Relmada Therapeutics, Inc.

Greetings and welcome to Ramada Therapeutics' fourth quarter and full year 2022 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Excuse me, Mr. Tim McCarthy. Thank you. You may begin.

Thank you, operator, and thank you all for joining us this afternoon. With me on today's call are Chief Executive Officer Sergio Traversa, Chief Medical Officer Dr. Cedric O'Gorman, and Chief Financial Officer Magid Shenouda. This afternoon, RealMata issued a news release providing a business update announcing financial results for the three and 12 months ended December 31st, 2022. Please note that certain information discussed on the call today is covered under the Safe Harbors provision of the Private Security Litigation Reform Act. We caution listeners that during this call, Realmata'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 Realmata's press release issued today and in the company's SEC filings, including the annual report on Form 10-K for the year ended December 31st, 2021, and subsequent filings. This conference call also contains time-sensitive information that is accurate only as of the date of this live broadcast, March 23rd, 2023. Ramada 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, as always, and good afternoon to everyone. I'm pleased to welcome you to the Ramada Fourth Quarter and Fulia 2022 Conference Call. We are coming off from a challenge in 2022, but we have learned a great deal from our completed studies and believe that these learnings better enable us to realize the potential of REL 1017 for the treatment of MDD. Following the availability of top-line results for REL 1017 in Reliance 1 or Study 301 in December 2022, we have spent the last three months analyzing these data and considering the appropriate next steps. As a reminder, Reliance 1 or Study 301 and Reliance 2 or Study 302 are two Phase III sister two-arm placebo-controlled pivotal studies evaluating REL 1017 at 25% milligrams is an adjunctive treatment for MDD. Study 302 is ongoing. We are confident that we have identified the key issues that led to the Phase III data in Study 301 differing from the positive results seen in Phase II. As such, we intend to focus on REL 1017 as an adjunctive treatment based on the data generated to date and market potential, and will initiate one new trial, Study 304, and implement clinical critical changes to the ongoing study 302. Our study 302 protocol amendment has been finalized and is ready to be implemented immediately. And our new study 304 protocol has been drafted and will be ready to initiate by mid-2023. I would like to emphasize that broadly, we have learned that the two most important drivers for a successful depression trial are recruiting the appropriate patients with MDD, and controlling the placebo response. It is proposed that REL1017, unlike conventional oral antidepressants, accepts its antidepressant effect by inhibiting and correcting the consequences of hyperactive glutaminergic pathways. It does not affect mood by altering neurotransmitter levels, and it is thought not to have therapeutic effect in the absence of underlying MDD pathophysiology, namely glutaminergic dysfunction. This suggests that the drug would therefore have no effect in the situationally depressed or in those without a true diagnosis of major depressive disorder. The efficacy signal of REL1017 in a clinical trial would therefore be expected to be reduced directly proportional to the percentage of inappropriate subjects enrolled in the trial. You will see from the data we are going to share with you today the impact that clinical trial subject quality had on drug outcomes. During today's call, Cedric, our new chief medical officer, will provide the key details for our analysis of Study 301 that generated many valuable insights which influenced our future planned REL 1017 clinical programs. He will then review the changes we are making to study 302, and we'll also be implementing in our new study 304. Following Cedric's comment, Nagar Shenouda, our chief financial officer, will review our financial results and balance sheet. But I will say that we are sufficiently funded to fully execute our plan to reach data readouts for both phase three trials. We will then take your questions. And I will now turn the call over to Cedric. Cedric? The stage is all yours.

Thank you, Sergio. And first slide, please. To begin, you will recall that in Study 301, REL 1017 did not meet statistical significance on the primary endpoint. Treatment with REL 1017 did result in a 15.1 point change from baseline on the Madras total score, but placebo-treated patients experienced an improvement of 12.9 points representing a high placebo response. It is widely accepted by experts that if the placebo change on the Madras total score exceeds about 10 points, you have failed to adequately control placebo response. Despite this high placebo response, the placebo-adjusted delta favored REL-1017 and was 2.3 points, a clinically meaningful difference. Meta-analysis showed that the average drug placebo difference that has resulted in the approval of oral antidepressants over the past decades has been approximately two points. Next slide, please. We did see in study 301 that a statistically significantly greater proportion of patients treated with REL 1017 experienced therapeutic response, defined as a 50% or more improvement in the Madras total score from baseline at day 28, 40% with REL 1017 treatment, versus 27% for placebo with a p-value of 0.044. Next slide, please. Now let's take a look at the per-protocol analysis of study 301. It is important to note that this was a pre-specified analysis. Per-protocol refers to the population of patients who were treated to day 28 and who did not have any major protocol deviations. This pre-specified analysis only resulted in the exclusion of 29 patients and demonstrated a 3.1 placebo-adjusted difference in favor of REL 1017 at day 28 with a p-value of 0.051 approaching statistical significance. The total N in this pre-specified analysis was a robust 198 patients versus the 227 patients in the intent-to-treat primary analysis. From the primary and pre-specified analysis, including response rates and per protocol set, we believe the signal for efficacy with RAL 1017 is clear and robust, and that the continued development of RAL 1017 for the treatment of major depressive disorder is warranted and justified. After obtaining the full data set and final study report for Study 301, we further analyzed the results in a post-hoc manner to see what insights we could leverage to help us as we continue to develop REL 1017. We believe the following learnings will be a substantial driving force to optimize the likelihood of success for REL 1017. Next slide, please. As previously communicated, two of our highest enrolling sites were particularly impacted by paradoxical data and placebo response. When we excluded data from these two sites, the population was reduced by only approximately 40 subjects, and we saw a 4.1 point placebo-adjusted difference at day 28 on the Madras total score favoring REL 1017 with a p-value of 0.019. Next slide, please. We also found striking results when evaluating data from subjects coming into the study from different sources of referral, which for the purposes of this analysis, we divided into verifiable versus unverifiable sources of recruitment. Verifiably sourced patients were defined as patients who were known to the site, such as a current patient, patients found within the site's database, and referrals coming directly from healthcare professionals. Non-verifiably sourced subjects were those engaged through radio and TV ads, social media, internet searches, and recruitment companies. The prior studies had relied on self-reported medical history from the subjects regardless of the source of recruitment being verified or unverified. As a result, we believe that subjects recruited through unverifiable sources were not adequately vetted by the use of medical or pharmacy records to confirm the accuracy of their MDD diagnosis. Moving forward for our trials, medical and pharmacy records are mandated regardless of source of recruitment. Next slide, please. Here we present the change from baseline on the Madras total score when assessing patients from verifiable sources versus non-verifiable sources. We observed that verifiably sourced patients had a change from baseline of 17.2 points on the Madras 10 total score at day 28 versus 11.8 points for placebo. This amounts to a 5.5 point difference versus placebo with a p-value of 0.016. Again, this is a post hoc analysis, but from these data, it is clear to us that in clinically depressed patients from verifiable sources of recruitment, REL 1017 has a strong signal of efficacy. Next slide, please. It is also clear to us that the COVID-19 pandemic had a negative impact on trial results. This has been seen by other researchers in the MDD space. We believe that during the pandemic, many patients had situational depression, most likely related to isolation and other pandemic-related issues. When we cut the data using April 1st, 2022, when COVID restrictions were largely lifted, at the demarcation point, we saw a placebo-adjusted difference of 4.1 points favoring RAL 1017 on the day 28 Madras score for the post-pandemic subgroup. Next slide, please. Finally, we consulted with various internal and external stakeholders for additional perspective. These experts concluded that site visits in Study 301 were too long in duration with too many assessments driving up placebo response. The stakeholders also agreed that the highest enrolling sites with high placebo response were overrepresented in the final data set. Additionally, there were elements of the screening eligibility oversight that could have been improved to be more centralized rather than outsourced. Next slide, please. Based on these critical learnings and analysis, we intend to implement changes to our clinical programs going forward with a protocol amendment for the ongoing study and study conduct changes. These changes will allow us to more accurately identify and enroll patients with a verified diagnosis of MDD and will allow us to screen failed subjects with transient or situational depressive symptoms. We will only enroll patients from verifiable sources. More specifically, we will require medical and pharmacy records from prospective subjects to verify depression diagnosis and antidepressant treatment history. As previously mentioned, in the past, we have relied solely on patient self-report in these regards. In addition, we will be making site selection improvements. We now have a wealth of data on site performance from our recent trials and input from our thought leaders that will be drawn upon to select better quality sites going forward. Moreover, we intend to limit the number of patients per site, so no single site can have a disproportionate effect on study outcomes. We also plan to make changes to the protocol to reduce the duration of site visits and assessments. Previously, there were too many assessments and procedures that resulted in lengthy and burdensome site visits. Between extensive safety evaluations and secondary assessments, the study visits ran very long. While this is great in the sense that we now have an abundance of safety evaluations which look very good for REL 1017 in comparison to placebo, this hindered subject and site recruitment and hurt signal detection. We will also be dramatically simplifying our protocols going forward, again, with the goal of reducing expectation bias, placebo response, and enhancing signal detection. We also know that a simplified study design improves patient recruitment. Again, just to reiterate the positive, the completed studies provide us with very important controlled safety data, which looks very good with REL 1017 exposure, and that is not insignificant data when it comes to filing our NDA. In the ongoing study 302, we are planning to enroll approximately 300 patients and currently expect that trial to complete in the first half of 2024. Currently, we have enrolled one-third or approximately 100 patients into this study. We also intend to initiate a new study, 304, in mid-2023, also with a planned enrollment of approximately 300 patients, with completion anticipated in the second half of 2024. Our open-label one-year safety study is on schedule for completion and data release in mid-2023. With that, I will now turn the call over to Maggot for a review of the financials.

Thank you, Cedric. Today, we issued a press release announcing our business and financial results for the three and 12 months ended December 31, 2022, which I will now review. For the fourth quarter, ended December 31, 2022, total research and development expense was approximately $26.9 million as compared to $25.3 million for the comparable period of 2021. The increase was primarily related to an increase in stock-based compensation. This non-cash charge totaled $2.2 million in the most recently completed fourth quarter. Total general and administrative expense for the fourth quarter ended December 31, 2022, with approximately $11.8 million as compared to $8.9 million for the comparable period of 2021, an increase of approximately $2.9 million. The increase was primarily driven by an increase in stock-based compensation. This non-cash charge totaled $9.4 million in the most recently completed fourth quarter. For the fourth quarter ended December 31, 2022, the net loss was $37.9 million, or $1.28 per basic and diluted share, compared with a net loss of $34.4 million, or $1.80 per basic and diluted share in the comparable period of 2021. Turning to the results for the full year of December 31, 2022, Total research and development expense was approximately $113.3 million, as compared to $90.6 million for the comparable period in 2021. The increase was primarily related to an increase in costs associated with the execution of a broader clinical program for REL 1017. For the year ended December 31, 2022, total general and administrative expense was approximately $47.9 million as compared to $35.1 million for the comparable period of 2021. The increase was primarily driven by an increase in stock-based compensation. For the year ended December 31, 2022, the net loss was approximately $157 million, or $5.30 per basic and diluted share, compared with a net loss of $125.8 million for $7.16 per basic and diluted share in the comparable period of 2021. As of December 31, 2022, we had cash, cash equivalents, and short-term investments of approximately $148.3 million, compared to cash, cash equivalents, and short-term investments of approximately $211.9 million as of December 31, 2021. Based on the updated clinical development plan, Sergio and Cedric shared earlier, our current cash position provides us with ample runway or approximately two years of cash. I'll now turn the call over to Sergio. Sergio?

Thank you, Magid, and thank you, Cedric. So in summary, we are confident that we have an approvable draft and need to focus on clinical trial execution. Based on the results of Study 301, we now know how to identify the most reliable sites, the most suitable patients, and greatly improve our study protocols. Also, importantly, all other preclinical, clinical, and CMC pieces are in place for a successful NDA filing for REL 1017. Additionally, as stated earlier, we are sufficiently funded to fully execute on our plans for REL 1017 development as we end 2022 with approximately $148 million in cash, cash equivalent, and short-term investment. We look forward to reporting on progress with study 302 and 304 through the year. And now I will ask the operator to please open up the call for questions. Operator?

Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions.

Our first question comes from Uyir with Mizuho.

Please proceed with your question.

Hey, guys. Thanks for taking my questions. So I guess my first question is, I think you indicated that for 302, the protocol is pretty much finalized and you're ready to start immediately. So have you started re-enrolling and re-dosing the patients in 302? And secondly, for 304, do you need the FDA blessing before you can start the trial? And I guess my third question is... On the open label study, what data do you think it would be helpful, I guess, for investors to look at and to gain greater confidence in your molecule? Thanks.

Thank you, Yui. I believe, Cedric, these are questions that are for you.

Absolutely. Thanks for the question. And I'll address them in the order they were asked. So is 302 open for recruitment? Yes, it is. It was moving a little bit more slowly over the past quarter as we worked to streamline the existing protocol and make the necessary amendments to make it a more efficient study. And we will add sites to get that study moving ahead at a nice pace. So it was never closed or paused. It was open for recruitment. And now we will re-energize the efforts on that trial with the amended protocol. With regard to the new study and the requirement for FDA blessing to run the study, all studies that we design are submitted to the FDA. And so they do have the opportunity to come back and give us their thoughts or their recommendations. But as you can imagine, We've already had quite a bit of dialogue with the FDA, and we have quite a lot of understanding about what these trials need to look like. So there wouldn't be any anticipated divergence from what the FDA would expect in a trial like this. So it's pretty straightforward. And as to what kind of data comes from the open label study would be of interest to the community, I suppose the very fact that running a 12-month open label study allows you to get your necessary safety exposures. That's important for the NDA filing. Looking at, in an open label setting, real-world setting rates of adverse events will contextualize what patients might expect once they get this treatment in the future. And discontinuation rates are always of interest. And from the efficacy perspective, it's real-world efficacy findings. You can look at the timeline of treatment effect and also then Because it's a long-term open-label study, you can learn quite a bit about sustained response and treatment out to 12 months.

Thank you. Our next question is from Mark Goodman with SVB Securities.

Please proceed with your question.

Thanks for taking my question. This is Rudy on the line from Mark.

I have a question regarding study 302. You mentioned that study already enrolled around 100 patients. So how should we think about the impact of the new enrollment criteria, especially in those patients who are already enrolled?

And also, can you talk about the powering for both studies with your new protocol?

Well, thank you, Cedric. You're in great demand today, so it's for you too.

Thanks, Rudy. And if I understood your question, because there was a little bit of kind of metallic sounds to your voice, but I think you were saying what to learn from the first 100 patients in that study and how one should think about the next 200. What I will say is that the most important outcomes for this study around the primary efficacy analysis There are not changes in that regard. So basically, the amendments were aimed at reducing the amount of assessments, the amount of time that the patients were spending at the site in order to control for those issues that we saw, particularly placebo response. And so the primary outcome of interest, efficacy measurement, is unchanged. and the approach to dosing and evaluating the patients for the purpose of that is very much the same. So with regards to learning from the 301 study, obviously we can work to, if one were to assume that maybe the beginning of 302 was similar to 301, Obviously, there are ways that we feel confident, having discussed it internally and with clinical trialists, to design a more efficient second leg of this ongoing study, if you like, to bring us to a positive study. That's what we've set out to do by amending this protocol. With regards to, at this point, powering and statistical analysis, we just would not be ready at this moment to get into those details.

Got it. Thanks.

Our next question is from Andrea Tan with Goldman Sachs. Please proceed with your question.

Hi, everyone. Thanks for taking my question. Maybe another one for Cedric, if you don't mind. I'm curious, given the receptivity for Avelity so far, just wondering if you could speak on updated thoughts on how you would see REL 1017 existing in the treatment landscape there, and are there any learnings that you can take from the early launch so far?

Andrea, thank you for the question, Cedric. This is definitely for you.

I think it's tremendous to see new drugs being approved with new mechanisms of action. the MDD patient population continues to be underserved. And so I think it's terrific. The more opportunities we have for approvals, the better. And obviously, there are some similarities between REL 1017 being an MDA receptor antagonist. And I think it's very exciting for that particular realm of mechanisms that that there's greater access and people are willing to develop these drugs. I haven't really any learnings or insights based on early launch activity or anything like that.

I focus on the clinical trial design here.

Andrea, if I may, Sergio here. The positioning in the marketplace of the drug you mentioned and REL 1017, if REL 1017 will be approved, it will be quite a bit different. REL 1017 is going to be adjunctive, so it will be one single tablet that can be added to any other antidepressant used. And there is no antidepressant approved for that indication. The other drug is a radio combination, so it's unlikely. that would be widely used as an adjunctive to a third antidepressant.

I hope this answers your question. Thanks, Sergio. Our next question is from Andrew Tai with Jefferies.

Please proceed with your question.

Hi. Thanks. Good afternoon. Thanks for taking my question. I appreciate you walking us through these analyses that you did. First question is, what would the very first 303 monotherapy study look if you were to do a similar set of post-hoc analyses? Would you get a similar type of signal or favorable signal for 1017? And then secondly, as we think about reliance 2, is there a way to know if the first 100 patients indeed are not reliant tainted, there's no issues basically. Or said another way, why should we feel confident the first 30% of patients or so who have been enrolled in Reliance II won't hurt the study outcome? Because, you know, technically some of them could have come from unverifiable sources, correct? Thanks.

Eric. Okay. Thanks, Andrew. So the first question about monotherapy. Yes, we did. We did apply the same analysis to the monotherapy study. And again, in the monotherapy study, had a much higher mean change from baseline for placebo of about 14 points, and drug outperformed placebo by approximately one point. So it had a higher placebo problem, but the delta was also a little less than what we saw in the adjunctus. But you're right, when we looked at verifiable, unverifiable, pre-pandemic, post-pandemic, and different splits of the data and sites, we definitely saw the same issues. So we don't feel that the issues were unique to the Adjunctive 302 study, but rather broadly across the Reliance program. The decision to pursue Adjunctive was a strategic decision, really, based on the fact that 302 was ongoing with, as you pointed out, a third of patients enrolled. And by improving that design and starting with a new streamlined adjunctive study, a new study, that would be the clearest and quickest path to filing for the indication of adjunctive treatment of MDD with the agency. Now, the question as to whether, you know, can you know anything from the first 100 subjects? Well, you can't really because it's blinded. But what you can work on is you can look at how your studies did over time. And we spent a little bit of time pointing out the pre-pandemic or after the restrictions were lifted and the impact and how the Delta improved. And so we do think that maybe the later part of the 301 study is more reflective of the early part of the first 100 patients that we have in 302. And some other thoughts about sample sizing gave us confidence to say, well, you know, if we had an original target of about 300 patients in these trials, the opportunity for the drug to separate despite all those challenges would exist. And so we've done a number of modeling exercises and talking to statisticians and talking to the clinical sites. And so, yes, to answer your question directly, we feel pretty confident that with the amended protocol, and with the considerations around target sample size, this study could indeed be positive.

And also consider that if you look at the data from the top down, the major impact on study 301 was localized on two sites that enrolled about 40 patients together. These two sites, they were not never been present in study 302. Right.

Right. Okay. And then one more is just on the 304 study, Reliance 4. Are there any differences in the study design relative to Reliance 2, the ongoing one? And does it make sense to start at Reliance 5, actually? Thanks.

Well, let me start with Reliance 4 before we talk about Reliance 5. But with the 304 new study, it will be significantly different in terms of the various scales and assessments that we will be asking the raters and the PIs to administer with the patients. Now, there are a couple of standard things that you don't change, like your primary efficacy outcome measure. But again, it's much easier to start with a blank slate than it is to amend a protocol to kind of remove things. So it will be very similar in terms of two-arm study, four weeks in duration, primary efficacy outcome the same, and there will be less exploratory secondary endpoints just so that we can really focus in on the efficacy.

Very helpful. Thank you, guys. Our next question is from Jay Olson with Oppenheimer. Please proceed with your question.

Hey, guys. Thanks for the update, and thanks for taking the question. First question is for Cedric. Could you please talk about any due diligence that you did prior to making your decision to join Realmada, and what did you learn from your peers or KOLs that you may have spoken to about REL 1017, and what do you consider to be the most important capabilities for the chief medical officer to optimize the probability of success for MBD clinical trials? And then I had a follow-on, if I could, please.

Thank you for that question, and I'm delighted to be part of the Ramada team. They're a very thoughtful, professional group of people. I've only been here now since January 6th, but I already feel part of the family. And when Sergio first reached out to me and asked would I be interested in taking the role, you're absolutely right. I did want to look at the data under CDA and understand what went wrong in the study and if I still believed that the drug had efficacy potential. And if it did, what could I reasonably come in and suggest be changed in order to optimize the signal. So it was very obvious in my mind and with the key opinion leaders and thought leaders that you mentioned that when I looked at the placebo response, one and all acknowledged that this was an uncontrolled placebo response. And it's very hard to draw any conclusions. If you hadn't kept it to about 10 points, you really couldn't say one way or the other about the drug. So then I wanted to look at the protocols as they were run and see if I had ideas coming into the design of the trial that I feel I could actually be of help or benefit to them. And so I think that by everything that we're trying to do right now, streamlining the protocols, I believe that can be achieved. And was there a second part to your question?

No, I think that's everything. Thank you. That's super helpful. I did have one follow-up question on Reliance 2 when you see the results. How do you plan to evaluate patients who enrolled pre- versus post-protocol amendment? And is the study powered for a subgroup analysis of pre- versus post-protocol amendment? And what influence do you expect to see on the results from the protocol amendment? Thank you.

You want to answer that? Well, the second part, first, the effect on the results, I'm hoping to control for placebo response because I won't feel like I succeeded in my job unless I can bring placebo response down. And that should widen the delta, the drug-placebo difference, because one thing that REL 1017 has had in common is across all the trials is the same magnitude and trajectory of improvement. And so if we can keep placebo down, I would expect to see a nice separation. And the first part of the question related to, remind me? Evaluating patients pre-version. Oh, yeah. Yeah. I mean, we are definitely looking at that and intend to do that as part of the analysis plan, but the specifics of that, I just wouldn't be ready to get into the detail of it just yet with you. But it's a great and important demarcation in terms of data analysis.

Right. And Jay, we did a surgery here. We made a conservative assumption on the first one-third of the patients. We assumed that The data will be similar to what we have seen in 301, and we also made the assumption conservative on what the next two-thirds of the trial patients should be to make the study successful, and we reached a conclusion that it's definitely worth to move forward and complete the trial.

Okay, great. Thank you. That's super helpful. I appreciate that, Sergio, and thank you both.

Thank you. We've reached the end of the question and answer session. I would now like to turn the call back to Sergio Traversa for closing comments.

Thank you very much. And in closing, I remain grateful to the RealMata team for their continued hard work and dedication to executing our mission. I would like also to extend my sincere thanks to the participants and clinical partners involved in the REL 1017 trials for the effort in advancing this important product candidate through the clinic. With that said, thank you very much to everyone, and I wish to everyone a good end of the day. Thank you.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.