Reunion Neuroscience Inc. (NASDAQ: REUN / TSX: REUN), a clinical-stage biopharmaceutical company committed to developing innovative and patented therapeutic solutions for underserved mental health conditions, today reported fiscal results for the fourth quarter and year ended March 31, 2023 and provided a corporate update.
Corporate Updates
On June 1, 2023, Reunion announced that it has agreed to a take-private transaction from MPM BioImpact, a world-leading biotechnology investment firm, in an all-cash deal valued at approximately US$13.1 million. Shareholders will be entitled to receive US$1.12 in cash for each share held immediately prior to the effective time of the take-private transaction. The transaction is currently contemplated to close in the third calendar quarter of 2023, subject to satisfaction of certain closing conditions.
On April 3, 2023, Reunion announced that it appointed seasoned pharmaceutical executive, Fred Grossman, D.O., FAPA, to its Board of Directors. Dr. Grossman has over two decades of experience in clinical development and medical affairs, pharmacovigilance and health outcomes across a variety of products, including biologics and small molecules. Dr. Grossman previously served as the Chief Medical Officer at Empyrean Neuroscience, Mesoblast Limited and NeuroRx Pharma and has held senior executive leadership positions at Glenmark Pharmaceuticals, Sunovion Pharmaceuticals, Bristol Myers Squibb, Johnson & Johnson and Eli Lilly.
Recent Clinical Developments
- RE104 was generally well-tolerated with robust pharmacodynamic (“PD”) effects observed at doses greater than or equal to 30mg of RE104 (33mg of RE104 HCl) that closely aligned with the PD profile of its prodrug, 4-OH-DiPT (isoprocin).
- Drug Effect Questionnaire and Mystical Effect Questionnaire scores observed at these dose levels indicate the potential for therapeutic effect.
- The mean duration of experience with RE104 at these dose levels was 3.7 hours, representing a shorter duration of action when compared to psilocybin, but with the same intensity and quality of experience.
- The adverse event profile of RE104 was similar to that of psilocybin, with no serious adverse events.
- This data informed the dose selection of 30mg RE104 (33mg RE104 HCl) for a randomized, placebo-controlled Phase 2 trial in women with moderate to severe post-partum depression, with Phase 2 trial initiation planned for the second half of 2023.
RE200 Series
Reunion continues to develop its RE200 series of molecules. These novel molecules include preclinical compounds with enhanced receptor selectivity to address additional therapeutic applications. They are structurally similar to classic psychedelics but have selective potency at the target serotonin 2A receptor (5HT2A) and are devoid of 5HT2B receptor agonism.
Corporate Structure and Basis of Presentation
On August 11, 2022, the Company completed its previously announced spinout of its clinics and botanical research operations (“Clinic Operations”) to Field Trip Health & Wellness with the resulting drug discovery and development business renamed Reunion Neuroscience Inc., which is listed on the NASDAQ Stock Market and Toronto Stock Exchange under the ticker symbol “REUN”.
Reunion accounted for the Clinic Operations as discontinued operations whose assets and liabilities are classified and presented separately as current items held for transfer in the statement of financial position and are measured at their carrying amount. Clinic Operations are excluded from the results of continuing operations and are presented as a single amount as a net loss from discontinued Clinic Operations in the consolidated statements of loss and comprehensive loss.
For more details on the spinout transaction, please refer to the Key Highlights and Recent Developments – Reorganization and Spinout of Clinic Operations section of the Company’s management’s discussion and analysis, available under the Company’s SEDAR profile at www.sedar.com.
Financial Highlights
The Company incurred general and administrative expenses of $4.0 and $13.0 million for the three and twelve month periods ended March 31, 2023 compared to $3.1 and $11.0 million for the same periods in 2022. Changes for the three and twelve month periods included increased costs attributable to increased headcount and other costs associated with becoming a public company with an increased scale of operations due to the Company entering the clinical stage for its lead asset RE104.
Research and development expenses of $4.4 and $13.0 million were incurred for the three and twelve month periods ended March 31, 2023 compared to $2.3 and $7.0 million for the same periods in 2022. Increases were attributable to personnel and third-party manufacturing and clinical research costs associated with the Phase 1 clinical trial for RE104 and regulatory and startup activities in preparation for the Company’s planned Phase 2 clinical study in postpartum depression.
Other income and expenses include interest income on the Company’s cash and cash equivalents balances, foreign currency gains and losses primarily attributable to the Company’s United States dollar holdings and investment tax credits received from the Scientific Research and Experimental Development tax incentive program in Canada. The Company also recognized a $1.5 million gain and a $13.8 million loss for the three and twelve months ended March 31, 2023 in connection with (i) a loss allowance for its financial guarantee of certain lease obligations associated with entities that were part of the spinout of Clinic Operations and (ii) the Company’s write-off of its equity investment in Field Trip Health & Wellness Ltd.
The Company recognized a net loss from discontinued operations of $10.4 million for the twelve month period ended March 31, 2023. No such loss was incurred during the three month period ended March 31, 2023. This compares to a $8.2 and $36.9 million loss for the three and twelve month periods ended March 31, 2022. Discontinued operations are attributable to the spinout of Clinic Operations completed on August 11, 2022.
The Company incurred a net loss from continuing operations of $6.5 million or $0.56 per share and $38.1 million or $3.28 per share for the three and twelve month periods ended March 31, 2023 compared to a loss of $5.9 million or $0.11 per share and $17.8 million or $0.31 per share for the three and twelve month periods ended March 31, 2022.
As of March 31, 2023, the Company held cash and cash equivalents of $27.7 million.
| REUNION NEUROSCIENCE INC. (FORMERLY FIELD TRIP HEALTH LTD.) | ||||
| CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | ||||
| As of | As of | |||
| March 31, 2023 | March 31, 2022 | |||
| $ | $ | |||
| ASSETS | ||||
| Cash and cash equivalents | 27,200,097 | 63,720,102 | ||
| Restricted cash | 516,755 | 776,551 | ||
| Other assets | 2,023,453 | 5,408,853 | ||
| Property, plant and equipment | — | 4,462,175 | ||
| Intangible assets | — | 483,354 | ||
| Right-of-use assets | — | 27,285,334 | ||
| TOTAL ASSETS | 29,740,305 | 102,136,369 | ||
| LIABILITIES AND EQUITY | ||||
| Accounts payable and accrued liabilities | 5,076,982 | 5,846,672 | ||
| Financial guarantees | 3,367,910 | — | ||
| Deferred revenue | — | 278,717 | ||
| Loan payable | — | 31,163 | ||
| Lease obligations | — | 29,021,056 | ||
| TOTAL LIABILITIES | 8,444,892 | 35,177,608 | ||
| TOTAL EQUITY | 21,295,413 | 66,958,761 | ||
| TOTAL LIABILITIES AND EQUITY | 29,740,305 | 102,136,369 | ||
| REUNION NEUROSCIENCE INC. (FORMERLY FIELD TRIP HEALTH LTD.) | ||||||||||||
| CONSOLIDATED STATEMENTS OF LOSS | ||||||||||||
| Three Months Ended | Year Ended | |||||||||||
| March 31, | March 31, | |||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| $ | $ | $ | $ | |||||||||
| Operating Expenses | ||||||||||||
| General and administration | 3,955,463 | 3,111,301 | 12,960,316 | 10,989,450 | ||||||||
| Research and development | 4,406,957 | 2,301,840 | 12,980,137 | 6,958,216 | ||||||||
| Total operating expenses | 8,362,420 | 5,413,141 | 25,940,453 | 17,947,666 | ||||||||
| Other Income (Expenses) | ||||||||||||
| Interest income | 276,742 | 76,923 | 691,789 | 397,516 | ||||||||
| Foreign exchange gain (loss) | (98,736 | ) | (613,040 | ) | 747,945 | (211,500 | ) | |||||
| Tax credit refund | 184,087 | — | 184,087 | — | ||||||||
| Share of loss, lease loss allowance and impairment of investment in associate | 1,508,020 | — | (13,785,669 | ) | — | |||||||
| Net loss from continuing operations | (6,492,307 | ) | (5,949,258 | ) | (38,102,301 | ) | (17,761,650 | ) | ||||
| Net loss from discontinued Clinic Operations | — | (8,221,027 | ) | (10,390,695 | ) | (36,929,480 | ) | |||||
| NET LOSS | (6,492,307 | ) | (14,170,285 | ) | (48,492,996 | ) | (54,691,130 | ) | ||||
| Net Loss per Share – Basic and Diluted | (0.56 | ) | (0.25 | ) | (4.17 | ) | (0.95 | ) | ||||
| Net Loss per Share from continuing operations – Basic and Diluted | (0.56 | ) | (0.11 | ) | (3.28 | ) | (0.31 | ) | ||||
About Reunion Neuroscience Inc.
Reunion is committed to developing innovative therapeutic solutions for underserved mental health conditions. The Company’s lead asset, RE104, a proprietary, novel, serotonergic psychedelic compound and the only 4-OH-DiPT prodrug in clinical development, is being developed as a potential treatment for postpartum depression that could provide rapid symptom relief and durable efficacy. RE104 is protected under U.S. Patent No. 11,292,765 issued on April 5, 2023 (priority June 30, 2020), with claims for composition of matter, methods of manufacturing, formulations and methods of use for a genus of hemi-ester tryptamines, including RE104, which could provide protection out to June 30, 2041. Reunion is also developing the RE200 series, which includes preclinical compounds with enhanced receptor selectivity to address additional therapeutic applications.