Relmada Therapeutics(RLMD) - 2021 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements This section presents the unaudited condensed consolidated financial statements for Q1 2021, showing a $22.2 million net loss and $103.9 million in total assets Condensed Consolidated Balance Sheets Total assets decreased to $103.9 million by March 31, 2021, primarily due to reduced short-term investments, leading to a decline in stockholders' equity | Financial Metric | March 31, 2021 (Unaudited) | December 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $3,804,042 | $2,495,397 | | Short-term investments | $98,899,732 | $114,595,525 | | Total current assets | $103,775,602 | $118,073,569 | | Total assets | $103,866,508 | $118,186,204 | | Total current liabilities | $12,719,380 | $12,603,458 | | Total stockholders' equity | $91,147,128 | $105,582,746 | - The company's accumulated deficit grew to $201.5 million as of March 31, 2021, up from $179.3 million at the end of 2020[10] Condensed Consolidated Statements of Operations Net loss more than doubled to $22.2 million in Q1 2021, driven by increased Research and Development and General and Administrative expenses | Metric | Three months ended March 31, 2021 | Three months ended March 31, 2020 | | :--- | :--- | :--- | | Research and development | $14,022,227 | $4,507,784 | | General and administrative | $8,382,976 | $5,466,654 | | Total operating expenses | $22,405,203 | $9,974,438 | | Net loss | $(22,215,181) | $(10,673,316) | | Net loss per common share | $(1.34) | $(0.72) | - The weighted average number of common shares outstanding increased to 16,572,672 from 14,738,230 in the prior year period[13] Condensed Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity decreased to $91.1 million due to a $22.2 million net loss, partially offset by stock-based compensation and warrant exercises - Key activities affecting stockholders' equity in Q1 2021 included a net loss of $22.2 million, stock-based compensation of $5.9 million, and cash proceeds from warrant and option exercises totaling $1.9 million[16] Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased to $16.1 million in Q1 2021, offset by $15.5 million from investing activities, resulting in a $1.3 million cash increase | Cash Flow Activity | Three months ended March 31, 2021 | Three months ended March 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(16,085,475) | $(3,424,763) | | Net cash provided by (used in) investing activities | $15,465,841 | $(23,632,215) | | Net cash provided by financing activities | $1,928,279 | $3,004,946 | | Net increase/(decrease) in cash | $1,308,645 | $(24,052,032) | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail the company's clinical-stage biotech focus, $102.7 million in funding for 12 months, and recent option/warrant issuances and license obligations - The company is a clinical-stage biotechnology company focused on developing esmethadone (REL-1017), an NMDA receptor antagonist for CNS diseases[21] - Management believes existing cash and cash equivalents will fund operating expenses and capital needs for at least 12 months from the report's issuance date[26] - In January 2021, the company awarded 1,490,000 options and 400,000 warrants to employees, directors, and consultants with an exercise price of $33.43[66][72] - The company has an ongoing license agreement requiring quarterly payments of $45,000 until the first commercial sale of a licensed product or other terminating events[81] Management's Discussion and Analysis of Financial Condition and Results of Operation Management discusses the development of esmethadone (REL-1017) for MDD, reporting a $22.2 million net loss in Q1 2021 due to increased R&D, with 12 months of funding available Business Overview and Strategy Relmada focuses on developing esmethadone (REL-1017) for MDD, with Phase 3 trials (RELIANCE I & II) underway and results expected in H1 2022 - The company's lead product candidate, esmethadone (REL-1017), is being developed as a rapidly acting, oral agent for the treatment of depression[94] - On April 1, 2021, the company initiated RELIANCE II, the second of two pivotal Phase 3 clinical trials for REL-1017 as an adjunctive treatment for MDD[99] - Anticipated milestones include results from the RELIANCE I and RELIANCE II trials in the first half of 2022[104] Results of Operations Operating expenses increased to $22.4 million in Q1 2021, driven by a $9.5 million rise in R&D and $2.9 million in G&A, leading to a $22.2 million net loss | Expense Category | Q1 2021 | Q1 2020 | Increase/(Decrease) | | :--- | :--- | :--- | :--- | | Research and development | $14,022,227 | $4,507,784 | $9,514,443 | | General and administrative | $8,382,976 | $5,466,654 | $2,806,322 | | Total Operating Expenses | $22,405,203 | $9,974,438 | $12,320,765 | - The increase in R&D expense was primarily due to a $7.7 million rise in study costs associated with the execution of Phase 2 and 3 studies[123] - The increase in G&A expense was mainly driven by a $2.0 million increase in stock-based compensation and an $0.9 million increase in other expenses, primarily consulting services[123] Liquidity and Capital Resources The company reported $16.1 million negative operating cash flow in Q1 2021, with $96.8 million in cash and investments, sufficient for 12 months at a $75-100 million burn rate - The company incurred negative operating cash flows of $16.1 million for the quarter ended March 31, 2021[125] - Management believes it has sufficient funding to continue operations for at least 12 months from the issuance of the financial statements[127] - The company expects its cash burn rate for the next 12 months to range between $75 million and $100 million[127] Critical Accounting Policies and Estimates Critical accounting policies involve significant judgments in research and development expenses and stock-based compensation expenses - The company's critical accounting policies and estimates relate to research and development expenses and stock-based compensation expenses[139] Quantitative and Qualitative Disclosures About Market Risk No material changes to market risk exposures have occurred since the 2020 Form 10-K disclosures - There have been no material changes to the company's market risk exposures from those disclosed in the 2020 Form 10-K[140] Controls and Procedures Disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal control over financial reporting - Management concluded that disclosure controls and procedures were effective as of March 31, 2021[141] - No material changes were made to the company's internal control over financial reporting during the first quarter of 2021[142] PART II - OTHER INFORMATION Legal Proceedings No material legal proceedings are ongoing; a prior employee complaint was settled for an immaterial amount post-quarter-end - A lawsuit filed by an employee in July 2020 was settled after the quarter ended for an amount immaterial to the financial statements[146] Risk Factors No material changes to risk factors from the 2020 Form 10-K, with ongoing monitoring of COVID-19 impacts - There have been no material changes to the risk factors disclosed in the company's 2020 Form 10-K[148] - The company is actively monitoring the potential effects of the COVID-19 pandemic on its business, though it does not currently expect a material impact on its long-term development timeline or liquidity[147] Other Items (2, 3, 4, 5) No unregistered equity sales, senior security defaults, mine safety disclosures, or other reportable information occurred during the quarter - The company reported no unregistered sales of equity securities, defaults upon senior securities, mine safety disclosures, or other information for the quarter[149][150][151][152] Exhibits This section lists exhibits to the Form 10-Q, including CEO and CFO certifications and XBRL Interactive Data Files - The exhibits filed with the report include CEO and CFO certifications and XBRL data files[154]