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Relmada shares collapse after fast-acting depression drug fails first test

An experimental medicine from Relmada Therapeutics failed a Phase 3 trial in major depressive disorder, sending shares of the Florida-based biotechnology company tumbling nearly 80% on Thursday.

Relmada said a four-week course of its drug, dubbed REL-1017, didn’t lead to a statistically significant benefit versus placebo on a rating scale measuring symptoms of depression. After 28 days, the scores of patients treated with Relmada’s drug fell by an average of 14.8 points. Placebo recipients’ scores declined by a mean of 13.9 points.

Relmada cited a “higher than expected placebo response,” a common occurrence in studies of psychiatric drugs, for the negative outcome. The company also claimed to find “paradoxical results” at certain study sites in which placebo recipients “dramatically outperformed” its drug. When excluding the sites with “implausibly high or low placebo responses,” REL-1017 had a meaningful effect, the company said. Those findings come from an after-the-fact exploratory analysis, however, and don’t change the study’s overall outcome.

The biotech is now running two additional placebo-controlled Phase 3 trials testing REL-1017 as an adjunctive treatment for major depressive disorder. Relmada executives have indicated that positive results from two trials “could be adequate for filing,” according to a recent research note from SVB Securities analyst Marc Goodman.

Still, most investors aren’t waiting around for the results. Relmada’s share price plummeted to about $6.50 in early trading Thursday, down from a roughly $32 at market’s close Wednesday.

REL-1017 is designed to block the activity of a neurotransmitter, called NMDA, that controls mood. The NMDA receptor has long been a target of depression medicines, as directly blocking it with a medicine, as the recreational drug ketamine does, might relieve symptoms more quickly than standard treatments. That hypothesis has been bolstered in recent years by two approvals. First was Johnson & Johnson’s nasal spray, Spravato, which is closely related to ketamine and was cleared by U.S. regulators in 2019. Last month, a medicine from Axsome Therapeutics, Auvelity, became the first oral NMDA receptor-blocking drug to get to market.

Relmada aims to be next in line with an oral medication. Its drug works differently than Spravato and Auvelity, however. It’s an isomer, or different chemical arrangement, of the opioid addiction treatment methadone, meaning it has the same chemical formula but a different atomic arrangement. Those differences are meant to lead to a fast-acting treatment that sidesteps the potentially addictive properties and other associated side effects of methadone as well as ketamine.

Relmada noted there were no opioid-like or withdrawal effects in its Phase 3 trial, and in mid-stage testing, the drug showed a statistically significant separation from placebo in only four days.

REL-1017’s future now hinges on the results of the next two studies, however.

“While these [negative study] results are disappointing for patients, the need for new, safe and effective treatments for MDD continues to exist. We look forward to the data from the [two ongoing trials] of REL-1017, a potential new therapy for the adjunctive treatment of MDD,” said study investigator Maurizio Fava, the Psychiatrist-In-Chief at Massachusetts General Hospital, in a statement.

Axsome shares climbed 6% in early trading.