Relmada Therapeutics, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Ramada Therapeutics Inc. 4th Quarter and Full Year 2022 Results Call. At this time, all lines are in a lesson-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star 0 for the operator. This call is being recorded on Tuesday, March 19, 2024. I would now like to turn the conference over to Mr. Tim McCarty. Thank you. Please go ahead.

Thank you, Operator, and thank you all for joining us this afternoon. With me on today's call are Chief Executive Officer Sergio Traversa and Chief Financial Officer Maggie Shenouda. This afternoon, Realmada issued a press release providing a business update announcing financial results for the three and 12 months ended December 31, 2023. Please note that certain information discussed on the call today is covered under the safe harbor provisions of the Private Securities 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 the company's SEC filings, including in the annual report on Form 10-K for the year ended December 31st, 2023, and subsequent violence. This conference call also contains time-sensitive information that is accurate only as of the date of this live broadcast, March 19th, 2024. Realmada 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'd like to turn the call over to Sergio. Sergio?

Thank you, Tim, as always. Good afternoon to everyone, and welcome to the RealMata fourth quarter and full year 2023 conference call. We are continuing to make solid progress in advancing the ongoing phase three program for REL 10-17 in major depressive disorder, or MDD, as well as in the promising preclinical novel psilocybin program, all of which I will briefly cover today. Following this, Magid will review of our four-quarter and full-year 2023 financial results, and then we will take your questions. Let's begin with an update on the Phase 3 program for REL 1017. As you know, Realmada is focused on developing REL 1017 as an adjunctive treatment for MDD. As previously communicated, we have made critical changes to Reliance 2, the ongoing study 302, a phase 3 two-arm placebo-controlled pivotal study evaluating REL1017 25 milligrams for adjunctive NDD aimed at controlling placebo response and improving the enrollment quality. The amendment study 302 protocol has been implemented across all our clinical sites. Enrollment continues to steadily progress, and our ability to leverage our close relationship with the study site is paying dividends. Moreover, the ongoing initiative we put in place to drive trial awareness with prospective patients are also bearing fruit. Importantly, we are evaluating the productivity of sites on a real-time basis and making changes where needed. As a reminder, we plan to enroll approximately 300 patients into Reliance II. Based on our current projection, we expect the enrollment into Reliance II to be completed in mid-2024. In our second Phase III trial for REL 1017, named Relight or Study 304, we begin those inpatients during the third quarter of last year. Relight also has a planned enrollment of approximately 300 patients, that is planned to be completed by the end of 2024. To reiterate what we have said previously, like Relias II, Relias is a randomized, double-blind, placebo-controlled, four-week trial evaluating the efficacy and safety of REL1017 as an adjunctive treatment for MDD in patients experiencing inadequate response to ongoing background antidepressant treatment. The primary endpoint of both studies is the same, is the change in the Madras total score from baseline to day 28 as compared to placebo. I should highlight that we made significant changes to our screening and enrollment processes in order to ensure that we have patients that meet all the quality criteria. More specifically, we have instituted a comprehensive adjudication process through which we now require medical records for all patients enrolled in Reliance 2 and Reliance. Given this, our screen failure rate in these studies is now approximately 80% versus 50% previously in Reliance 1 and Reliance 3, our previously completed Phase 3 trial for REL 1017. We strongly believe that these changes will significantly enhance the probability of success of our current studies. Of note, We have completed all the necessary preclinical manufacturing and phase one studies required for a potential REL 1017-NDA filing, and are now focused on execution of various precommercial readiness activities. Moving now to our promising preclinical novel, modified release silo-typing program. You may recall that at last November, AASLD meeting, the liver conference, compelling preclinical data were presented in a poster presentation. These data demonstrated the beneficial effect of low chronic dose psilocybin on multiple metabolic parameters in a rodent model of metabolic dysfunction associated steatotic liver disease, or MASLD. These initial promising preclinical results support the therapeutic potential of low chronic dose of psilocybin. As we said previously, based on this data, low dose psilocybin could improve lipids and glucose with potential fewer side effects over other investigative treatment approaches such as GLP-1, glucosol, and GIP. We intend... to initiate a single ascending dose phase one trial in obese patients in the first half of 2024 to define the pharmacokinetic safety and tolerability profiles for our modified release psilocybin formulation in this population. This will be followed by a phase two A trial to establish critical proof of concept. Data from the Plan 2A study is anticipated in the first half of next year. Just to summarize our multiple upcoming key milestones over the next 12 to 18 months, we anticipate completing enrollment in the ongoing Reliance 2 study mid-2024, with top line in the second half. In addition, we plan to complete enrollment in the Reliance study by the end of this year. We intend to initiate a Phase I clinical trial for the modified release formulation of psilocybin in the first half of this year. Moving on, while MAGA will provide a detailed review of our financial, I would like to emphasize that with current cash on hand to take us into 2025. RealMada remains sufficiently funded to fully execute our plans to reach data reach-outs from both REL 1017 Phase 3 trials, Reliant 2 and Reliant, as well as conduct the planned Phase 1 for our modified-release psilocybin formulation. I will now turn the call over to Magid to review our fourth quarter and full-year financial results. Magid.

Thank you, Sergio. Today, we issued a press release announcing our business and financial results for the three and 12 months ended December 31, 2023, which I will now review. For the fourth quarter ended December 31, 2023, total research and development expense was approximately 14.8 million dollars as compared to 26.9 million dollars for the comparable period of 2022, a decrease of approximately 12.1 million dollars. The decrease was primarily associated with the completion of two Phase III trials and the long-term open-label safety trial, Study 310. The research and development non-cash charge related to stock-based compensation totaled $1.8 million in the most recently completed fourth quarter. Total general and administrative expense for the fourth quarter ended December 31, 2023, was approximately $12.1 million as compared to $11.8 million for the comparable period of 2022, an increase of approximately $243,000. The increase was primarily driven by an increase in compensation expense due to higher employee-related costs. The general and administrative non-cash charge related to stock-based compensation totaled $8.1 million in the most recently completed fourth quarter. For the fourth quarter ended December 31, 2023, the net loss was $25.2 million, or 84 cents per basic and diluted share, compared with a net loss of $37.9 million, or $1.28 per basic and diluted share, in the comparable period of 2022. Turning to the results for the full year ended December 31, 2023, total research and development expense was approximately $54.8 million, as compared to $113.3 million for the year ended December 31, 2022, representing a decrease of $58.5 million. Again, the decrease was primarily driven by a reduction in study costs associated with the completion of two Phase III trials and the long-term Open Labels Safety Trial Study 310. For the year ended December 31, 2023, Total general and administrative expense was approximately $48.9 million, as compared to $47.9 million for the year ended December 31, 2022. Again, an increase was primarily driven by an increase in compensation expense due to higher employee-related costs. For the year ended December 31, 2023, the net loss was approximately $98.8 million, or $3.28 per basic and diluted share. compared with a net loss of $157 million or $5.30 per basic and diluted share for the year ended December 31, 2022. As of December 31, 2023, we had cash, cash equivalents and short-term investments of approximately $96.3 million compared to approximately $148.3 million as of December 31, 2022. Cash use and operations for the full year 2023 was $51.7 million. Based on our current clinical development plan, our current cash position provides us with ample runway into 2025. Of note, this time period includes data readouts from both Phase 3 trials, Reliance 2, Study 302, and Relight, Study 304, as well as the initiation of our planned Phase 1 trial of our modified release psilocybin formulation. I will now ask the operator to please open the call for questions. Operator?

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your telephone keypad. You will hear a three-tone prompt acknowledging a request. Questions will be taken in the order received. Should you wish to cancel your request, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from the line of Mark Goodman from New Partners. Please go ahead.

Hi, good afternoon. This is Basma on for Mark. For Alliance 2, could you please remind us again how many patients were enrolled before the protocol amendments, and do you expect that due to the inclusion of these patients prior to the amendments, that there will be any source of, I would say, noise to the trial, or were you able to go back and check the inclusion criteria? Thank you.

Well, thank you. That's Sergio here. That's a great question. Previously to the amendment, we enrolled about 80, 90 patients And so the, as of now, I mean, they will be included in the final analysis. And the, like, we have noticed, if I can expand for a bit, we have noticed that there was a big difference in patient enrolled when the COVID restriction were in place and after. the COVID restrictions were lifted. So of these 80, 90 patients, about half were enrolled after the COVID restrictions were lifted. So, I mean, the data are blinded, so we don't really know how the data would look like, but we don't have any reason to believe that this patient would carry any particular baggage, also because the sites that where the issue with data was generated in the previous trials, they've never been phrased in RELAS2. So the bottom line is that, yes, this patient will be included in the final analysis, but we don't have any particular reason to believe that would carry any particular burden on the final review. And we do have on the call Dr. Andrew Cutler, that is our a special advisor for clinical development. And maybe, Andrew, if you are online, you may want to expand a little bit on the question that is, will these patients enrolled previous to the protocol amendment carry any weight on the final results?

Well, thank you very much. I'm here. Excuse me. I think it's a very reasonable question, but I'm pretty confident I would say I'm very confident that we should be successful. The previous study really was very close to being positive. It just missed. And so you don't have to be perfect here. We just have to be better. And I think the changes that have been made, particularly with respect to analyzing the quality of the sites and the protocol amendment will make the quality of the second cohort here, which is going to be the majority of the patients, I think will carry through. So I'm very confident that despite having some patients enrolled previously, you know, I still think we're going to be successful overall.

Thank you. That's very helpful.

I hope that answers your question.

Yes, thank you.

Thank you. And your next question comes from the line of Oyer from New Zealand. Please go ahead.

taking your questions. So I have a couple. So just following up on the previous question, you know, at these sites that enroll patients previously, could you maybe elaborate on or remind us just like were most of these patients referred by physicians and, you know, were there large volumes of patients or just a few patients at these sites? Yeah, so that's sort of the first questions, and I'll ask a second question after that. Thanks.

Yeah, sure. Thank you. There were two sites where together they enrolled about 20% of the study 301, the adjunctive treatment study, and they've never been present in 302. And, you know, there were a couple of issues there. We don't really know why the data of these two sites were the opposite or completely different from the other 41 sites in the trial. But, you know, just to accept that, you know, that was reality. But they've never been in the study 302. And now we are limiting the number of patients enrolled for each site. So we won't have any site that will, like, make a major impact on the final number. So we feel confident that with these measures, what happened in the study 301 will not happen again.

Okay. Yeah, if I could add one other quick thing. Another modification we made was requiring medical records to ensure that these were legitimate patients who actually were taking an antidepressant. And that was not done in the 301 study. So that's another improvement we've made.

All right. Thanks. And maybe more presently, could you provide some color on maybe the proportion of patients who've been so far enrolled in Reliance 2 and maybe Relight as well? And after that, maybe just briefly, Magid, like just tell us, help us think, to think about how to model the cadence of spending. Is it sort of relatively flattish or would it sort of go down towards the end of the year? Thanks.

Yeah, I'll take the first one. We may not want to go like in real details about number of patients, but Like we passed half of the trial at the end of last year. And Rombin is progressing steadily with some variability, maybe week to week. But, you know, it's on track. And, you know, we are confident that we are at top line data in the second half of this year. Like when we get closer, we'll be a little bit more precise. But, you know, we stay with, you know, there's a little bit broad guidance about second half of this year. And reason being that we are screening quite a bit of patients. I mean, I don't, well, the number of screened patients is very large. What we have noticed with the improvement on the protocol, clearly the screening failure had went up significantly. We were around 50% on the previous trial. I think I mentioned that before. We are now approaching 80%. So, I mean, the selectivity in enrolling patients is much higher. We did look, if I can expand, on the reason why these patients are not enrolled and have been screened, and there are legitimate reasons. And so these are the patients that generated the issue in the previous trials, and definitely we don't want these kind of patients again in the new trials. So, you know, the screening process, it's going very, very well. And the screening failure, for legitimate reasons, it's much higher. So we do believe that the quality is very, very good in this trial. I don't know, Andrew, if you want to add something.

No, I think you've said it well. It's in line with what I said earlier. We're really trying to make sure we have the right patients legitimately with the illness and not patients with mild depression or who are not legitimate patients. So we're really trying to be careful about selecting the right patients.

Mag, I think the second one is both for you.

Sure. Yep, yep. So hi, Loy. Thanks for the question. So G&A expense should, you know, follow the pattern we've had in 2023 on a quarterly basis. Um, you know, a lot depends on enrollment patterns, but our current expectation is that R and D should pick up a little bit, um, in the third quarter. Um, and then, excuse me, in the first quarter, in the first quarter, and then, um, again, you know, increase in, um, the second quarter and then, um, you know, stay at that level through the third and fourth quarter, as you can sort of see enrollment pickup in, um, 302 and then pick up in 304 as well. So I hope that helps.

Very helpful. Thank you. Sure. My pleasure.

Thank you. And your next question comes from the line of Andrew Tsai from Jefferies. Please go ahead.

Hey. Good afternoon. Thanks for taking my question. So first one I noticed in your prepared remarks you said how you're monitoring sites in real time. making changes accordingly. So what exactly are you monitoring for and what kinds of changes are you making on a day-to-day kind of basis? And then secondly, are there any learnings or thoughts that you might have on SAGE's recent rejection for their MDD study? Sorry, not study, but the approval. And if there's any read-through or any lessons learned that you think you could apply to Ariel1017, thanks.

Well, thank you, Andrew, and thanks for the call. I will ask you after to repeat the second question because I didn't get it 100%. But the first question is, I think Andrew can go a lot more in detail since he has run a site for 30 years and has done many, many CNS clinical trials. There is no magic, right? You monitor, in general, you monitor every, like, three, four patients, four, five patients involved by the site, how the blinded data they look like. Of course, they're blinded, so you don't know if they are good. But you definitely can have a good understanding if there is something wrong, right? when you have data that the variability week over week of the first four weeks is one week up, one week down, and you go up and down, you know, usually that's not the behavior that placebo and the drug do, right? When there is a trend, there is a trend. So that's one signal. And then, you know, the overall quality of the site, right? How, you know, the quality is documenting data, they put the data in the database, right? So there is no one single factor. Is there a combination that can give you some sense if the site is providing like the service that we would like to? Andrew, I mean, you have done this for a long time. Do you want to add anything?

Yes. Yes, there are various quality indicators you look for. And I think we're watching, we're minding the store much more closely here. You look for things like are the rating scales consistent? Are they kind of all moving in the same direction? You look for adherence to the protocol and what we call protocol violations, which indicate sloppiness. You know, this time we're being careful to not let, as Sergio said, any sites just kind of get off to the races and recruit too many patients or too fast. So there are a variety of quality indicators you look for and consistency things you look for. as Sergio said, and we're watching those. And then if there's a site that has issues, we're actually stopping their enrollment. We're trying to figure out what's going on and deciding if we want to continue with them or not.

Hope I answered your question, Andrew, and if you don't mind to repeat the second one because I didn't get it.

Oh, perfect. You know, Sage recently had their NDA rejected for MDD. And I'm just curious if the reason behind that rejection has any bearing or read-through to your, you know, as methadone, basically.

Sergio, maybe I could help. Maybe I could help with this one. Yes, you can.

Go ahead.

I was very involved. I was very involved with that. It's really apples and oranges. Their paradigm was very different. It was a two-week treatment paradigm with a very different mechanism. And Really, the problem was they didn't have a good story for how two weeks of treatment would hold a charge. And in their phase two study, there was a suggestion that the efficacy continued on beyond the two weeks. However, it was not well replicated in phase three. So the FDA had concerns about that. It's a very different paradigm, very different medicine. I don't see it as an issue or anything that would influence what we're doing.

Makes sense. Okay, thank you very much. Thank you, Andrews, both Andrews.

Thank you. Once again, that is star and one to ask a question. And your next question comes from the line of Andrea Tan from Goldman Sachs. Please go ahead.

Good afternoon. Thanks for taking our questions. Sergio or Andrew, just curious if you're able to share what Reliance 2 and the Relight studies are powered to detect and remind us what you're assuming here for placebo responses.

Yeah, it's great. Thank you, Andrea, for the question. But we haven't filed with the FDA the final statistical plan. You usually do it at the very end. There is no advantage to do it before. But, you know, it's a fair assumption that usually what you want to detect is a clinically meaningful effect that, according to the expert, in adjunctive treatment is like two, two and a half points. So the trial is designed to detect that kind of a change from placebo. And that would be the minimum, right? We hope we can do better than that based on the phase two data, but that's a fair assumption that would be the statistical plan. And with 300 patients involved, it is feasible. It's realistic.

And then maybe just one quick question on RELP11 here. I wanted to confirm which indication you're looking to study this in.

Yes. We actually did not discuss the indication. Reason being that we don't really know exactly what kind of indication we'll look at. We have to do phase one for pharmacokinetics, all the parameters, the new formulations, the new concepts. low-dose chronic treatment, what we can see is the effect that had on the rodent model that, according to the expert, it's somewhat relevant for what should happen in humans. And what we have seen is that there is a material decrease in body weight with no diet, with continuing the high-fat, high-glucose diet. So despite high-fat and high-glucose diets, the rodent, they lost weight, not as much as a GLP-1, but enough to make it like a valuable drug to treat obesity. But at the same time, we have seen a material decrease in glucose level, like similarly, probably a little higher than metformin. And we have seen a very material effect on fatty liver. And all these, like continuing a diet with high fat, high glucose, So it kind of works on all the span of parameter metabolic syndrome, so weight, glucose, and fatty liver. So, I mean, there's a fair assumption that the indication will be a metabolic one. We haven't decided yet, and will be decided after phase two to prove a concept specifically what the indication will be, that it could be maybe not obesity by itself, But, you know, it could be also a combination with the GLP-1 and to overcome some of the limitation of the GLP-1, like muscle loss. But, you know, we need to see the data. And there is, like, a wide range of possibility all in the metabolic area that are suitable. And we'll try to do something that is, you know, a reasonable – good way to get the drug approved in a relatively short amount of time. I don't have the straight question. Yeah, the straight answer, but that's where we are now, waiting for efficacy data to make the final decision where to go.

Got it. Maybe just one follow-up there. Have you seen evidence to date preclinically that you are avoiding loss of muscles? when you've tracked the weight loss in these rodents?

Well, in the preclinical, no, we haven't seen it because we haven't looked at it. But it's a fair assumption that since there is no change in diet, the model, the rodent, don't lose weight because they stop eating or they reduce the food intake like with GLP-1. So psilocybin is 5-H2A agonist, and it acts at the metabolic level. So pretty much it increases the metabolism of fat. So mechanistically, it's not really expected to have loss of muscles, unlike the GLP-1.

Okay. Thanks, everyone.

Thank you, Andrea.

Thank you. And your last question comes from the line of Velma Fogliatti from Guggenheim. Please go ahead.

Good afternoon. Thank you for taking our question. This is Velma Fogliatti. So following up to the previous questions, can you clarify if you already performed the real-time stat checking in the previous Reliance studies, or is it something that you have implemented new only now? And then I wanted to ask you about the statistical plan, if that is run by a third party or internally within the company. Thank you.

Thank you for the question. If I understood correctly, the first question is that we did implement a monitoring of the sites in the previous studies, and the straight answer is no. And, you know, it was COVID, it was a little bit more complicated to do it than now, and we didn't do it. But that's only one of the changes operational that were made in the new protocol. And so that was one, but, you know, the required for medical record is probably the biggest one. And so, I mean, the old goal, as we discussed, you know, a few times or many times, is to really enroll patients that are affected by biological depression. And they have a history. This is an adjunctive trial. So the patient has to come in already on some antidepressant. And to have access to medical and pharmacy records, it's a good proxy to be sure that the patient is a real patient. These are things that we didn't do in the previous trial for a variety of reasons. And so can you repeat the second one?

And, yeah, I was asking if the statistical plan is designed by a third party or internally within your company?

Yeah, no, it is – well, it is – design is a collaboration, and so by these – it is – we have the help of, like, a large statistical company independent that advises us on the statistics.

Got it. Thank you.

Thank you.

Thank you. There are no further questions at this time. Mr. Traversa, please go ahead.

Well, thank you. In summary, we remain confident that we do have an approvable drug in route 1017 and are excited by the potential of our novel psilocybin and derivative programs. So we look forward to reporting on progress with our pipeline in the months ahead. And to close, I'm grateful to the Ramada team for their continued hard work and dedication to executing on our mission. And I would also like to extend my sincere thanks to the patients and clinical partners involved in the REL 1017 trials for their participation in the advancement of this promising investigation on medicine through development. Thank you very much to everyone.

Thank you. That concludes our conference today. Thank you for participating. You may all disconnect.