Relmada Therapeutics(RLMD) - 2023 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Unaudited Condensed Consolidated Financial Statements Relmada Therapeutics, Inc.'s unaudited condensed consolidated financial statements for Q1 2023 and 2022, including balance sheets, operations, equity, cash flows, and detailed notes Condensed Consolidated Balance Sheets Total assets and stockholders' equity decreased from December 31, 2022, to March 31, 2023, due to reduced short-term investments and increased accumulated deficit | Metric | March 31, 2023 (Unaudited) | December 31, 2022 | | :-------------------------- | :------------------------- | :------------------ | | Cash and cash equivalents | $28,894,360 | $5,395,905 | | Short-term investments | $103,547,634 | $142,926,781 | | Total current assets | $135,531,574 | $152,870,304 | | Total assets | $135,566,449 | $152,905,179 | | Total current liabilities | $10,097,257 | $12,468,877 | | Total stockholders' equity | $125,469,192 | $140,436,302 | | Accumulated deficit | $(488,432,511) | $(462,110,935) | Unaudited Condensed Consolidated Statements of Operations Net loss decreased for Q1 2023 compared to Q1 2022, driven by lower operating expenses, especially R&D, and increased other income | Metric | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Research and development | $15,861,010 | $25,012,853 | | General and administrative | $12,292,599 | $13,284,570 | | Total operating expenses | $28,153,609 | $38,297,423 | | Loss from operations | $(28,153,609) | $(38,297,423) | | Total other income (expenses) | $1,832,033 | $(1,448,360) | | Net loss | $(26,321,576) | $(39,745,783) | | Loss per common share | $(0.87) | $(1.40) | Unaudited Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased from $140.4 million to $125.5 million due to net loss, partially offset by stock-based compensation | Metric | December 31, 2022 | March 31, 2023 | | :-------------------------- | :---------------- | :------------- | | Total Stockholders' Equity | $140,436,302 | $125,469,192 | | Stock based compensation | - | $11,354,466 | | Net loss | - | $(26,321,576) | - For the three months ended March 31, 2022, the company raised $29,583,542 from an ATM offering, $300,006 from warrant exercises, and $64,800 from option exercises[15] Unaudited Consolidated Statements of Cash Flows Cash and cash equivalents significantly increased to $28.9 million from $5.4 million due to net cash from investing activities, despite operating cash usage | Metric | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(16,505,094) | $(19,429,743) | | Net cash provided by (used in) investing activities | $40,003,549 | $(10,027,668) | | Net cash provided by financing activities | $- | $29,948,348 | | Net increase in cash and cash equivalents | $23,498,455 | $490,937 | | Cash and cash equivalents at end of period | $28,894,360 | $44,934,376 | Notes to Unaudited Condensed Consolidated Financial Statements Detailed notes explain the company's business, accounting policies, financial instruments, equity, and commitments, providing context to the financial statements NOTE 1 - BUSINESS Relmada Therapeutics, Inc. is a clinical-stage biotechnology company developing esmethadone (REL-1017) for CNS diseases, facing inherent industry risks - Relmada Therapeutics, Inc. is a clinical-stage biotechnology company focused on developing esmethadone (REL-1017), an N-methyl-D-aspartate (NMDA) receptor antagonist, for central nervous system (CNS) diseases[21] - The company faces risks common to the biotechnology industry, including dependence on collaborative arrangements, new technological innovations, key personnel, proprietary technology protection, and compliance with FDA and other governmental regulations[22] NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This section outlines accounting principles including basis of presentation, consolidation, liquidity, estimates, and policies for cash, investments, patents, leases, fair value, taxes, R&D, stock compensation, and EPS Basis of Presentation Unaudited condensed consolidated financial statements adhere to U.S. GAAP for interim reporting, including normal adjustments, and should be read with the annual 10-K - Financial statements are prepared in accordance with U.S. GAAP for interim unaudited condensed consolidated financial information, including normal recurring adjustments[23] - Interim results are not necessarily indicative of full-year results and should be read with the Company's Annual Report on Form 10-K for the year ended December 31, 2022[23] Principles of Consolidation Consolidated financial statements include Relmada Therapeutics, Inc. and its wholly-owned subsidiary, with all significant intercompany transactions eliminated - The unaudited condensed consolidated financial statements include the Company's accounts and those of its wholly-owned subsidiary, with all significant intercompany accounts and transactions eliminated[24] Liquidity Negative operating cash flow of $16.5 million and $488.4 million accumulated deficit as of March 31, 2023; management expects current funds to cover 12 months - The Company incurred negative operating cash flows of $16,505,094 for the three months ended March 31, 2023, and has an accumulated deficit of $488,432,511[25] - Management believes existing cash and cash equivalents and short-term investments will fund operating expenses and capital expenditure requirements for at least 12 months from the issuance date[26] - Beyond 12 months, management will evaluate additional financings through equity/debt sales, loans, or strategic collaborations[26] Use of Estimates Financial statements require management estimates and assumptions, especially for stock-based compensation and income taxes, which may differ from actual results - Preparation of financial statements requires management to make estimates and assumptions, with significant estimates including stock-based compensation expenses and income taxes[27] Cash and Cash Equivalents Cash and cash equivalents comprise highly liquid investments with maturities under three months, held at high-credit institutions, exceeding insured limits - Cash and cash equivalents include cash deposits and highly liquid investments with maturities of three months or less when purchased[28] - The Company's cash and cash equivalents balance of $28,894,360 at March 31, 2023, exceeds federally insured limits[28] Short-term Investments Short-term investments, mainly mutual funds, are measured at fair value with changes in earnings; totaled $103.5 million at March 31, 2023, using Level 1 inputs - Short-term investments consist entirely of mutual funds, measured at fair value based on net asset value (NAV), with changes recognized in earnings[31] - At March 31, 2023, short-term investments were $103,547,634, classified using Level 1 inputs within the fair value hierarchy[32][40] - The company recorded an unrealized gain of $1,291,110 for the three months ended March 31, 2023, compared to an unrealized loss of $1,763,287 for the same period in 2022[40] Patents Patent application costs are expensed as incurred due to uncertain recoverability - Costs related to filing and pursuing patent applications are expensed as incurred due to uncertain recoverability[33] Leases Operating leases over one year are recognized as right-of-use assets and lease liabilities; short-term leases (12 months or less) are expensed straight-line - The Company recognizes leases with terms greater than a year on the balance sheet as right-of-use assets and lease liabilities, classified as operating leases for office space[34] - Short-term leases (12 months or less) are expensed on a straight-line basis over the lease term and are not recognized on the balance sheet[34] Fair Value of Financial Instruments Financial instruments, including cash, short-term investments, and accounts payable, are valued using a fair value hierarchy, with short-term investments primarily using Level 1 inputs - The Company's financial instruments (cash, short-term investments, accounts payable) are valued at fair value, with short-term investments of $103,547,634 classified using Level 1 inputs[35][40] - Fair value hierarchy prioritizes quoted prices in active markets (Level 1) over unobservable inputs (Level 3)[36][37][38] Income Taxes The company uses the asset and liability method for income taxes, with a full valuation allowance against net deferred tax assets due to realization uncertainty, and no uncertain tax position liabilities - The Company accounts for income taxes using the asset and liability method, recognizing deferred tax assets and liabilities[43] - A full valuation allowance is recognized against net deferred tax assets as of March 31, 2023, and December 31, 2022, due to the likelihood of realization not meeting the 'more likely than not' threshold[43] - No liabilities were recorded for uncertain tax positions at March 31, 2023, and December 31, 2022[44] Research and Development R&D costs, including contracts, salaries, stock-based compensation, and consultants, are expensed as incurred, with clinical study estimates based on progress and contracted costs - Research and development costs, primarily for product development contracts, salaries, benefits, stock-based compensation, and consultants, are expensed in the period incurred[45] - Estimates for clinical study contracts are made by analyzing study progress, invoices, and contracted costs[45] Stock-Based Compensation Employee equity award costs are measured at grant-date fair value using Black-Scholes and recognized over the service period - The cost of employee services for equity instruments is measured at grant-date fair value using the Black-Scholes option pricing model and recognized over the requisite service period[46] Net Loss per Common Share Basic and diluted loss per common share are based on net loss and weighted-average shares; dilutive securities are excluded from diluted EPS due to net losses - Basic and diluted loss per common share are calculated by dividing net loss by the weighted-average number of common shares outstanding[47] - Potentially dilutive securities (stock options and warrants) are excluded from diluted net loss per share calculations for all periods presented due to the Company's net losses, making them anti-dilutive[47][48] | Anti-Dilutive Securities | March 31, 2023 | March 31, 2022 | | :----------------------- | :------------- | :------------- | | Stock options | 12,487,917 | 10,262,184 | | Common stock warrants | 3,027,441 | 3,175,443 | | Total | 15,515,358 | 13,437,627 | Recent Accounting Pronouncements ASU 2016-13 adoption, 'Financial Instruments - Credit Losses (Topic 326),' did not significantly impact the condensed consolidated financial statements - The adoption of ASU 2016-13, 'Financial Instruments - Credit Losses (Topic 326),' did not have a significant impact on the Company's condensed consolidated financial statements[50] Subsequent Events (Note 2) Management reviewed all material events through the financial statement issuance date for subsequent event disclosure - Management reviewed all material events through the date the financial statements were issued for subsequent event disclosure consideration[51] NOTE 3 - PREPAID EXPENSES Prepaid expenses decreased from $4.0 million to $3.1 million due to reduced prepaid R&D costs | Prepaid Expenses | March 31, 2023 | December 31, 2022 | | :--------------------- | :------------- | :---------------- | | Insurance | $211,700 | $313,200 | | Research and Development | $2,589,800 | $3,619,800 | | Other | $288,100 | $102,200 | | Total | $3,089,600 | $4,035,200 | NOTE 4 - ACCRUED EXPENSES Accrued expenses decreased from $7.2 million to $5.7 million, primarily due to lower accrued R&D costs | Accrued Expenses | March 31, 2023 | December 31, 2022 | | :--------------------- | :------------- | :---------------- | | Research and development | $4,806,000 | $5,809,800 | | Professional fees | $125,000 | $116,500 | | Accrued bonus | $331,000 | $492,100 | | Accrued vacation | $332,400 | $529,800 | | Other | $80,900 | $258,700 | | Total | $5,675,300 | $7,206,900 | NOTE 5 - STOCKHOLDERS' EQUITY This section details common stock, option, and warrant activity, and stock-based compensation expense, noting no common stock issued in Q1 2023 but 620,000 options granted Common Stock No common stock shares were issued in Q1 2023; an Open Market Sale Agreement for up to $100 million remains unused - No shares of common stock were issued during the three months ended March 31, 2023[55] - The Company has an Open Market Sale Agreement with Jefferies to sell up to $100,000,000 of common stock, but no shares have been issued under this agreement as of March 31, 2023[56] Options and Warrants Two equity incentive plans allow up to 10,552,942 options; 620,000 options granted in Q1 2023, with $84.5 million unrecognized stock-based compensation expense - The 2014 Stock Option and Equity Incentive Plan and the 2021 Equity Incentive Plan (as amended) allow for granting up to 10,552,942 options or other stock awards[57][58][59] - From January 1, 2023, through March 31, 2023, 620,000 options were issued to consultants and employees with an aggregate fair value of approximately $1.9 million[64] - As of March 31, 2023, the Company has approximately $84.5 million of unrecognized stock-based compensation expense related to unvested stock options, to be recognized over a weighted average remaining service period of 2.62 years[66] | Options Activity (3 months ended March 31, 2023) | Number of Options | Weighted Average Exercise Price Per Share | | :----------------------------------------------- | :---------------- | :---------------------------------------- | | Outstanding at December 31, 2022 | 12,122,606 | $18.19 | | Granted | 620,000 | $3.60 | | Forfeited | (93,750) | - | | Cancelled | (160,939) | - | | Outstanding at March 31, 2023 | 12,487,917 | $17.35 | | Options exercisable at March 31, 2023 | 4,774,660 | $21.33 | - As of March 31, 2023, the Company had approximately $5.5 million of unrecognized compensation expense related to outstanding warrants[68] Stock-based compensation by class of expense Total stock-based compensation decreased to $11.4 million from $11.9 million, with most allocated to general and administrative expenses | Stock-based Compensation | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------- | :-------------------------------- | :-------------------------------- | | Research and development | $1,994,200 | $1,258,400 | | General and administrative | $9,360,300 | $10,672,300 | | Total | $11,354,500 | $11,930,700 | NOTE 6 - COMMITMENTS AND CONTINGENCIES This section details license agreements with Wonpung, third-party licensors, Inturrisi/Manfredi, and Arbormentis, LLC, covering fees, milestones, royalties, legal proceedings, and lease commitments License Agreements Relmada holds license agreements with Wonpung, third-party licensors, Inturrisi/Manfredi, and Arbormentis, LLC, covering territorial rights, royalties, milestones, and a psilocybin program - Relmada has a License Development and Commercialization Agreement with Wonpung Mulsan Co. for exclusive territorial rights in Asia for up to two drugs, with potential royalties of up to 12% of net sales[72][73] - The Company has an obligation to pay third parties (Dr. Charles E. Inturrisi and Dr. Paolo Manfredi) royalty payments up to 2% on net sales and up to 20% of sublicense royalties, plus milestone payments up to $4 million[74] - Under an agreement with Inturrisi and Manfredi, Relmada pays $45,000 every three months and tiered royalties up to 2% on net sales of licensed products[75] - Relmada acquired development and commercial rights to a novel psilocybin program from Arbormentis, LLC, for an upfront fee of $12.7 million (cash and warrants) and potential milestone payments up to approximately $160 million, plus a low single-digit royalty on net sales[77] Legal The company is unaware of any legal proceedings or claims that would materially adversely affect its business, financial condition, operating results, or cash flows - The Company is not currently aware of any legal proceedings or potential claims that would have a material adverse effect on its business, financial condition, operating results, or cash flows[79] Leases and Sublease Relmada leases corporate headquarters in Coral Gables and New York, with Q1 2023 and 2022 lease expenses of $51,700 and $19,500, respectively - The Company leases corporate headquarters in Coral Gables, FL, and additional office space in New York, NY[80] - Lease expense for the three months ended March 31, 2023, and 2022, was approximately $51,700 and $19,500, respectively[80] NOTE 7 - OTHER POST-RETIREMENT BENEFIT PLAN Relmada participates in a multiemployer 401(k) plan, matching employee contributions, with Q1 2023 expense of $40,400, up from $31,600 in Q1 2022 - Relmada participates in a multiemployer 401(k) plan, matching 100% of the first 3% of employee contributions and 50% of contributions exceeding 3% up to 5%[84] - The Company's 401(k) contribution expense was approximately $40,400 for the three months ended March 31, 2023, compared to $31,600 for the same period in 2022[85] NOTE 8 - SUBSEQUENT EVENTS (Note 8) Subsequent to March 31, 2023, 15,000 options were granted to two new employees with exercise prices between $2.28 and $2.51 - Subsequent to March 31, 2023, 15,000 options were granted to two new employees with an exercise price ranging from $2.28 to $2.51[86] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and Q1 2023 operational results, focusing on its clinical-stage biotechnology business and esmethadone (REL-1017) development for MDD FORWARD-LOOKING STATEMENT NOTICE This section warns that the report contains forward-looking statements with risks and uncertainties, and actual results may differ; the company assumes no obligation to update - The report contains forward-looking statements that involve risks and uncertainties, particularly in the 'Risk Factors' and 'Management's Discussion and Analysis of Financial Condition and Results of Operations' sections[88] - Readers are cautioned not to place undue reliance on forward-looking statements, which are based on information available as of the report date, and the company assumes no obligation to update them[89] Business Overview Relmada is a clinical-stage biotechnology company developing esmethadone (REL-1017) for MDD, with positive Phase 2 results, ongoing Phase 3 trials (RELIANCE I, II, III), Fast Track designation, and upcoming milestones - Relmada Therapeutics, Inc. is a clinical-stage biotechnology company focused on developing esmethadone (REL-1017), an NMDA receptor antagonist, for CNS diseases, with a lead product candidate for depression[90][91] Phase 2 Clinical Trial The REL-1017-202 Phase 2 study demonstrated statistically significant improvements in depression symptoms across multiple measures for both 25 mg and 50 mg doses, with rapid onset and favorable tolerability - The REL-1017-202 Phase 2 study showed statistically significant improvement on all efficacy measures (MADRS, CGI-S, CGI-I, SDQ) for both REL-1017 25 mg and 50 mg treatment groups compared to placebo[93] - Improvements on the MADRS endpoint appeared on Day 4 and continued through Day 14, with P values < 0.03 and large effect sizes (0.7 to 1.0)[94] - The study confirmed REL-1017's tolerability profile, with only mild and moderate adverse events (AEs) and no serious AEs, psychotomimetic/dissociative AEs, or withdrawal signs[95] Phase 3 Program Relmada initiated three Phase 3 MDD trials (RELIANCE I, II, III) for REL-1017; RELIANCE I and III missed primary endpoints, but RELIANCE I showed meaningful difference; FDA granted Fast Track designation - Relmada initiated Phase 3 clinical trials RELIANCE I (adjunctive MDD, Dec 2020), RELIANCE II (adjunctive MDD, Apr 2021), and RELIANCE III (monotherapy MDD, Oct 2021) for REL-1017[96][97] - RELIANCE III (monotherapy) did not achieve its primary endpoint, showing a MADRS reduction of 14.8 points vs. 13.9 points for placebo, with a higher than expected placebo response[98] - RELIANCE I (adjunctive) did not achieve its primary endpoint but showed a clinically meaningful MADRS reduction of 2.2 points (15.1 vs. 12.9) and a nominally statistically significant response rate (39.8% vs. 27.2%, p<0.05)[99] - The FDA granted Fast Track designation to REL-1017 as a monotherapy for MDD and confirmed no two-year carcinogenicity study or Thorough QT (TQT) cardiac study is required[97][101] Human Abuse Potential (HAP) Studies HAP studies showed REL-1017 had significantly lower 'likability' than oxycodone and ketamine, and was equivalent to placebo, indicating no opioid or dissociative abuse potential - REL-1017 (25 mg, 75 mg, 150 mg) demonstrated a highly statistically significant difference in 'likability' compared to oxycodone 40 mg in recreational opioid users (p<0.05) and was statistically equivalent to placebo[102] - REL-1017 also showed a substantial and statistically significant difference in 'likability' compared to intravenous ketamine 0.5 mg/kg in recreational drug users and was statistically equivalent to placebo[103] Key Upcoming Anticipated Milestones Upcoming milestones include RELIANCE II results in H1 2024, new Phase III adjunctive MDD trial initiation in mid-2023, and RELIANCE – OLS study results in mid-2023 - Results of RELIANCE II, the second adjunctive MDD trial, are expected in the first half of 2024[104] - Initiation of a new Phase III adjunctive MDD trial is anticipated in mid-2023, with completion in the second half of 2024[104] - Results of the RELIANCE – OLS (Long-term, Open-label) study in MDD are expected in mid-2023[104] Our Development Program Relmada's program focuses on esmethadone (REL-1017) for MDD, a rapid-acting NMDA channel blocker differentiated by its mechanism and lack of opioid/ketamine-like adverse effects Esmethadone (d-Methadone, dextromethadone, REL-1017) as a treatment for MDD Esmethadone is developed as a rapid-acting oral MDD agent, addressing treatment gaps; its low-affinity, non-competitive NMDA channel blocker mechanism differentiates it - 21.0 million adults in the U.S. had at least one major depressive episode in the past year, with only about half receiving treatment, and 33% of drug-treated patients not achieving adequate therapeutic benefits[105] - Esmethadone is being developed as a rapidly acting, oral agent for MDD, differentiated by its mechanism as a low affinity, non-competitive NMDA channel blocker, potentially lacking adverse side effects of ketamine/esketamine[107] - Esmethadone, as the dextro isomer of racemic methadone, possesses NMDA antagonist properties with virtually no traditional opioid or ketamine-like adverse events at therapeutic doses, unlike l-methadone which is responsible for opioid activity[109] Esmethadone (d-methadone, dextromethadone, REL-1017) in other indications Current focus is adjunctive MDD, but Relmada may explore esmethadone as monotherapy for MDD and other indications like restless leg syndrome in the future - Current strategy focuses on esmethadone as an adjunctive treatment for MDD, but future plans may include re-commencing testing as a monotherapy for MDD[111] - Relmada is evaluating other potential indications for esmethadone, including restless leg syndrome and other glutamatergic system activation-related diseases[111] Our Corporate History and Background Relmada is a clinical-stage biotechnology company with no revenues, a $26.3 million Q1 2023 net loss, and $488.4 million accumulated deficit, requiring trials and approvals for commercialization - Relmada is a clinical-stage biotechnology company developing NCEs and novel drug products for CNS diseases[112] - The Company has not generated revenues and does not anticipate doing so in the foreseeable future, requiring clinical trials and regulatory approvals for product commercialization[113][114] - Net loss for the three months ended March 31, 2023, was $26,321,576, with an accumulated deficit of $488,432,511[114] Business Strategy Relmada's strategy is to develop and commercialize CNS product candidates for unmet needs, prioritizing esmethadone development, IP generation, and resource-based activity prioritization - The Company's strategy is to identify, develop, and commercialize product candidates for high unmet medical needs in CNS diseases, leveraging industry experience and development expertise[115] - The priority program is the further development of esmethadone, which requires a full clinical development program for NDA submission[116] - Plans include generating intellectual property (IP) to protect products and prioritizing development activities based on resources, market dynamics, and value potential[116] Market Opportunity The CNS disease treatment market, especially for depression, offers a large revenue opportunity, affecting nearly 2 billion people globally, with antidepressants as the largest segment - The market for addressing high unmet medical needs in CNS diseases is believed to be large, with CNS diseases affecting nearly 2 billion people globally (40% of total disease burden)[117] - The depression treatment market is segmented by antidepressant drugs, devices, and therapies, with antidepressants being the largest segment, including major pharmaceutical and generic companies[118] Intellectual Property Portfolio and Market Exclusivity Relmada holds over 50 patents for REL-1017, potentially covering beyond 2033, and secured Orphan Drug Designation for d-methadone, granting 7-year FDA exclusivity and potential 10-year EU exclusivity - The Company has over 50 issued patents and pending patent applications related to REL-1017 for multiple uses, potentially providing coverage beyond 2033[119] - Relmada secured an Orphan Drug Designation from the FDA for d-methadone for 'the treatment of postherpetic neuralgia,' which, upon potential NDA approval, carries 7-year FDA Orphan Drug marketing exclusivity[119] - REL-1017 may be eligible for 5 years of market exclusivity in the U.S. (Hatch Waxman Act) plus an additional 6 months of pediatric exclusivity, and up to 10 years of exclusivity in the European Union[119] Key Strengths Relmada's strengths include REL-1017 in Phase 3 for adjunctive MDD, robust Phase 2 efficacy, safety, potential in multiple indications, expert scientific support, and a substantial IP portfolio - Compelling lead product opportunity: REL-1017 is in Phase 3 trials for adjunctive treatment of MDD[122] - Robust and highly statistically significant efficacy seen with esmethadone in a randomized Phase 2 trial, with primary endpoint at 7 days and onset of action at 4 days[122] - Potential in additional multiple indications in underserved markets with large patient populations in other affective and cognitive disorders[122] - Scientific support from leading experts affiliated with institutions like Harvard, Cornell, Yale, and University of Pennsylvania[122] - Substantial IP portfolio and market protection with approved and filed patent applications providing coverage beyond 2033[122] Results of Operations Total operating expenses decreased by $10.1 million in Q1 2023 due to lower R&D, leading to a reduced net loss despite increased other income from higher interest rates | Operating Expenses | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Decrease | | :------------------------ | :-------------------------------- | :-------------------------------- | :------- | | Research and development | $15,861,010 | $25,012,853 | $(9,151,843) | | General and administrative | $12,292,599 | $13,284,570 | $(991,971) | | Total | $28,153,609 | $38,297,423 | $(10,143,814) | Research and Development Expense R&D expense decreased by $9.2 million to $15.9 million in Q1 2023, mainly due to lower study costs after RELIANCE I and III completion, partially offset by increased compensation - Research and development expense decreased by approximately $9,151,900 to $15,861,000 for the three months ended March 31, 2023, compared to $25,012,900 in the prior year[122] - The decrease was primarily driven by a $9,050,700 reduction in study costs and a $1,124,900 decrease in other research expenses due to the completion of RELIANCE I and RELIANCE III late in 2022[123] - Offsetting factors included an increase of $735,700 in stock-based compensation expense and $639,200 in employee compensation expense[123] General and Administrative Expense G&A expense decreased by $992,000 to $12.3 million in Q1 2023, primarily due to lower stock-based compensation, partially offset by higher employee and consulting costs - General and administrative expense decreased by approximately $992,000 to $12,292,600 for the three months ended March 31, 2023, compared to $13,284,600 in the prior year[124] - The change was primarily due to a $1,312,000 decrease in stock-based compensation expense, offset by a $229,200 increase in compensation expense and a $90,800 increase in other general and administrative expenses[129] Other Income (Expense) Other income significantly increased to $1.2 million from $329,900 due to higher interest rates, with a $666,700 realized loss and $1.3 million unrealized gain on short-term investments - Interest/investment income, net, increased to approximately $1,207,600 for the three months ended March 31, 2023, from $329,900 in the prior year, due to higher interest rates and investment yields[124] - Realized loss on short-term investments was approximately $666,700, and unrealized gain was $1,291,100 for the three months ended March 31, 2023[124] Income Taxes No income tax provision was made for Q1 2023 and 2022 due to net losses and a full valuation allowance against deferred tax assets - The Company did not provide for income taxes for the three months ended March 31, 2023, and 2022, due to a net loss and a full valuation allowance against all deferred tax assets[125] Net Loss Net loss for Q1 2023 was $26.4 million, down from $39.7 million, resulting in a loss per common share of $0.87 compared to $1.40 - Net loss for the three months ended March 31, 2023, was approximately $26,351,600, compared to $39,745,800 in the prior year[126] - Loss per common share, basic and diluted, was $0.87 for the three months ended March 31, 2023, compared to $1.40 in the prior year[126] Liquidity Relmada had $16.5 million negative operating cash flow and $488.4 million accumulated deficit in Q1 2023; cash increased due to investing activities, sufficient for 12 months - The Company incurred negative operating cash flows of $16,505,094 for the three months ended March 31, 2023, and has an accumulated deficit of $488,432,511[127] - Management believes existing cash and cash equivalents and short-term investments will fund operating expenses and capital expenditure requirements for at least 12 months[128] | Cash Flow Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Cash used in operating activities | $(16,505,094) | $(19,429,743) | | Cash provided by (used in) investing activities | $40,003,549 | $(10,027,668) | | Cash provided by financing activities | $- | $29,948,348 | | Net increase in cash and cash equivalents | $23,498,455 | $490,937 | - Cash provided by investing activities for Q1 2023 was $40,003,549, primarily from the sale of short-term investments ($74,770,836) exceeding purchases ($34,767,287)[131] Effects of Inflation Monetary assets are not directly affected by inflation, and equipment replacement costs are immaterial; however, inflation could increase compensation and contract service expenses - The Company's assets are primarily monetary (cash and cash equivalents) and not directly affected by inflation[133] - Inflation could increase expenses for employee compensation and contract services, potentially affecting the rate at which resources are used[133] Commitments and Contingencies (MD&A) No material changes to commitments, contingencies, or risk factors previously disclosed in the Annual Report on Form 10-K for December 31, 2022 - No material changes to commitments and contingencies or risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2022[134] Critical Accounting Policies and Estimates Financial statements adhere to U.S. GAAP, requiring management estimates and assumptions, which are continuously reviewed, with no current high estimation uncertainty - Financial statements are presented in accordance with U.S. GAAP, requiring management to make estimates and assumptions that affect reported amounts[136] - Management continuously reviews estimates and assumptions, and currently, none involve a high level of estimation uncertainty[136] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes to market risk exposures were disclosed in the Annual Report on Form 10-K for December 31, 2022 - No material changes to market risk exposures as disclosed in the annual MD&A contained in Form 10-K for the year ended December 31, 2022[137] Item 4. Controls and Procedures This section confirms effective disclosure controls and procedures as of March 31, 2023, with no material changes in internal control over financial reporting during the quarter Evaluation of Disclosure Controls and Procedures The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2023, ensuring timely and accurate material information reporting - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of March 31, 2023[138] - Disclosure controls are designed to ensure material information is accumulated, communicated, processed, summarized, and reported within specified time periods[138] Changes in Internal Control over Financial Reporting No material changes in internal control over financial reporting occurred during Q1 2023 that affected or are likely to affect the company's controls - No material changes in internal control over financial reporting occurred during the three months ended March 31, 2023[139] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is unaware of any legal proceedings or claims that would materially adversely affect its business, financial condition, operating results, or cash flows - The Company is not currently aware of any legal proceedings or potential claims that would have a material adverse effect on its business, financial condition, operating results, or cash flows[142] Item 1A. Risk Factors No material changes to risk factors previously disclosed in the Annual Report on Form 10-K for December 31, 2022 - No material changes to the risk factors under Part I, Item 1A of the Form 10-K for the year ended December 31, 2022[143] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported for the period - None[144] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported for the period - None[145] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[146] Item 5. Other Information No other information to report for the period - None[147] Item 6. Exhibits This section lists exhibits filed with Form 10-Q, including CEO and CFO certifications (Sarbanes-Oxley Sections 302 and 906) and Inline XBRL documents | Exhibit No. | Title of Document | Location | | :---------- | :----------------------------------------------------------------------------------- | :------- | | 31.1 | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Attached | | 31.2 | Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Attached | | 32.1 | Certification of the Chief Executive Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* | Attached | | 32.2 | Certification of the Principal Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* | Attached | | 101.INS | Inline XBRL Instance Document. | Attached | | 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | Attached | | 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | Attached | | 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | Attached | | 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | Attached | | 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | Attached | | 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | Attached | SIGNATURES The report is signed by Relmada Therapeutics, Inc.'s CEO, Sergio Traversa, and CFO, Maged Shenouda, as of May 11, 2023 - The report is signed by Sergio Traversa, Chief Executive Officer, and Maged Shenouda, Chief Financial Officer, on May 11, 2023[153]