Business Overview and History

Relmada Therapeutics, Inc. (RLMD) is a late-stage biotechnology company dedicated to addressing the unmet needs in the treatment of central nervous system (CNS) disorders. With a primary focus on developing innovative therapies for major depressive disorder (MDD), Relmada has strategically positioned itself at the forefront of this challenging, yet critically important, therapeutic area.

Relmada Therapeutics, Inc. was founded in Nevada with the goal of developing new chemical entities (NCEs) and novel versions of existing drug products to address areas of high unmet medical need in the CNS space. The company's lead product candidate, esmethadone (REL-1017), is being developed as a rapidly acting, oral agent for the treatment of MDD, a condition that affects an estimated 21 million adults in the United States alone.

In 2014, Relmada adopted the 2014 Stock Option and Equity Incentive Plan, allowing for the granting of common stock awards, stock appreciation rights, and incentive and nonqualified stock options to designated employees, non-employee directors, and consultants and advisors.

A significant development occurred in 2018 when Relmada entered into an Intellectual Property Assignment Agreement and License Agreement with Dr. Charles E. Inturrisi and Dr. Paolo Manfredi. Under this agreement, Relmada assigned its existing rights, including patents and patent applications, to esmethadone in the context of psychiatric use to the licensor. In return, the licensor granted Relmada a perpetual, worldwide, and exclusive license to commercialize the existing invention and certain further inventions regarding esmethadone in the context of other indications.

Expanding its portfolio, in 2021, Relmada entered into a License Agreement with Arbormentis, LLC, acquiring development and commercial rights to a novel psilocybin and derivative program worldwide, excluding Asian countries.

Esmethadone, an isomer of methadone, possesses a unique mechanism of action as a low-affinity, non-competitive N-methyl-D-aspartate (NMDA) receptor antagonist. This differentiated approach sets it apart from the majority of currently approved antidepressants, which typically target serotonin, norepinephrine, or dopamine pathways. Relmada's clinical development strategy for esmethadone aims to capitalize on its potential for rapid-acting and sustained antidepressant effects, addressing a critical unmet need in the treatment of MDD.

In 2019, Relmada reported positive top-line data from a Phase 2 clinical trial (REL-1017-202) evaluating esmethadone in patients with severe depression. The study demonstrated statistically significant and clinically meaningful improvements in depressive symptoms compared to placebo, with an onset of action as early as Day 4 and sustained effects through Day 14, one week after treatment discontinuation.

Buoyed by these promising results, Relmada initiated its Phase 3 clinical program for esmethadone in 2020, with the enrollment of the first patient in the RELIANCE I study, followed by the initiation of RELIANCE II and RELIANCE III in 2021. These two pivotal trials are designed to evaluate the efficacy and safety of esmethadone as an adjunctive treatment for MDD.

Unfortunately, in late 2022, Relmada announced that its RELIANCE I and RELIANCE III studies did not meet their primary endpoints. While a setback, the company remains committed to the continued development of esmethadone and is currently conducting a long-term, open-label study (Study 310) to further evaluate the drug's safety and efficacy profile.

In parallel with the esmethadone program, Relmada has also diversified its pipeline by acquiring the development and commercial rights to a novel psilocybin-based program, REL-P11, in 2021. This proprietary, modified-release formulation of psilocybin is being evaluated for the treatment of metabolic indications, with plans to initiate a Phase 1 clinical study in 2024.

Financial Performance and Liquidity

As of September 30, 2024, Relmada reported a cash, cash equivalents, and short-term investments position of $54.1 million, down from $96.3 million as of December 31, 2023. The company's net loss for the third quarter of 2024 was $21.7 million, or $0.72 per basic and diluted share, compared to a net loss of $22.0 million, or $0.73 per basic and diluted share, in the same period of the previous year.

Research and development expenses for the third quarter of 2024 were approximately $11.1 million, up from $10.5 million in the corresponding quarter of 2023. This increase was primarily driven by the ramp-up of expenses related to the RELIANCE II and RELIGHT studies. General and administrative expenses, on the other hand, decreased to $11.9 million in the third quarter of 2024, down from $12.2 million in the same period of the prior year, due to a reduction in stock-based compensation expenses.

For the most recent fiscal year (2023), Relmada reported no revenue and a net loss of $98,791,746. The company's operating cash flow (OCF) and free cash flow (FCF) for 2023 were both negative $51,659,206. In the most recent quarter (Q3 2024), the company again reported no revenue, with a net loss of $21,725,970. The OCF and FCF for this quarter were both negative $16,656,391. The decreases in net income, OCF, and FCF were primarily due to continued research and development expenses for the company's lead product candidate REL-1017.

Relmada's financial position remains a concern, as the company has incurred significant losses and negative cash flows from operations since inception. As of September 30, 2024, Relmada had an accumulated deficit of $622.22 million. The company's ability to continue as a going concern is uncertain, given its projected operating requirements and existing cash and investments.

In terms of liquidity, Relmada's debt-to-equity ratio is 0, indicating that the company has no debt. The current ratio and quick ratio are both 6.888, suggesting a strong short-term liquidity position. However, it's important to note that the company does not have any credit facilities or credit lines, which could limit its financial flexibility in the future.

Based on the company's current plans for clinical development, Relmada expects its existing cash position to support operations through key near-term milestones into 2025. However, the company's ability to secure additional financing, whether through public or private sources, will be critical to its long-term viability.

Upcoming Milestones and Catalysts

Relmada's key upcoming milestones include the planned interim analysis for the RELIANCE II Phase 3 study, which is expected to be reported by the end of 2024. This analysis will provide important insights into the study's progress and could represent a significant de-risking event for the REL-1017 program and the company as a whole. The interim analysis has three potential outcomes:

1. The study can continue with the pre-planned number of patients, which is the preferred outcome and the basis for a top-line data readout in the first half of 2025. 2. The study may continue with an increased sample size if a promising efficacy signal was observed. 3. The study may be deemed futile if the drug-placebo delta is below approximately 2.2 points, which would indicate that a clinically meaningful result is highly unlikely.

Additionally, Relmada is currently screening subjects and expects the first randomization very soon for a Phase 1 safety study of REL-P11 in obese subjects. If successful, the company plans to advance REL-P11 into a Phase 2a proof-of-concept study in 2025, exploring its potential in the treatment of metabolic indications.

Risks and Challenges

Relmada's primary risk is the continued development and potential commercialization of its lead product candidate, esmethadone. The failure of the RELIANCE I and RELIANCE III studies to meet their primary endpoints represents a significant setback, and the company's ability to successfully navigate the remaining Phase 3 program and secure regulatory approval for esmethadone remains uncertain.

Additionally, Relmada's financial position and ability to fund its ongoing operations is a concern, as the company has incurred substantial losses and negative cash flows since its inception. The company's access to additional financing, whether through public or private sources, will be critical to its long-term viability.

The competitive landscape in the MDD treatment market also poses a challenge, as Relmada's esmethadone will need to differentiate itself from existing and emerging therapies, such as Spravato (esketamine) and Auvelity (dextromethorphan-bupropion).

Lastly, the successful development and commercialization of the company's psilocybin-based program, REL-P11, remains uncertain, as this area of pharmaceutical research and development carries its own unique set of regulatory and commercial hurdles.

Industry Trends

The CNS disease treatment market, including the depression treatment market, is expected to continue growing due to the large patient population and high unmet medical needs. This trend bodes well for companies like Relmada that are developing innovative treatments for CNS disorders. However, the competitive landscape is intensifying, with several pharmaceutical companies pursuing novel approaches to treating depression and other CNS conditions.

Conclusion

Relmada Therapeutics is navigating the complex and highly competitive world of CNS drug development, with a primary focus on advancing its lead product candidate, esmethadone, as a potential adjunctive treatment for major depressive disorder. While the company has faced significant challenges, including the recent failure of its RELIANCE I and RELIANCE III studies, it remains committed to exploring the full potential of esmethadone and diversifying its pipeline with the development of its novel psilocybin-based program, REL-P11.

Relmada's ability to successfully execute its clinical programs, secure additional financing, and differentiate its products in the crowded MDD treatment landscape will be crucial to its long-term success. The upcoming interim analysis of the RELIANCE II study and the initiation of clinical trials for REL-P11 represent critical milestones that could significantly impact the company's future prospects.

Investors should closely monitor the company's progress, upcoming milestones, and the evolving competitive dynamics within the CNS therapeutics industry. While Relmada's innovative approach and diverse pipeline offer potential upside, the company's financial position and the inherent risks associated with drug development in the CNS space underscore the speculative nature of an investment in RLMD.