yes, there are reports out that show that there is an increase up to like 400%, that's hard to believe, but I read that number somewhere. In terms of the nature of the depression related with the pandemia, we don't -- I don't really see the patient profile they are enrolled. And so that's when I would pass. We have criteria for inclusion and exclusion and that I don't believe they are related with pandemia or not. So I don't know if there has been a change in how the profile of the depressed patient changed with pandemia. I assume probably some relation between the pandemia and some manifestation of depression, there must be, economic crisis and jobs and -- so they all have an impact. And then I do believe that -- I actually read it more than believe it that COVID itself, that the virus has an impact on the brain, and there could be some post-COVID not like job-related effect, but virus-related effect on the -- how the depressed patients show these symptoms. But I would love to be able to give you a more specific answer, but I don't really see the patient profile or the patients that are enrolled.

Okay. Great. And then could you talk about the differences between GABAA and NMDA mechanisms since both appear to provide rapid onset of efficacy in MDD? And what would cause a physician to prefer one mechanism versus the other in MDD?

Yes. Yes. That's also a very good question. Well, the end kind of going towards the same direction, but from opposite side, right. I believe one is an activator and the other one is an inhibitor. So it is pretty different in terms of mechanism. Probably -- and this is just looking at the data available. Probably the biggest difference in what we believe physicians will prefer the NMDA mechanism is that NMDA tends to being stable or improve the efficacy over time while the GABAA does the opposite. And then so the -- if it's true and the FDA strongly believe that the depression is a chronic illness, then you want to have a drug that you can take for a long time in terms of safety, but also that keep the efficacy or increase the efficacy over time. Hope that I answered your question?

Yes. Perfect.

Your next question is from Yatin Suneja from Guggenheim Securities.

This is Eddie on for Yatin. So can you give us a little -- some more sense of how the RELIANCE trial is powered specifically on the placebo arm, sort of how are you modeling what a placebo effect could be here? And what are [Technical Difficulty].

Eddie, I don't know if it's just me, but I only could hear the first like 20 seconds of your question.

Can you hear me better now?

Yes, much better, much better.

Yes.

You're asking the question about the power.

Yes. Yes.

Great. Sure. I'll be happy to do that. So as you definitely remember the Phase II data, the effect size, it was something around 0.7, 0.9. I assume that Prozac -- fluoxetine that I work with has an effect size about 0.3, and it got approved. So the effect size in -- of REL-1017 was kind of 3x what fluoxetine has. Clearly, the Phase II -- so we don't want to -- although we believe we have an extremely effective drug, we didn't want to take too much risk. So we make a very conservative assumption in the Phase III program across the board. Rule of thumb coming from the expert is the -- you lose about 25% of effect size when you go from Phase II to Phase III for a variety of reasons. But clearly, this loss of effect size can be modulated and it can be adjusted using, for example, like having only 2 arms instead of 3 in Phase III versus Phase II, so that clearly makes -- should make a material difference. But even assuming the -- some loss of effect size, we wanted to be conservative. So we -- in the assumption, statistically we assume that we'll have about half the effect size that we had in Phase II. So 0.7 to 0.35 to 0.4. That should be relatively conservative.

Okay. And then on the monotherapy study, like I said, are these naive patients? Or is there a certain washout period before their last sort of treatment of antidepressants?

Yes. I believe mostly they are naive. I do believe they are allowed to -- I don't remember the exact how much time they have to pass before they can get into the trial. But there is a considerable amount of time of washout before they can get into the trial. As you know, it is now well known that my time when I was working on fluoxetine, it was not known, but SSRIs they have a pretty significant withdrawal effect. So the last thing you want to do is to have a patient that is not only depressed, gets into the withdrawal effect from SSRIs. So I believe that -- I don't remember. I can give you the exact number offline. But it's not a week or 2. It's like, I believe it's 3 months or something like that or 2 months when they have to be clean, not taking an antidepressant before to get it.

This does conclude the question-and-answer session. I would like to turn the conference back over to Sergio Traversa for any closing remarks.

Well, thank you, operator. Thank you all for joining us on the call today. We are pleased with -- we have been pleased and we are pleased to share our recent progress with you and the REL-1017 clinical development program. It continues to advance. We are excited about the important catalysts that lie ahead of us, and we'll keep you updated on clinical results and activity through the remainder of 2021. Thank you, again, for joining us on the call, and enjoy the rest of the day. Thank you.

Thank you. This does conclude the conference for today. Thank you for participating. You may now disconnect.