On Wednesday, Leerink Partners adjusted its stance on Relmada Therapeutics Inc (NASDAQ:RLMD), moving its rating from Outperform to Market Perform and significantly reducing the price target to $1.00 from the previous $10.00. The stock, currently trading at $0.67, has seen a dramatic decline from its 52-week high of $7.22.
According to InvestingPro data, analyst targets for the stock range from $2 to $23, suggesting significant uncertainty in the market's outlook. This change comes after an interim analysis by the Data Monitoring Committee (DMC) found the company's major drug candidate, REL-1017, to be futile in the RELIANCE II study for the treatment of Major Depressive Disorder (MDD).
The DMC's conclusion marks a setback for Relmada, as REL-1017's NMDA antagonist mechanism was previously supported by preclinical and clinical evidence. The drug's mechanism is similar to that of other approved products in the market, such as Johnson & Johnson's Spravato. Despite the disappointing results, Relmada is considering its next steps and still has another product, REL-P11 (low-dose psilocybin), which is currently in Phase 1 trials.
As of the end of the third quarter of 2024, Relmada reported having $54 million in cash reserves. Following the recent update, Leerink Partners has removed the projected revenues from REL-1017 from its financial model for Relmada. InvestingPro analysis shows the company maintains strong liquidity with a current ratio of 6.89, and holds more cash than debt on its balance sheet.
With a market capitalization of just $20.13 million, investors seeking deeper insights can access the comprehensive Pro Research Report, which provides detailed analysis of Relmada's financial health and future prospects. The firm has introduced modest projected revenues for REL-P11 starting in 2032, pending further data from the ongoing trials.
The analyst's decision to downgrade Relmada reflects the impact of the interim analysis results on the company's outlook. With the uncertainty surrounding REL-1017 and the early-stage development of REL-P11, the firm believes it is prudent for investors to adopt a more cautious approach, as reflected in the new price target and rating.
InvestingPro's Financial Health Score indicates a 'FAIR' overall rating, with additional ProTips available to subscribers highlighting key strengths and challenges in the company's fundamentals.
In other recent news, Relmada Therapeutics, Inc. experienced a significant setback as the Phase 3 Reliance II study of REL-1017, intended as an adjunctive treatment for major depressive disorder (MDD), was deemed futile by the independent Data Monitoring Committee (DMC). The company reported a decrease in cash and investments to $54.1 million and a net loss of $21.7 million in its Q3 financials.
Despite the disappointing trial results, Relmada confirmed its ongoing commitment to the development of REL-P11, a candidate for treating metabolic disease, currently in a Phase 1 first-in-human study.
Relmada's CEO, Sergio Traversa, stated the company will evaluate the full dataset to determine next steps for the REL-1017 program. Mizuho (NYSE:MFG) analyst Uy Ear commented on the news, expressing disappointment and suggesting a reassessment of the program's future.
In addition to the REL-1017 developments, the company's research and development expenses have risen to $11.1 million, funding ongoing studies including a Phase 1 safety study for a psilocybin-based candidate.
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