Relmada Therapeutics, a clinical-stage biotech focusing on treatments for central nervous system diseases, is currently engrossed in two pivotal Phase 3 trials for its lead candidate, REL-1017, as an adjunctive treatment for Major Depressive Disorder (MDD). On the surface, the company seems to be making steady progress, anticipating top-line data from one of the trials, Reliance II, in the second half of 2024. However, lurking beneath this seemingly optimistic outlook is a startling statistic: an 80% screen failure rate.

This extraordinary figure, significantly higher than the 50% observed in previous trials (Reliance I and Reliance III), is a double-edged sword. Relmada insists this surge is a deliberate consequence of their stringent new patient selection criteria, aimed at weeding out the 'noise' that plagued earlier trials and ultimately contributed to their setbacks. They argue that by demanding medical and pharmacy records, they are ensuring the enrollment of patients with a verifiable history of depression and documented prior treatment.

But is this dramatic increase in screen failures truly a mark of superior patient selection, leading to a cleaner and more robust dataset, or could it be masking underlying issues? Could it be a desperate attempt to salvage a flawed drug by cherry-picking ideal candidates?

The answer, as always, lies in the delicate balance of risk and reward. Let's analyze the potential implications of this high screen failure rate:

Scenario 1: The Genius Play

Imagine this: Relmada has cracked the code. The 80% they are screening out are precisely the patients who were responsible for the high placebo response and inconclusive data in previous trials. This stringent selection process could yield a trial population highly responsive to REL-1017, producing a clear and statistically significant separation from placebo. This scenario, if true, positions Relmada for a dramatic comeback, with REL-1017 potentially becoming a game-changer in the MDD treatment landscape.

Scenario 2: The Ticking Time Bomb

The flip side is just as compelling. What if the 80% screen failure rate is a sign of desperation? Could Relmada be struggling to find patients who genuinely fit the narrowed criteria, effectively shrinking their potential patient pool to a point where the trial's validity is compromised? Furthermore, even if the trial succeeds with this hyper-selected group, what does it say about the drug's real-world applicability? Will such strict criteria make REL-1017 only relevant for a tiny fraction of MDD patients, drastically limiting its market potential?

Beyond the Numbers: A Hypothetical Exercise

To illustrate the potential impact, let's consider a hypothetical scenario. Let's assume Relmada aims to recruit 300 patients for their ongoing Reliance II trial. With an 80% screen failure rate, they would need to screen 1500 patients to reach their target.

Now, let's delve deeper. If a typical clinical trial site can realistically screen about 50 patients per year, Relmada would require 30 active sites to meet their recruitment goal within a year. This assumes no site closures due to quality issues, which we know Relmada is actively monitoring for. If even a few sites falter, recruitment could be further delayed, pushing the timeline beyond the anticipated second half of 2024.

This simple exercise highlights the vulnerability of Relmada's strategy. The higher the screen failure rate, the greater the strain on recruitment, timeline, and ultimately, the company's resources.

Analysis of Screen Failure Reasons

Based on the Q4 2023 and Q1 2024 earnings call transcripts, we can analyze the primary reasons behind the 80% screen failure rate:

Financial Runway

As of Q1 2024, Relmada has $83.6 million in cash, cash equivalents, and short-term investments. They project this will fund operations into 2025, covering data readouts for both ongoing Phase 3 trials (Reliance II and Relight) and the planned Phase 1 trial for their modified release psilocybin formulation.

Chart: Quarterly R&D Expenses

The chart below displays Relmada's quarterly R&D expenses, reflecting the fluctuation in costs as trials progress and conclude.

The Takeaway: A Cautious Optimism?

Relmada's situation is a textbook example of a high-stakes gamble. While the company seems to be taking proactive measures to ensure a high-quality trial, the 80% screen failure rate raises critical questions about the feasibility and generalizability of their approach.

The coming months will be crucial for Relmada. The market will be watching closely, analyzing not just the top-line data from Reliance II, but also the rate of enrollment in both trials, the number of sites closed due to quality issues, and any further revisions to the trial protocols.

Relmada's future hinges on walking a tightrope between scientific rigor and practical feasibility. Only time will tell whether their high-stakes strategy will catapult them to success or lead to yet another disappointment.

"Fun Fact: Relmada's name is derived from 'resilience' and 'mada,' the Sanskrit word for 'joy.' This symbolic aspiration for restoring joy through resilience in patients with CNS disorders adds an intriguing layer to their current challenge: can they demonstrate resilience in their clinical trials and bring joy to investors who have witnessed the company's turbulent journey?"